The Economic Consequences of Disappearing Government Debt FEDERAL BUDGETARY DEVELOPMENTS in the United States of late have

been fast moving and nothing short of outstanding: The latest projections of the Congressional Budget Office (CBO) peg the federal surplus for fis-cal year 2000 in excess of $230 billion, around $50 billion more than its forecast of just six months earlier. For a generation accustomed to mount-ing government obligations and dire warnings of adverse macroeconomic consequences, a surplus in 2000 amounting to 2.4 percent of nominal GDP—the largest since 1948—would seem to imply a changed economic landscape. Yet these developments are not limited to the United States. Several fac-tors have combined to improve fiscal positions in a number of countries worldwide. Among these factors are cyclical recoveries that have boosted income tax revenue, increases in equity values that have produced capital gains tax windfalls, and spending restraint due in part to spending caps and, in many European countries, a desire to satisfy the fiscal criteria in the 1993 Maastricht treaty. In its latest OECD Economic Outlook, the Orga-nization for Economic Cooperation and Development projects that four-teen of twenty-three countries covered will achieve fiscal balance or surplus over the immediate two-year projection period. Indeed, if one excludes Japan, whose fiscal position is moving in the opposite direction