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Perspectives on the Budget Surplus

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  • Alan J. Auerbach
  • William G. Gale

Abstract

This paper provides alternative measures of federal budget surpluses over 10-year and long-term horizons. Official baseline budget forecasts are based on a series of statutory requirements that may be at variance with reasonable expectation. More plausible notions of current policy toward discretionary spending, taxes and retirement trust funds imply that surpluses over the next 10 years will be substantially smaller than the baseline forecasts indicate. Properly accounting for long-term imbalances in social security and the rest of the budget implies that, under plausible definitions of current policy, the federal government faces a long-term shortfall.

Suggested Citation

  • Alan J. Auerbach & William G. Gale, 2000. "Perspectives on the Budget Surplus," NBER Working Papers 7837, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:7837
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    1. Alan J. Auerbach, 1994. "The US Fiscal Problem: Where We Are, How We Got Here, and Where We're Going," NBER Chapters, in: NBER Macroeconomics Annual 1994, Volume 9, pages 141-186, National Bureau of Economic Research, Inc.
    2. Alan J. Auerbach & Kevin A. Hassett, 1999. "Uncertainty and the Design of Long-Run Fiscal Policy," NBER Working Papers 7036, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ben S. Bernanke & Vincent R. Reinhart & Brian P. Sack, 2004. "Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(2), pages 1-100.
    2. Michael J. Fleming, 2001. "Financial market implications of the federal debt paydown," Staff Reports 120, Federal Reserve Bank of New York.
    3. Germinal G. Van, 2022. "The Theory of Efficient Growth," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 65(2), pages 68-91.
    4. Mstislav Afanasyev & Natalia Shash, 2020. "Budget Surplus Management And Fiscal Fine Tuning," Public administration issues, Higher School of Economics, issue 6, pages 84-97.
    5. Ozili, Peterson, 2018. "Tax Evasion and Financial Instability," MPRA Paper 88430, University Library of Munich, Germany.
    6. Gale, William G. & Potter, Samara R., 2002. "An Economic Evaluation of the Economic Growth and Tax Relief Reconciliation Act of 2001," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(1), pages 133-186, March.
    7. George J. Hall & Stefan Krieger, 2000. "Tax Smoothing Implications of the Federal Debt Paydown," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 253-302.
    8. Gale, William G. & Potter, Samara R., 2002. "An Economic Evaluation of the Economic Growth and Tax Relief Reconciliation Act of 2001," National Tax Journal, National Tax Association, vol. 55(N. 1), pages 133-186, March.
    9. Easterly, william, 2001. "Growth implosions, debt explosions, and my Aunt Marilyn : do growth slowdowns cause public debt crises?," Policy Research Working Paper Series 2531, The World Bank.
    10. Haffert, Lukas, 2016. "Permanent budget surpluses as a fiscal regime," MPIfG Discussion Paper 16/1, Max Planck Institute for the Study of Societies.
    11. Douglas W. Elmendorf & Jeffrey B. Liebman, 2000. "Social Security Reform and National Saving in an Era of Budget Surpluses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 1-72.
    12. Vincent Reinhart & Brian Sack, 2000. "The Economic Consequences of Disappearing Government Debt," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 163-220.
    13. Douglas W. Elmendorf & Jeffrey B. Liebman & David W. Wilcox, 2001. "Fiscal Policy and Social Security Policy During the 1990s," NBER Working Papers 8488, National Bureau of Economic Research, Inc.

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