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The Changing Nature of the Long-Run Federal Budget Problem

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  • Rudolph G Penner

Abstract

Although recent performance and the short-term outlook for the U.S. federal budget deficit have been favorable, the good news is not expected to continue. Low interest rates and slowly growing health costs have helped ease the burden of debt, but they are not expected to continue for very long. A likely combination of growing spending on Social Security, Medicare, and Medicaid and higher interest rates would increase the drag on the American economy. This paper analyzes which expenditures do and do not cause a significant increase in the federal debt and describes how a remedy implies difficult choices that require leaders of both political parties “to join hands and jump off the cliff together.”

Suggested Citation

  • Rudolph G Penner, 2015. "The Changing Nature of the Long-Run Federal Budget Problem," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 50(3), pages 128-134, July.
  • Handle: RePEc:pal:buseco:v:50:y:2015:i:3:p:128-134
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