Perspectives on the budget surplus

This paper provides alternative measures of federal budget surpluses over 1 0-year and long-term horizons. Official baseline budget forecasts are based on a series of statutory requirements that may be at variance with reasona ble expectation. Move plausible notions of current policy toward discretion ary spending, taxes, and retirement trust funds imply that surpluses over t he next 10 years will be substantially smaller than the baseline forecasts indicate. Properly accounting for long-term imbalances in social security a nd the vest of the budget implies that, under plausible definitions of curr ent policy, the federal government faces a long-term shortfall.