THE OUTLOOK FOR FISCAL, MONETARY AND DEBT MANAGEMENT POLICIES

Abstract

IN ATTEMPTING TO ASSESS the probable course of fiscal, monetary, and debt management policies in the year ahead, one conventional starting point would ordinarily involve: (1) a forecast of business activity, employment, and price trends, as seem likely in the absence of any changes in current policies; and (2) an estimate of what that sort of economic and financial climate might induce in the way of discretionary government financial policies to modify the outcome. But these are not conventional times-for at least four reasons. First, a great drive has been underway for a basic and badly-needed structural change in the Federal tax system-a drive which is being pushed hard, and with recent improvement in prospects for success, wholly apart from the short-run outlook for the economy. Secondly, the tragic death of the late President has placed a new Chief Executive in command-one who may pursue somewhat different policies, especially on the expenditure side of the Federal budget, but with only fragmentary indications thus far of the extent of possible changes. Thirdly, the international payments position of the U.S. has finally (and in my opinion, belatedly) forced a major modification of government financial policies. And finally, we are about to enter a year divisible by four; Mr. Dooley's famous remark about the Supreme Court following the election returns may not be applicable to our supreme court of financeif that term is still relevant to the Federal Reserve-but it assuredly applies to the Congress and the Administration, in which powers over fiscal and debt-management policies reside.