ABSTRACT
This chapter explores three future scenarios for American economic policymaking. Scenario 1 assumes politics as usual with growing entitlement spending, no significant increases in revenues, constant and large budget deficits, and an expanding federal debt. Scenario 2 assumes significant reform of economic policy driven by a shared commitment to tame the entitlement, pork-barrel, and deficit monsters. Scenario 3 assumes that policymakers muddle through, making regular annual adjustments but not threatening the political status quo any more than is necessary to avert near-term economic disaster. The economic solutions are not so hard to identify. But in the eyes of politicians who hate to vote for benefit reductions or tax increases, the political path to those solutions is hard to navigate. The federal government has grown over the course of the twentieth century to be the single most important participant in the American economy.
