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Budget Issues: Deficit Reduction and the Long Term

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Report Type Reports and Testimonies
Report Date March 13, 1996
Report No. T-AIMD-96-66
Subject
Summary:

GAO has long argued that deficit reduction is crucial to America's future economic health. The surest way to increase the resources available for investment is to boost national savings by reducing the deficit. Today, the relationship of the deficit to the nation's long-term economic interest is more broadly recognized. Both Congress and the President have put forth plans to reverse earlier fiscal trends and balance the budget. The debate is no longer about whether to balance the budget, but rather when and how. This testimony describes GAO's simulations of the economic impact of different fiscal policies over the long term and discusses several matters relating to deficit reduction, particularly the important benefits to be gained from shifting to a new fiscal policy; the importance of how the deficit is reduced, including both the composition of federal spending and the need to address the drivers of the deficit; and the experiences of other industrialized nations.

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