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Dealing with Long-Term Deficits

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  • Martin Feldstein

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.

Suggested Citation

  • Martin Feldstein, 2016. "Dealing with Long-Term Deficits," American Economic Review, American Economic Association, vol. 106(5), pages 35-38, May.
    • Handle: RePEc:aea:aecrev:v:106:y:2016:i:5:p:35-38
    Note: DOI: 10.1257/aer.p20161004
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    References listed on IDEAS

    as
    1. Congressional Budget Office, 2015. "An Update to the Budget and Economic Outlook: 2015 to 2025," Reports 50724, Congressional Budget Office.
    2. Congressional Budget Office, 2015. "An Update to the Budget and Economic Outlook: 2015 to 2025," Reports 50724, Congressional Budget Office.
    3. Congressional Budget Office, 2015. "The Budget and Economic Outlook: 2015 to 2025," Reports 49892, Congressional Budget Office.
    4. Martin Feldstein & Daniel Feenberg & Maya MacGuineas, 2011. "Capping Individual Tax Expenditure Benefits," NBER Working Papers 16921, National Bureau of Economic Research, Inc.
    5. Congressional Budget Office, 2015. "The Budget and Economic Outlook: 2015 to 2025," Reports 49892, Congressional Budget Office.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Han, Zhao, 2021. "Low-frequency fiscal uncertainty," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 639-657.
    2. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2021. "Progressing towards efficiency: the role for labor tax progression in reforming social security," GRAPE Working Papers 57, GRAPE Group for Research in Applied Economics.
    3. Chen, Chien-Hsun, 2023. "Taiwan’s Rapidly Aging Population: A Crisis in the Making?," MPRA Paper 116543, University Library of Munich, Germany.
    4. John Komlos, 2019. "The Real U.S. Unemployment Rate Is Twice the Official Rate, and the Phillips Curve," CESifo Working Paper Series 7859, CESifo.
    5. Thia, Jang Ping, 2020. "Deficits and crowding out through private loan spreads," The Quarterly Review of Economics and Finance, Elsevier, vol. 77(C), pages 98-107.

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    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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