资源简介 (共50张PPT)4.1 Government Budgeting4.2 Measuring the Budgetary Position of the Government: Alternative Approaches4.3 Do Current Debts and Deficits Mean Anything A Long-Run Perspective4.4 Why Do We Care About the Government’s Fiscal Position 4.5 ConclusionBudget Analysis and Deficit Financing 4Excerpts from Inaugural Speeches andthe U.S. Deficit4.1“We will continue along the path toward a balanced budget in a balanced economy.” president Lyndon JohnsonDeficit in first year in office (1964): 0.9% of GDPDeficit in last year in office (1968): 2.9% of GDP“We must balance our federal budget so that American families will have a better chance to balance their family budgets.” President Richard NixonDeficit in first year in office (1969): –0.3% of GDP (surplus)Deficit in last year in office (1974): 0.4% of GDPExcerpts from Inaugural Speeches andthe U.S. Deficit4.1“We can achieve a balanced budget by 1979 if we have the courage and the wisdom to continue to reduce the growth of federal spending.” President Gerald FordDeficit in first year in office (1975): 3.4% of GDPDeficit in last year in office (1976): 4.2% of GDP“With careful planning, efficient management, and proper restraint on spending, we can move rapidly toward a balanced budget, and we will.” President Jimmy CarterDeficit in first year in office (1977): 2.7% of GDPDeficit in last year in office (1980): 2.7% of GDPExcerpts from Inaugural Speeches andthe U.S. Deficit4.1“[This budget plan] will ensure a steady decline in deficits, aiming toward a balanced budget by the end of the decade.”President Ronald ReaganDeficit in first year in office (1981): 2.6% of GDPDeficit in last year in office (1988): 3.1% of GDP“[This budget plan] brings the deficit down further and balances the budget by 1993.” President George H. W. Bush, Deficit in first year in office (1989): 2.8% of GDPDeficit in last year in office (1992): 4.7% of GDPExcerpts from Inaugural Speeches andthe U.S. Deficit4.1“[This budget plan] puts in place one of the biggest deficit reductions . . . in the history of this country.” President William ClintonDeficit in first year in office (1993): 3.9% of GDPDeficit in last year in office (2000): –2.4% of GDP (surplus)“Unrestrained government spending is a dangerous road to deficits, so we must take a different path.” President George W. BushDeficit in first year in office (2001): –1.3% of GDP (surplus)Deficit in last year in office (2008): 3.2% of GDPExcerpts from Inaugural Speeches andthe U.S. Deficit4.1“This budget builds on these reforms . . . it’s a step we must take if we hope to bring down our deficit in the years to come.” President Barack ObamaDeficit in first year in office (2009): 9.8% of GDPDeficit in most recent year in office (2015, projected): 3.2% of GDPGovernment Budgeting4.1Debt: The amount that a government owes to those who have loaned it money.Deficit: The amount by which a government’s spending exceeds its revenues in a given year.The Budget Deficit in Recent Years4.1Federal government spending rose fairly steadily from 1965 through the mid-1980s, but tax revenues did not keep pace, leading to a large deficit. This deficit was eroded and turned to a surplus in the 1990s, but by 2001 the United States was back in deficit again.4.1The budget process distinguishes between two types of federal spending:Entitlement spending: Mandatory funds for programs for which funding levels are automatically set by the number of eligible recipients, not the discretion of Congress.Discretionary spending: Optional spending set by appropriation levels each year, at Congress’s discretion.The Budget Process4.1Controlling the budget is a difficult process.The Balanced Budget and Emergency Control Act (also known as the Gramm-Rudman-Hollings Deficit Reduction Act, or GRH).Passed in 1985 in an attempt to control the budget.Initiated automatic spending cuts once the budget deficit started missing specified targets.The cuts were avoided by gimmicks, such as changing the targets.Application: Efforts to Control the Deficit4.1Failure to meet GRH deficit targets led to the 1990 adoption of the Budget Enforcement Act (BEA):Rather than trying to target a deficit level, the BEA aimed to restrain government growth.It created the pay-as-you-go process (PAYGO), which prohibited any policy from increasing the estimated deficit in the next six-year period.If deficits increase, the President must issue a sequestration requirement, which reduces direct spending by a fixed percentage.Apparently successful in reducing spending.Application: Efforts to Control the Deficit4.1PAYGO expired on September 30, 2002, and has not been renewed.President Bush proposed renewing PAYGO in 2004…… but not before passing a budget that cut taxes and increased spending.President Obama has publicly supported PAYGO legislation…… but his proposed budget would increase deficits to almost $2 trillion in the near term.Application: Efforts to Control the DeficitBudget Policies and Deficits at the State Level4.1One tool for balancing budgets is a balanced budget requirement, used by many states.Balanced