FISCAL POLICY TIED TO THE MAST: WHAT HAS GRAMM-RUDMAN WROUGHT?

Authors

  • STEVEN M. SHEFFRIN

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    • *Professor of Economics, University of California, Davis. I thank Tom Mayer, Ruth Shen, and participants at a seminar sponsored by the Institute for Governmental Affairs, Davis, for their comments. This paper was presented at the 61st Annual Western Economic International Conference, San Francisco, Calif., July 1986, in a session organized by Thomas Mayer, University of California, Davis.


Abstract

Gramm-Rudman was an historic attempt to apply rules of self-restraint to the fiscal process. This paper analyzes the logic of the Gramm-Rudman approach from economic, legal, and budgetary perspectives. Although the U.S. Supreme Court ruled that the law was unconstitutional, Gramm-Rudman did aid in deficit reduction. The features that led to its success were its careful design and construction, which could not he duplicated by a constitutional amendment.

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