CBO Analysis Shows Economic Benefits of Fiscal Sustainability Are Large and Nearly the Same Whether Taxes Are Raised or Spending Is Cut


 

Publication Date: September 2007

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Chad Stone

Research Area: Banking and finance; Economics

Keywords: Economic projections; Federal budget; Tax code; Fiscal future

Type: Report

Abstract:

The economic benefits of reducing long-run deficits are very large, and there is only a modest difference between the economic effects of shrinking deficits by raising taxes and doing so by cutting expenditures.  This is the key conclusion of a recent Congressional Budget Office response to a request from Senator Judd Gregg (R-NH), the ranking member of the Senate Budget Committee, for an analysis of the potential economic effects of relying on higher taxes alone to finance projected increases in federal expenditures in coming decades.