Abstract
Experience with fiscal rules suggests they can help policy makers balance the need for fiscal prudence and sustainable commitments with the sirens’ call to meet immediate demands and do what is popular. However, reviews of that experience also suggest that: (1) implementation of and adherence to a fiscal rule requires a good deal of political will; and (2) it is nearly impossible to determine whether countries using fiscal rules are already more likely to be more fiscally responsible than countries without rules, or whether it is the rule itself that results in a more fiscally responsible country. Adherence to any strong fiscal rule will depend quite simply on whether it is grounded in public consensus about what constitutes sound fiscal policy. In the U.S. the traditional consensus that supported fiscal discipline in the past has evaporated. The first task of U.S. leaders prepared to bind themselves to a fiscal rule is to help restore a national norm of fiscal responsibility.
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