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Policies to Reduce Federal Budget Deficits by Increasing Economic Growth

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  • Douglas Elmendorf
  • R. Glenn Hubbard
  • Zachary Liscow

Abstract

Could policy changes boost economic growth enough and at a low enough cost to meaningfully reduce federal budget deficits? We assess seven areas of economic policy: immigration of high-skilled workers, housing regulation, safety-net programs, regulation of electricity transmission, government support for research and development, tax policy related to business investment, and permitting of infrastructure construction. We find that growth-enhancing policies almost certainly cannot stabilize federal debt on their own but that such policies can reduce the explicit tax hikes, spending cuts, or both that are needed to stabilize debt. We also find a dearth of research on the likely impacts of potential growth-enhancing policies and on ways to design such policies to restrain federal debt, and we offer suggestions for ways to build a larger base of evidence.

Suggested Citation

  • Douglas Elmendorf & R. Glenn Hubbard & Zachary Liscow, 2026. "Policies to Reduce Federal Budget Deficits by Increasing Economic Growth," Entrepreneurship and Innovation Policy and the Economy, University of Chicago Press, vol. 5(1), pages 41-75.
    • Handle: RePEc:ucp:eipoec:doi:10.1086/738900
    DOI: 10.1086/738900
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