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Discusses the changes on the economy of the United States (US) since the passage of the bill Congressional Budget Act in 1974. Impacts of the inflation rate in the 1970s and 1980s on federal budget and tax expenditure policies; Shifts in the distribution of income; Changes in the budget and its components; Elements of fiscal policy from 1974-1999; Performance of the budget rules on the economic changes; Budget surplus reflections on US fiscal policy.

This article discusses institutional change and the efficacy of monetary policy. When U.S. fiscal policy got caught up in an ideological battle during the 1980s over the appropriate size of government, monetary policy emerged as the sole tool of U.S. stabilization policy. Despite the inherent risks of reliance on a single tool to manage a multiplicity of domestic and external economic objectives, the monetary authorities have been highly successful over the past six years. The events of 1979-82 convinced all of you people of the power of monetary policy to restrain aggregate demand. Yet you cannot ignore the large interest rate increases and the financial disruption associated with those restrictive policies. With the recent re-emergence of inflationary pressures, questions have been raised about how high interest rates will have to go to dampen future demand growth. History is replete with examples of how markets change to soften the consequences of external disturbances and evade the objectives of regulators.

Presents comments and discussion on the article by William E. Gibson on the need to protect homebuilding from credit restriction. Comments from John Kareken who did not buy into Gibson's reasons for the need to protect homebuilding; Comments from Barry Bosworth who felt the argument was too blunt and lacked evaluation of what the costs for his plan would make throughout the economy; Discussion by the panel.