TY  - JOUR
AU  - Auerbach,Alan J.
TI  - Quantifying the Current U.S. Fiscal Imbalance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6119
PY  - 1997
Y2  - August 1997
UR  - http://www.nber.org/papers/w6119
L1  - http://www.nber.org/papers/w6119.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
508-1 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu
M2  - featured in NBER digest on 1998-03-01
AB  - This paper considers the magnitude of the U.S. fiscal imbalance, as measured by the permanent changes needed to stabilize the national debt as a share of GDP.  At present, even after recent improvements in forecast deficits, this imbalance stands at 5.3 percent of GDP -- several times the magnitude of the current official deficit.  The imbalance is due primarily to the growth of Medicare, Medicaid, and Social Security. Addressing an imbalance of this size will require significant policy changes.  Even if current projected reductions in other government spending occur, and policies are adopted to eliminate the estimated OASDI imbalance and balance the federal budget in 2002, an additional and immediate reduction in the primary deficit of 2.7 percent of GDP will be required to establish a feasible fiscal policy.  Waiting to adopt policy changes will increase the size of the required annual primary deficit reduction.
ER  -