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Gramm-Rudman-Hollings: Potential Economic Effects of Meeting Deficit Targets (CRS Report for Congress)

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Release Date Sept. 16, 1987
Report Number IB87059
Authors Brian W. Cashell, Economics Division
Source Agency Congressional Research Service
Summary:

Although some doubt that the deficit targets set by Gramm-Rudman-Hollings (G-R-H) will be met, most observers agree that degree of fiscaltightening is in the offing. Whether by increasing taxes or reducingoutlays, such a fiscal contraction could slow economic growth in the shortrun. Depending upon the magnitude of such a fiscal contraction, theeconomy could be thrown into recession. A stimulative monetary policy hasthe potential of offsetting the economic effects of deficit reduction.What options are available which might help minimize the potentialeconomic disruption of the process of deficit reduction?