Grading Government: A Deficit Management Scorecard

Before 2004, Congress reduced the deficit when the projected deficit rose. We use Congress’s pre-2004 fiscal feedback rule to grade its recent deficit management. We find that recent Congresses managed the deficit worse than most others, with one half year being the worst on record. Stochastic modeling implies that fiscal sustainability requires Congress to make annual deficit reductions as a share of GDP starting with 0.3 percent next year and summing to 1.7 percent by year 10 — 0.3 percentage points larger than the tenth-year requirement just two years ago. Our “deficit management scorecard” can grade Congress semiannually with each new budget outlook.