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Finance and Economics Discussion Series: Data for FEDS 201239 ♣

Fiscal Rules, What Does the American Experience Tell Us?

Byron Lutz and Glenn Follette

Figure 1: Government Debt

Year Federal State and local
1945 112.8 5.7
1946 102.6 5.7
1947 90.5 5.9
1948 79.9 5.8
1949 81.5 6.2
1950 73.7 7.2
1951 63.7 7.0
1952 61.8 8.6
1953 60.2 9.4
1954 60.7 10.8
1955 55.5 11.1
1956 51.2 11.5
1957 48.1 11.9
1958 49.5 13.0
1959 47.0 13.2
1960 44.8 13.7
1961 44.6 14.3
1962 42.7 14.3
1963 41.1 14.5
1964 39.2 14.4
1965 36.4 14.4
1966 33.7 14.0
1967 33.4 14.1
1968 31.9 13.9
1969 29.2 14.0
1970 28.8 14.5
1971 28.8 14.8
1972 27.4 14.6
1973 25.1 14.1
1974 23.9 13.9
1975 27.1 13.4
1976 28.1 13.0
1977 28.1 12.6
1978 27.1 12.9
1979 25.7 12.6
1980 26.4 12.4
1981 26.2 11.9
1982 30.2 12.7
1983 33.0 13.1
1984 34.7 13.1
1985 37.7 16.1
1986 40.5 16.9
1987 41.2 17.8
1988 41.3 17.5
1989 41.1 17.2
1990 43.1 17.0
1991 46.3 18.0
1992 48.6 17.3
1993 50.0 17.3
1994 49.3 15.6
1995 49.1 14.1
1996 48.3 13.1
1997 45.7 12.9
1998 42.7 13.0
1999 39.4 12.6
2000 34.0 12.0
2001 32.9 12.7
2002 34.2 13.6
2003 36.2 14.1
2004 37.0 14.2
2005 37.2 14.7
2006 36.5 15.0
2007 36.4 15.6
2008 44.3 15.7
2009 55.3 16.7
2010 64.0 16.8
Return to Figure 1

Figure 2: Ratio of State and Local Debt to State GDP

State Private purpose State Other Local Private purpose Local Other State
0.090 0.107 0.000 0.053 MA
0.037 0.040 0.055 0.112 KY
0.106 0.080 0.000 0.051 RI
0.026 0.076 0.024 0.110 NY
0.026 0.066 0.016 0.116 SC
0.040 0.031 0.041 0.101 PA
0.082 0.049 0.002 0.069 AK
0.044 0.016 0.019 0.114 CO
0.036 0.040 0.006 0.112 MI
0.046 0.044 0.004 0.098 IL
0.027 0.043 0.001 0.119 WA
0.006 0.051 0.023 0.110 FL
0.007 0.025 0.008 0.144 NV
0.108 0.029 0.013 0.030 MT
0.082 0.051 0.000 0.044 NH
0.016 0.047 0.005 0.108 CA
0.026 0.043 0.015 0.091 US
0.029 0.079 0.003 0.062 NJ
0.017 0.051 0.009 0.096 OR
0.061 0.021 0.007 0.082 MO
0.037 0.062 0.013 0.056 NM
0.074 0.057 0.000 0.037 VT
0.007 0.014 0.030 0.116 TX
0.045 0.044 0.003 0.074 WI
0.012 0.028 0.031 0.095 AZ
0.008 0.038 0.037 0.081 KS
0.007 0.042 0.013 0.100 AL
0.036 0.032 0.004 0.088 IN
0.023 0.008 0.007 0.123 NE
0.051 0.052 0.020 0.036 WV
0.046 0.074 0.000 0.037 CT
0.007 0.084 0.000 0.066 HI
0.009 0.027 0.024 0.096 MN
0.062 0.042 0.003 0.045 ME
0.029 0.049 0.018 0.055 LA
0.035 0.017 0.003 0.090 UT
0.008 0.008 0.019 0.107 TN
0.021 0.034 0.029 0.057 OH
0.072 0.018 0.006 0.042 SD
0.014 0.051 0.008 0.064 MS
0.018 0.036 0.013 0.068 VA
0.038 0.044 0.007 0.043 MD
0.048 0.046 0.006 0.031 DE
0.017 0.026 0.022 0.064 AR
0.029 0.019 0.004 0.074 NC
0.008 0.024 0.010 0.082 GA
0.032 0.030 0.014 0.040 ND
0.014 0.047 0.011 0.041 OK
0.034 0.017 0.003 0.054 IA
0.047 0.013 0.001 0.041 ID
0.033 0.002 0.008 0.018 WY
Return to Figure 2

