Dealing with Long-Term Deficits
- (pp. 35-38)
Abstract
The United States faces a rising future ratio of debt to GDP that, if allowed to continue, would have serious adverse consequences for the American economy. Fortunately, policy changes can increase the size of the future GDP and shrink the future budget deficits. Relatively small reductions in future annual deficits could reverse the increasing ratio of national debt to GDP. Those annual deficit reductions could be best achieved by slowing the growth of Social Security and Medicare and by raising revenue by limiting tax expenditures or increasing the tax on gasoline.Citation
Feldstein, Martin. 2016. "Dealing with Long-Term Deficits." American Economic Review, 106 (5): 35-38. DOI: 10.1257/aer.p20161004Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E62 Fiscal Policy
- H50 National Government Expenditures and Related Policies: General
- H62 National Deficit; Surplus
- H63 National Debt; Debt Management; Sovereign Debt