budget requirement (BBR): A law forcing a given government to balance its budget each year (spending = revenue).Ex post BBR: A law forcing a given government to balance its budget by the end of each fiscal year.Forces revenues and expenditures at the end of each year to actually balance.Budget Policies and Deficits at the State Level4.1Ex ante BBR: A law forcing either the governor to submit a balanced budget or the legislature to pass a balanced budget at the start of each fiscal year, or both.Less effective than ex post BBR because rosy projections of revenues can make a budget appear to be balanced when at the end of the year, it is revealed to actually be unbalanced due to unrealistic expectations.Measuring the Budgetary Position of the Government: Alternative ApproachesReal vs. Nominal4.2Real prices: Prices stated in some constant year’s dollars. Using real prices allows analysts to assess how any value has changed over time, relative to the overall price level.Nominal prices: Prices stated in today’s dollars.Consumer Price Index (CPI): An index that captures the change over time in the cost of purchasing a “typical” bundle of goods.The Standardized Deficit4.2Because revenue (taxes) and spending (insurance) depend on the economy, the deficit changes even when policy does not.Automatic stabilizers: Automatic reductions in revenues and increases in outlays when the economy shrinks relative to its potential.Cyclically adjusted budget deficit: A measure of the government’s fiscal position if the economy were operating at full potential GDP.Budget Deficit, Accounting and Not Accounting for Automatic Stabilizers4.2As expected, this figure shows that in periods of economic expansion, the cyclically adjusted deficit is actually higher than the reported deficit. When the economy is underperforming, the cyclically adjusted deficit is significantly lower than the reported deficit.Cash vs. Capital Accounting4.2Government investments in assets can worsen the budget deficit.Cash accounting: A method of measuring the government’s fiscal position as the difference between current spending and current revenues.Capital accounting: A method of measuring the government’s fiscal position that accounts for changes in the value of the government’s net asset holdings.Cash accounting treats a birthday party and an office building as identical, but capital accounting does not.Problems with Capital Budgeting4.2Capital budgeting seems conceptually appealing, butIt is very hard to say when spending has increased the government’s assets. Does buying a missile count as an investment The difficulties might make it easier for politicians to misstate the government’s budgetary position with a capital budget than without one.Some U.S. states and foreign countries use capital budgets with mixed results.Static vs. Dynamic Scoring4.2When policy changes, household behavior also changes, potentially affecting the budget deficit.How to account for this Static scoring: A method used by budget modelers that assumes that government policy changes only the distribution of total resources, not the amount of total resources.Dynamic scoring: A method used by budget modelers that attempts to model the effect of government policy on both the distribution of total resources and the amount of total resources.Static vs. Dynamic Scoring: Scoring the Stimulus4.2How does “stimulus spending” affect the budget deficit This government spending can be very large and is explicitly intended to grow the economy; static scoring would suggest that it is very expensive.Dynamic scoring by the CBO suggested that the stimulus increased GDP by 0.1–1.9% in 2012–2013.But in the long run, the stimulus may slightly decrease growth.Overall, it is difficult to assess the impact of policy on the aggregate economy.Do Current Debts and Deficits Mean Anything A Long-Run Perspective4.3Many government programs create future expenses, even if they are not explicitly in law.Implicit obligation: Financial obligations that the government has in the future that are not recognized in the annual budgetary process.Example: Social Security payments are promised into the far future.Deciding to spend $1 this year or next affects the current deficit by $1 but has very little impact on the government’s financial position.Background: Present Discounted Value4.3How much do future obligations or payments cost today Present discounted value (PDV): The value of each period’s dollar amount in today’s terms.Mathematically, if the interest rate is r, and the payments in each future period are F1, F2, . . . and so on, then the PDV is computed as:Background: Present Discounted Value4.3Example: Pitcher Max Scherzer was offered a seven year, $210 million contract. A provision of the contract stated, however, he would receive $15 million installments over 14 years. The present value of his contact was “only” $166 million.Measuring Long-Run Government Budgets: Intertemporal Budget Constraint4.3One way to account for current and future expenditures and revenue is the intertemporal budget