Figure 3: Government Net Saving and Net Lending

Year Net Federal Saving as a Percent of GDP Net Federal Lending as a Percent of GDP Net S&L Saving as a Percent of GDP Net S&L Lending as a Percent of GDP
1960 1.4 0.4 0.8 -0.6
1961 0.5 -0.8 0.8 -0.7
1962 0.4 -0.9 0.9 -0.5
1963 0.9 -0.1 0.9 -0.6
1964 0.1 -0.7 1.0 -0.5
1965 0.5 -0.1 0.9 -0.6
1966 0.3 -0.4 1.0 -0.6
1967 -1.1 -1.7 0.8 -0.9
1968 -0.3 -0.6 0.8 -0.7
1969 0.9 0.7 0.8 -0.5
1970 -1.5 -1.5 0.7 -0.6
1971 -2.6 -2.2 0.6 -0.6
1972 -2.0 -1.6 1.3 0.3
1973 -0.9 -0.4 1.1 0.2
1974 -1.0 -0.7 0.6 -0.4
1975 -4.3 -4.6 0.2 -0.7
1976 -2.9 -3.2 0.4 -0.3
1977 -2.3 -2.5 0.7 0.2
1978 -1.3 -1.6 0.8 0.3
1979 -0.5 -1.0 0.5 -0.1
1980 -2.0 -2.5 0.3 -0.2
1981 -1.8 -2.2 0.2 -0.2
1982 -4.2 -4.6 -0.1 -0.4
1983 -5.0 -5.6 0.1 -0.1
1984 -4.4 -5.1 0.6 0.2
1985 -4.2 -5.2 0.5 0.0
1986 -4.4 -5.2 0.5 -0.1
1987 -3.2 -4.0 0.3 -0.4
1988 -2.7 -3.4 0.3 -0.3
1989 -2.4 -3.0 0.4 -0.3
1990 -3.0 -3.7 0.1 -0.7
1991 -3.7 -4.2 -0.1 -0.9
1992 -4.8 -5.2 -0.0 -0.7
1993 -4.2 -4.5 -0.0 -0.6
1994 -3.1 -3.2 0.1 -0.5
1995 -2.8 -2.8 0.1 -0.5
1996 -1.9 -2.0 0.3 -0.3
1997 -0.7 -0.6 0.4 -0.3
1998 0.4 0.5 0.5 -0.2
1999 1.1 1.0 0.5 -0.3
2000 1.9 1.9 0.4 -0.4
2001 0.4 0.3 -0.2 -1.0
2002 -2.4 -2.6 -0.5 -1.4
2003 -3.4 -3.8 -0.4 -1.2
2004 -3.2 -3.6 -0.1 -0.9
2005 -2.2 -2.8 0.2 -0.5
2006 -1.5 -1.9 0.4 -0.3
2007 -1.7 -2.2 0.1 -0.7
2008 -4.3 -5.3 -0.3 -1.1
2009 -8.9 -10.5 -0.1 -0.8
2010 -9.1 -10.3 0.2 -0.3
Return to Figure 3

Figure 4a: Revenue Effect of Major Tax Legislation

year Four Year Average Percent of GDP
1980 0.5
1981 -2.89
1982 0.98
1983 0.25
1984 0.39
1985 0.05
1986 0.01
1987 0.26
1988 0.00
1989 0.07
Return to Figure 4a

Figure 4b: Discretionary Spending

year Defense Nondefense
1980 4.9 5.2
1981 5.1 4.8
1982 5.4 4.1
1983 5.7 3.9
1984 5.8 3.9
1985 6.0 3.9
1986 6.2 3.7
1987 6.0 3.5
1988 5.8 3.5
1989 5.7 3.5
1990 5.3 3.5
1991 5.3 3.5
1992 4.7 3.6
1993 4.3 3.7
Return to Figure 4b

Figure 5a: Year-End Balance as a Percent of Expenditures

year Weak Rule Strong Rule
1988 0.04 0.08
1989 0.05 0.09
1990 0.03 0.07
1991 -0.01 0.05
1992 -0.00 0.05
1993 0.01 0.06
1994 0.05 0.08
1995 0.04 0.08
1996 0.06 0.08
1997 0.06 0.10
1998 0.08 0.12
1999 0.08 0.10
2000 0.09 0.10
2001 0.08 0.09
2002 0.03 0.04
2003 0.02 0.04
2004 0.05 0.07
2005 0.07 0.10
2006 0.10 0.13
2007 0.08 0.15
2008 0.06 0.12
2009 0.02 0.08
2010 0.03 0.08
Return to Figure 5a

