The Fiscal Gap and Retirement Saving Revisited

Alan J. Auerbach,
Alan Auerbach Headshot
Alan J. Auerbach Robert D. Burch Professor of Economics and Law - Economics Department, UC-Berkeley, Director - Robert D. Burch Center for Tax Policy and Public Finance
Peter R. Orszag, and
Peter R. Orszag Vice Chairman of Investment Banking, Managing Director, and Global Co-Head of Healthcare - Lazard
William G. Gale
William G. Gale The Arjay and Frances Fearing Miller Chair in Federal Economic Policy, Senior Fellow - Economic Studies, Co-Director - Urban-Brookings Tax Policy Center

July 26, 2004


Because of the strikingly large long-term fiscal gaps being projected recently for the United States, researchers have searched for hidden assumptions underlying revenue projections that might be biasing the results. This paper addresses the extent to which alternative projections of tax-preferred retirement accounts affect estimates of the long-term fiscal gap. We review previous work by Boskin (2003), and the Congressional Budget Office (CBO 2004). We show that Boskin’s projections imply only very small revisions to standard fiscal gap estimates. The CBO analysis implies an even smaller adjustment. Thus, neither of these contributions changes the conclusion that the United States faces a substantial fiscal gap.