Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013.

摘要

If the fiscal policies currently in place are continued in coming years, the revenues collected by the federal gov-ernment will fall far short of federal spending. That gap will grow over time as the aging of the population and the rising cost of health care continue to boost federal spend-ing under current policies. Therefore, putting the budget on a sustainable path will require significant changes in spending policies, tax policies, or both. Policymakers face difficult trade-offs in deciding how quickly to implement policies to reduce budget deficits. On the one hand, cutting spending or increasing taxes slowly would lead to a greater accumulation of govern-ment debt and might raise doubts about whether longer-term deficit reduction would ultimately take effect. On the other hand, implementing spending cuts or tax increases abruptly would give families, businesses, and state and local governments little time to plan and adjust. In addition, and particularly important given the current state of the economy, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion.