The Fiscal Gap and Retirement Saving Revisited

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.