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An Update on the Economic Crisis and the Fiscal Crisis: 2009 and Beyond

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Publication Date: June 2009

Publisher(s): Tax Policy Center

Author(s): Alan J. Auerbach; William G. Gale

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Economics (Economic theory)

Keywords: Federal Budgets & Fiscal Policy; Tax Distribution and Economic Trends; State and Local Issues; Economic Stimulus

Type: Report


his paper reviews recent economic events and their impact on U.S. fiscal performance and prospects. We highlight the historic nature of the 2009 budget outcomes, the unsustainability of plausible ten-year budget projections, and the increasingly dire long-term fiscal problem. These conditions leave federal policy makers with difficult choices. Over the next several years, as the recession ends and the economy recovers, policy makers will face a delicate balancing act between encouraging economic recovery and establishing fiscal sustainability. Even if a successful recovery ensues, however, medium-term and long-term fiscal problems have become increasingly urgent.