Generational Accounting in the United States
Generational Accounting in the Federal Budget Process
Meaning of Generational Accounting in the congressional and executive budget processes (GAO source): Estimates who pays for all that the government buys. Generational accounts estimate the real (inflation-adjusted) net taxes to be paid by the average member of each generation (today’s newborns, 1-year-olds, and so on). They also estimate the net taxes of the average member of the representative future generation (those not yet born). The accounts project government purchases and net taxes of current generations and calculate their present values.
Generational accounts do not try to estimate who benefits from what the government buys, only who pays for it with their net taxes. They do not try to predict the actual course of policy. Generational accounts act as a gauge, not a predictor or goal. They do not try to say how policy will actually evolve. And they cannot say what distributions are fair; that is a matter of policy, not analysis. The accounts serve only as a norm by which to evaluate prevailing policy and compare alternative policies.
Resources
See Also
- Federal Appropriations
- Entries about the United States Budget Process in the Encyclopedia (including Generational Accounting)
- Public Debt
Further Reading
- Legislatures and the budget process: the myth of fiscal control
(J Wehner, 2010)
- Reconcilable Differences?: Congress, the Budget Process, and the Deficit (JB Gilmour, 1990)
- Fiscal institutions and fiscal performance
(JM Poterba, J von Hagen, 2008)
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