constraint.Intertemporal budget constraint: An equation relating the present discounted value of the government’s obligations to the present discounted value of its revenues.Using this approach, the Trustees of the Medicare and Social Security Funds released data in 2012 on the long-run fiscal imbalance of the Social Security and Medicare programs. The results are stunning: from the perspective of 2012, the fiscal imbalance of these two programs is $63.2 trillion.Measuring Long-Run Government Budgets: Intertemporal Budget Constraint4.3There are limitations to this approach.Fiscal imbalance calculations assume an interest rate of 2.9%.These calculations require potentially heroic assumptions about interest rates, costs, and incomes in the very distant future.They assume that government policy remains unchanged.They only consider the pattern over time of transfer programs and not of other investments and government policies.Generational Accounting4.3Generational accounting is an influential approach to dynamic budget constraints.Assesses the implications of the government’s policies for different generations of taxpayers.How much does each generation of taxpayers (those born in different years) benefit, on net, from the government’s spending and tax policies, assuming that the budget is eventually brought into long-run balance Generational Accounting4.3Generational accounting answers the question by first rewriting the government’s intertemporal budget constraint:PDV of remainingtax payments ofexisting generations + PDV of taxpayments offuture generations = PDV of allfuture gov’tconsumption + Currentgov’tdebtGenerational accounting then asks: How much (net) tax on future generations is required to balance the budget 4.3The Composition of U.S. Generational AccountsAge in 1998 Net Tax Payment (PDV, $1,000s) Male Female0 $249.7 $109.6 40 241.4 37.9 80 –56.3 –99.2 Future generations 361.8 158.8 Lifetime net tax rate on future generations 32.3% Lifetime net tax rate on newborns 22.8% Generational imbalance 41.7% 4.3Alternative Ways to Achieve Generational Balancein 22 CountriesCountry Cut in Transfers Country Cut in TransfersArgentina 11.0% Italy 13.3%Australia 9.1 Japan 25.3Austria 20.5 Netherlands 22.3Belgium 4.6 New Zealand –0.6Brazil 17.9 Norway 8.1Canada 0.1 Portugal 7.5Denmark 4.5 Spain 17.0Finland 9.2 Sweden 18.9France 9.8 Thailand –114.2Germany 14.1 United Kingdom 9.5Ireland –4.4 United States 21.9Long-Run Fiscal Imbalance4.3Central question for policy makers: If the government continues with today’s policies, how much more will the government spend than it will collect in taxes over the entire future The long-run fiscal imbalance of the Social Security and Medicare programs. The fiscal imbalance of these two programs is $63.2 trillion.To achieve intertemporal budget balance would require a tax increase of about 11% of payroll. This would mean almost doubling the existing payroll tax that finances the government’s social insurance programs.Generational accounting doesn’t really address this.Problems with These Measures4.3The fiscal imbalance calculations are fairly tenuous.Depend on a wide variety of assumptions about the distant future:Future growth rates in costs and incomesInterest rate used to discount future taxes and spendingThe long-run imbalance measures only consider the pattern over time of transfer programs, and not of other investments and government policies.4.3What Does the U.S. Government Do The current U.S. budgeting approach scores policies on a 10-year window.Replaces 1- and 5-year windows used before 1996, incorporating some long-run concerns.Avoids imposing assumptions about revenue and expenditure in the very distance future.Nonetheless, difficult to forecast over even a 5-year period:Actual and projected deficit can differ by more than $500 billion.4.3Projected vs. Actual Surplus/DeficitCBO projections of the budget surplus/deficit five years ahead have deviated significantly from the actual surplus/deficit, particularly during the high deficit years of the early 1990s and the high surplus years of the late 1990s and early twenty-first century.4.3The tax reduction enacted in June 2001 was one of the largest tax cuts in our nation’s history.The tax cut consisted of a convoluted set of phase-ins and phase-outs of various tax cuts to comply with a congressional budget plan limiting the 11-year cost to $1.35 trillion.Included a sunset provision: All of the tax cuts disappear on December 31, 2010, reducing the 2011 cost of the tax cut to zero.APPLICATION: The Financial Shenanigans of 20014.3The bill itself contained numerous tax cuts operating on erratic schedules.Many of the cuts would phase in over periods longer than in any prior American legislation, backloading most of the fiscal impact toward 2010.Convoluted scheduling allowed legislators to claim action had been taken on a wide range of issues, while delaying the fiscal consequences associated with these actions.APPLICATION: The Financial Shenanigans of 20014.4Why Care About the Deficit The government’s budget deficit has implications