to respond to them would endanger our economic future. well - designed fiscal rules cannot substitute for the political will to take difficult decisions, but u. s. and international experience suggests that they can be helpful to legislators in certain circumstances. indeed, installing a fiscal rule could provide an important signal to the public that the congress is serious about achieving long - term fiscal sustainability, which itself would be good for confidence. a fiscal rule could also focus and institutionalize political support for fiscal responsibility. given the importance of achieving long - term fiscal stability, further discussion of fiscal rules and frameworks seems well warranted.

reason for fiscal policymakers to put in place a credible plan for bringing deficits down to sustainable levels over the medium term. the sooner a plan is established, the longer affected individuals will have to prepare for the necessary changes. indeed, in the past, long lead times have helped make necessary adjustments less painful and thus politically feasible. for example, the gradual step - up in the full retirement age for social security was enacted in 1983, but it did not begin to take effect until 2003 and will not be completed until 2027, thus giving future retirees ample time to adjust their plans for work, saving, and retirement. fiscal rules amid all of the uncertainty surrounding the long - term economic and budgetary outlook, one certainty is that both current and future congresses and presidents will have to make some very tough decisions to put the budget back on a sustainable trajectory. can these tough decisions be made easier for our elected leaders? at various times, some u. s. congresses and foreign governments have adopted fiscal rules to help structure the budget process. fiscal rules are legislative agreements intended to promote fiscal responsibility by constraining decisions about spending and taxes. for example, fiscal rules may impose constraints on key budget aggregates, such as total government expenditures, deficits, or debt. in the remainder of my remarks i will discuss the use of fiscal rules to address longer - term budget problems, beginning with a review of the u. s. and foreign experience. the united states has seen several attempts to apply fiscal rules, with mixed results. in 1985, the congress enacted the gramm - rudman - hollings law which, among other things, specified a target path for the federal deficit, including the elimination of the deficit by 1991. however, the target path proved to be unattainable, and eventually the entire structure was abandoned. one problem with this approach was that its primary focus and measure of success was the current budget deficit. although the emphasis on the current deficit was understandable, the approach ran aground of the fact that the budget deficit is driven not only by the choices of the congress, but also by the performance of the economy. if the economy is strong, for example, the deficit is almost bound to improve, as tax revenues increase and spending on the social safety net decreases ; conversely, if the economy weakens, the deficit is likely to rise, notwithstanding prior efforts by the congress to better manage government spending and taxes. with fiscal concerns still prominent, in 1990 the congress and