The Distorting Effect of Stabilization Funds on Fiscal Policy and Debt Management

The author argues that the systematic underestimation of federal revenues artificially increases the budget deficit, leading to excessive borrowing and a growing national debt—even as the state takes in more than it spends. Taking on more debt at a time when contributions are being made to the Reserve Fund and National Wealth Fund entails the negative effects of both deficit and surplus spending: the artificial dampening of economic growth and increased debt-servicing costs.