In 1997 the US President and Congress concluded an agreement that imposed caps on discretionary government spending and which was expected to balance the budget by the year 2002. Just one year later the tide has turned: the fiscal year 1998 resulted in a US budget surplus for the first time since 1969. This article discusses the causes for this surprising development and the link between budget surpluses and Social Security's finances. It also relates some recent proposals on how to preserve the budget surplus for Social Security to the sustainability of fiscal policy.
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