Thoughts on the Economic Future
Demographic Shifts Imply Avoicance of Structural Fiscal Deficits
Alice M. Rivlin is a senior
fellow in Economic Studies, at
The Brookings Institution. She
is also director, Greater
Washington Research
Program; recipient, MacArthur
Foundation Prize Fellowship;
former vice chair, Board of
Governors, Federal Reserve
System; former director, White House Office of Management and Budget; founding
director, Congressional Budget Office; and former president,
American Economic Association. She received her
BA from Bryn Mawr College and her MA and Ph.D. from
Radcliffe College, Harvard University.
As always, the short- and intermediate-term outlooks are uncertain, but what is certain is that the aging of the U.S. population will put an expanded demand on federal government expenditures. An optimistic view of the U.S. economy is that U.S. growth will soon resume the strong growth of the 1990s. However, even if this view is correct, it does not imply that it is appropriate to increase the structural budget deficit by lowering taxes. The looming social expenditures implied by the aging of the population suggests that anything that might increase the structural deficit should be put on hold until other, more urgent problems, are successfully addressed.