Figure 5b: Negative Budget Balances

year Weak Rule Strong Rule
1988 1 0
1989 1 0
1990 3 0
1991 5 0
1992 4 0
1993 2 0
1995 1 0
1996 1 0
1997 0 0
1998 0 0
1999 1 0
2000 1 0
2001 0 0
2002 3 1
2003 2 1
2004 0 1
2005 0 0
2006 0 0
2007 0 0
2008 0 0
2009 2 1
2010 2 4
Return to Figure 5b

Figure 6: Positive Deficit Shocks

year Mean Positive Deficit Shock (percent of expenditures) Mid-Year Positive Deficit Shocks (number)
1988 0.0128162 11
1989 0.0096285 13
1990 0.0196943 19
1991 0.0411003 30
1992 0.0228558 26
1993 0.0064675 15
1994 0.0047349 10
1995 0.0064564 13
1996 0.0083669 10
1997 0.0042951 11
1998 0.0034523 3
1999 0.005138 8
2000 0.0042578 4
2001 0.0155415 19
2002 0.0665958 34
2003 0.0356739 28
2004 0.0092889 9
2005 0.0017915 6
2006 0.0047423 5
2007 0.0048192 12
2008 0.0162829 22
2009 0.0818274 37
2010 0.0547388 31
Return to Figure 6

Figure 7: Strong and Weak Budget Rule States in Sample

State Strong Rule- In Sample Weak Rule - In Sample Not in Sample
AL x    
AK     x
AZ x    
AR     x
CA   x  
CO x    
CT x    
DE x    
FL x    
GA x    
HI x    
ID x    
IL   x  
IN x    
IA x    
KS x    
KY     x
LA   x  
ME x    
MD   x  
MA   x  
MI   x  
MN x    
MS x    
MO x    
MT     x
NE x    
NV     x
NH   x  
NJ x    
NM x    
NY   x  
NC     x
ND     x
OH x    
OK x    
OR     x
PA   x  
RI x    
SC x    
SD x    
TN x    
TX     x
UT x    
VT     x
VA x    
WA x    
WV x    
WI   x  
WY     x
Return to Figure 7

Figure 8a: Mid-Year Budget Cuts

year Mean Budget Cuts (percent of expenditures) Mid-Year Budget Cuts (number)
1988 0.0034031 8
1989 0.0027885 11
1990 0.0086561 16
1991 0.0302966 25
1992 0.0180805 30
1993 0.0078812 16
1994 0.0008624 5
1995 0.0028498 7
1996 0.0059597 12
1997 0.0014647 6
1998 0.0002162 1
1999 5.84e-05 1
2000 0.0003845 1
2001 0.0053397 15
2002 0.0271951 30
2003 0.0252684 30
2004 0.0058426 13
2005 0.0011071 5
2006 0.0016215 2
2007 2.17e-05 1
2008 0.0047385 10
2009 0.0457423 36
2010 0.0429831 32
Return to Figure 8

Figure 8b: Mid-Year Tax Increases

Year Mean Tax Increase (percent of expenditures) Mid-Year Tax Increases (number)
1988 0.0007906 7
1989 0.0049744 13
1990 0.0040355 13
1991 0.0070003 15
1992 0.0030709 12
1993 0.001151 8
1994 0.0003658 6
1995 0.0001081 4
1996 0.0001062 4
1997 0.0002601 6
1998 0.0002293 2
1999 0.000131 1
2000 0.002333 2
2001 0.00052 4
2002 0.0021479 9
2003 0.0017772 11
2004 0.0009867 8
2005 0.0008734 10
2006 6.63e-05 3
2007 0.0004207 5
2008 0.0003417 7
2009 0.0031386 13
2010 0.000818 7
Return to Figure 8b

Figure 8c: Mid-Year Reserve Fund Drawdowns

year Mean Reserve Fund Drawdowns (percent of expenitures) Mid-Year Reserve Fund Drawdowns (number)
1988 -0.0038097 10
1989 -0.0018004 7
1990 -0.0084047 16
1991 -0.0125686 23
1992 -0.0077533 15
1993 -0.0024106 8
1994 -0.0045188 6
1995 -0.0039795 11
1996 -0.0010093 4
1997 -0.0012162 6
1998 -0.0010822 4
1999 -0.0025926 8
2000 -0.0020072 6
2001 -0.0108744 17
2002 -0.0234414 24
2003 -0.0092586 14
2004 -0.0024644 9
2005 -0.0001448 2
2006 -0.0060076 5
2007 -0.0061018 11
2008 -0.0100097 17
2009 -0.0165708 27
2010 -0.0080615 13
Return to Figure 8c
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Last update: June 28, 2012