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The discussion shows, through examples, how reallocations in spending can change the deficit without altering macroeconomic impact, and frames fiscal evaluation as forward-looking and burden-focused.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & Report",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/document/making-sense-of-the-federal-budget-impasse-economic-commentary/324746/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/making-sense-of-the-federal-budget-impasse-economic-commentary/324746.png","ImageObject",300,407,{"name":42,"@type":43},"Miles","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-11-10","2026-09-21",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",11,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What explains the disagreement between Congress and the President despite sharing a balanced-budget goal?","Question",{"text":63,"@type":64},"They agree on the objective and timeframe, but cannot agree on a specific plan. The text says the continuing debate reflects serious, reasoned differences about federal fiscal policy details—especially the economic consequences of spending and tax decisions.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"Why does the commentary claim that focusing on deficits alone provides few clues?",{"text":68,"@type":64},"It argues that deficit changes do not reveal the real effects of fiscal policy. Instead, it urges concentrating on spending composition and the structure of taxation, because what is spent and how it is spent, and what is taxed and how it is taxed, drive economic consequences.",{"name":70,"@type":61,"acceptedAnswer":71},"How does the commentary illustrate that deficit size may not determine policy quality?",{"text":72,"@type":64},"It gives examples where shifting spending categories leaves the overall deficit unchanged or even increases it, while concluding the policy could still be positive. The reasoning is that spending that produces public capital investment can be preferable even if the deficit rises.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},324746,1790498460,{"code":4,"msg":82,"data":83},"success",[84,88,92,96,101,106,111,115,120,123,127],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Story & Novel",90,"story-novel",{"id":26,"doc_module":4,"doc_module_name":25,"category_name":89,"show_sort_weight":90,"slug":91},"Literature",80,"literature",{"id":33,"doc_module":4,"doc_module_name":25,"category_name":93,"show_sort_weight":94,"slug":95},"Exam",70,"exam",{"id":97,"doc_module":4,"doc_module_name":25,"category_name":98,"show_sort_weight":99,"slug":100},5,"Comic",60,"comic",{"id":102,"doc_module":4,"doc_module_name":25,"category_name":103,"show_sort_weight":104,"slug":105},6,"Technology",50,"technology",{"id":107,"doc_module":4,"doc_module_name":25,"category_name":108,"show_sort_weight":109,"slug":110},7,"Healthcare",40,"healthcare",{"id":112,"doc_module":4,"doc_module_name":25,"category_name":29,"show_sort_weight":113,"slug":114},8,30,"research-report",{"id":116,"doc_module":4,"doc_module_name":25,"category_name":117,"show_sort_weight":118,"slug":119},9,"Religion & Spirituality",20,"religion-spirituality",{"id":118,"doc_module":4,"doc_module_name":25,"category_name":121,"show_sort_weight":118,"slug":122},"World Cup","world-cup",{"id":124,"doc_module":4,"doc_module_name":25,"category_name":125,"show_sort_weight":124,"slug":126},10,"Lifestyle","lifestyle",{"id":128,"doc_module":4,"doc_module_name":25,"category_name":129,"show_sort_weight":97,"slug":130},19,"General","general",{"code":4,"msg":82,"data":132},{"doc_id":79,"user_id":133,"nickname":42,"user_avatar":134,"doc_module":4,"category_id":112,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":55,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":97,"language":140,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":12,"update_tm":144,"read_time":145,"preview_page_count":4},13056703019404,"https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0","# Making Sense of theFederal Budget Impasse\n\nby David Altig  \nIn November,the U.S.Congress passedthe Balanced Budget Act of 1995.Theill provided a fiscal package that would,according to Congressional BudgetOffice projections,balance the federalbudget by fiscal year 2002.On Novem-ber 20,President Clinton signed into lawa Continuing Resolution for Fiscal Year1996 that provided short-term financingfor most federal govemment operations.It also heralded an agreement betweenthe President and Congress on the goal ofproducing a long-term budget plan thatwould eliminate the federal deficit on theseven-year schedule proposed in the Bal-anced Budget Act.  \nOn December 6,the President vetoed theBalanced Budget Act,at the same timeproposing the Administration's ownseven-year plan.Consistent with theNovember Continuing Resolution,thePresident's plan undertook to eliminatethe government deficit by 2002.  \nAlthough they concur on the balanced-budget goal and the time frame forachieving it,Congress and the Presidenthave been unable to agree on a specificplan that is mutually satisfactory.It nowappears that no long-term budget planwill be passed in 1996,and that federalbudget policy will consist of aseries ofshort-term agreements to fund opera-tions and avoid the liquidity crises asso-ciated with the Treasury's debt limit.  \nTo many Americans,this impasse seemsfrustrating and confusing.Indeed,thepopular press is often quick to charac-terize the problem as political games-manship,typical of an election year anddevoid of substantive content.As longas there is consensus on the balanced-budget objective and the time needed toachieve it,isn't it silly to haggle over afew trivial details?Why notjust splitthe difference between the Administra-tion's plan and Congress's and let theeconomy begin enjoying the return tolower deficits?  \nThis Economic Commentary has a sim-ple message:All balanced-budget plansare not created equal,and broad agree-ment on a zero deficit by a given datedoes not preclude serious,reasoned dif-ferences of opinion on the economicconsequences of aparticular fiscal pack-age.Central to this message is the propo-sition that changes in deficits per se pro-vide few clues about the effects of fiscalpolicy changes.Put more directly,weshould concentrate on the specifics ofspending and tax policies:The totalamount of federal expenditures mattersless than what we spend and how wespend it.How much revenue we collectis less important than what we tax andhow we tax it.  \nAlthough this is a fairly obvious point,readily acknowledged by almost anyonewho thinks seriously about the issue,it isoften overlooked in policy discussions.  \nJanuary 15,1996  \nIf Congress and the President canagree that they need to balance thebudget,why are they still fightingover how to implement their goal?The continuing debate is not simplyirresponsible posturing in the politi-cal silly season,but the result of seri-ous,reasoned differences of opinionon the details of federal fiscal pol-icy—the economic consequences ofspecific spending and tax decisions.  \nIn this Commentary,I use three simpleexamples to illustrate the problems thatarise from focusing on the magnitude ofthe federal deficit rather than the funda-mental tax and spending policies that un-derlie it.The three examples correspondto fiscal policy types that have alreadybeen considered,are currently being con-sidered,or are likely to be contemplatedin the future:a shift in discretionaryspending from one activity to another,unfunded pay-as-you-go Social Securitytransfers,and a flat-tax proposal.All ofthem share the characteristic of havingpotentially large effects on the macro-economy without making any impact atall on the federal budget deficit.  \n# ■ Spending Is as Spending Does\n\nConsider the following change in gov-ernment spending policy:One billiondollars that had historically been spent onconstructing monuments to great leadersis shifted to the financing of public infra-structure projects like highways.The","cbCaihuB8YkOkqM4","https://ap.wps.com/l/cbCaihuB8YkOkqM4","pdf",1161268,"English","# Making Sense of the Federal Budget Impasse\n## Spending Is as Spending Does\n## The Burden of the Nondebt","[{\"question\":\"What explains the disagreement between Congress and the President despite sharing a balanced-budget goal?\",\"answer\":\"They agree on the objective and timeframe, but cannot agree on a specific plan. The text says the continuing debate reflects serious, reasoned differences about federal fiscal policy details—especially the economic consequences of spending and tax decisions.\"},{\"question\":\"Why does the commentary claim that focusing on deficits alone provides few clues?\",\"answer\":\"It argues that deficit changes do not reveal the real effects of fiscal policy. Instead, it urges concentrating on spending composition and the structure of taxation, because what is spent and how it is spent, and what is taxed and how it is taxed, drive economic consequences.\"},{\"question\":\"How does the commentary illustrate that deficit size may not determine policy quality?\",\"answer\":\"It gives examples where shifting spending categories leaves the overall deficit unchanged or even increases it, while concluding the policy could still be positive. The reasoning is that spending that produces public capital investment can be preferable even if the deficit rises.\"}]","Making Sense of the Federal Budget Impasse - Economic Commentary | PDF",1789968760,13]