for both efficiency and (intergenerational) equality.Budget deficits can affect the amount of savings and growth in the economy.Today’s deficits are tomorrow’s taxes, so high deficits imply redistribution from future to current generations.4.4Short-Run vs. Long-Run Effects of the Government on the MacroeconomyShort-run stabilization issues: The role of the government in combating the peaks and troughs of the business cycle.Automatic stabilization: Policies that automatically alter taxes or spending in response to economic fluctuations in order to offset changes in household consumption levels.Discretionary stabilization: Policy actions taken by the government in response to particular instances of an underperforming or overperforming economy.4.4Background: Savings and Economic GrowthMore capital, more growth: Capital accumulation is a key part of economic growth.As there is more capital in an economy:Each worker is more productive, and total social product rises.A larger capital stock means more total output for any level of labor supply. Thus, growth in the capital stock drives (per capita) growth.4.4What determines the amount of capital accumulated Interest rate: The rate of return in the second period of investments made in the first period.The higher is the interest rate, the more people want to save (demand), but the more it costs firms to invest (supply).In a competitive capital market, equilibrium is determined by the intersection of these demand-for-savings and supply-of-investment curves.More Savings, More CapitalCapital Market EquilibriumPrice of capital (Interest rate), rQuantity of capital, KSupply of savings, S1S2K1K2r1r2BADemand for capital, D14.4Adding government borrowing into the capital market reduces the supply of saved funds available to the private capital market.4.4The Federal Budget, Interest Rates, and Economic GrowthThe simple supply and demand framework is complicated by introducing the federal government into the market.What if there is a federal deficit and the government must borrow to finance the difference between its revenues and its expenditures The key concern about federal deficits is that the federal government’s borrowing might compete with the borrowing of private firms.Suppose a fixed supply of savings is used to finance both the capital of private firms and the borrowing of the government.Government’s borrowing reduces the supply of savings.This increases interest rates and crowd outs the borrowing of the private sector, leading to a lower level of capital accumulation.In reality, there are a number of complications of how government financing affects interest rates and growth.The Federal Budget, Interest Rates, and Economic Growth4.44.4International Capital MarketsIf capital markets are internationally integrated, then the amount of savings is very large relative to government spending.This might mitigate crowding out.Evidence: While integration is present (and perhaps growing), it is far from perfect.The supply of capital to the United States may not be perfectly elastic, and government deficits could crowd out private savings.4.4Ricardian EquivalenceMuch of the savings in the United States is accumulated to finance bequests, inheritances left behind for the next generation.If the government borrows from future generations to increase benefits to the current generation, people will simply save the extra money, leaving a larger bequest.This implies that government debt has no impact on the economy. This is called Ricardian equivalence.This model has received very little empirical support in the economics literature.4.4ExpectationsThere are both short-term (e.g., 30-day) and long-term (e.g., 10-year) interest rates.Because businesses tend to make long-standing capital investments, they focus more on the longer-term rates. As a result, the entire future path of government surpluses and deficits matters for capital accumulation, not just the surplus or deficit today.4.4EvidenceTheory, therefore, tells us that higher deficits lead to higher interest rates and less capital investment, but it does not tell us how much higher and how much less.The existing empirical literature on this question is somewhat inconclusive, although recent evidence suggests that projected long-term deficits do appear to be reflected to some extent in long-term interest rates.4.4Intergenerational EquityIntergenerational equity: The treatment of future generations relative to current generations.Budget deficits mean more benefits for the current generation relative to future generations.But, because of economic growth, future generations have better standards of living than previous ones.4.5ConclusionThe deficit has been a constant source of policy interest and political debate over the last decade.The existing deficit is quite large, but the long-run implicit debt that is owed to the nation’s seniors through the Social Security and Medicare programs is even larger.This could have major long-term negative effects on both economic efficiency and intergenerational equity. 展开更多...... 收起↑ 资源预览