Federal Budget: The President's Midsection Review.
Abstract
This statement discusses the President's Midsession Review and the implications of the President's proposals on fiscal policy and the federal budget. The press has focused on the fact that both 0MB and CBO have revised upward their projections for the unified budget surplus. The phrase "$1 trillion more" has been widely reported in the media. Further, these new projections show an on-budget surplus throughout the next 10-15 years. An earlier-than- expected and larger-than-expected surplus is only good news for the future health of our economy-if two conditions are met. First, the surplus must be realized. Second, the surplus must be put to prudent use. To the extent that the surplus is used for debt reduction, it offers the benefit of lower interest costs And the miracle of compound interest means that savings in today's interest payments will yield benefits tomorrow. The surplus we celebrate today came about not only through stronger-than-expected economic growth but also as the result of some difficult policy choices you and the President made over the past years Now, after the recent years of tight discipline and focus on fiscal responsibility, the surplus offers a chance to debate the relative merits of different priorities. Should some of the surplus be used to meet pent-up demand for spending in certain domestic discretionary areas? For an increase in defense spending? For tax cuts? To secure existing unfunded entitlement promises? For debt reduction? For a combination of all of these? Most would not argue for devoting 100 percent of the surplus to debt reduction over the next 10 years. However, unless a good portion of the surplus is saved, it will not be used to redeem debt, and we will lose a portion of the interest savings. And it is critical to save a good deal of the surplus because known demographic trends require that we hand the next generation a stronger economy and a lower debt burden.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 21, 1999
- Accession Number
- ADA366150
Entities
Organizations
- United States Government Accountability Office