Restoring Americas Fiscal Constitution estimates the potential impact of new fiscal rules on the U.S. economy over the next two decades. The new rules would require a cyclically balanced budget and an expenditure limit. The study shows that over the forecast period, the budget could be balanced and the total debt-to-GDP ratio reduced to the 60 percent tolerance level under this scheme, but this fiscal consolidation can only be achieved using a combination of fiscal reforms that go far beyond what has been proposed by Congress and the President.The first chapter explores the theoretical foundations of a fiscal constitution. The orthodox public finance view of public debt is contrasted with a public choice perspective. This is followed by chapters surveying the new fiscal rules enacted in other countries to address debt issues. Several chapters provide a historical perspective on U.S. debt, including a critical appraisal of our fiscal rules. New laws are proposed to address the debt crisis, and a dynamic simulation model is used to estimate the impact of the proposed laws on the U.S. economy. The final section provides a roadmap for enacting the proposed constitutional and statutory fiscal rules.

John D. Merrifield is professor of economics at the University of Texas at San Antonio.Barry W. Poulson is professor emeritus of economics at the University of Colorado.

List of FiguresList of TablesAcknowledgmentsIntroductionChapter 1: Theoretical Foundations for Americas Fiscal ConstitutionChapter 2: A New Era of Fiscal RulesChapter 3: Fiscal Rules in Euroland RevisitedChapter 4: Abandoning Americas Fiscal ConstitutionChapter 5: A Nation Under-WaterChapter 6: Fiscal Rules in America: A CritiqueChapter 7: New Fiscal Rules for AmericaChapter 8: Our Fiscal Future: A Road to Serfdom or Freedom?Chapter 9: A Roadmap to Restore Americas Fiscal ConstitutionChapter 10: Reopening the Constitutional Road to a Balanced Budget AmendmentAppendix AAppendix BReferencesAbout the Authors