A plan to balance the government budget that allows countercyclical fiscal policy

A plan is described that would educate taxpayers to be Ricardians so that there would be effective political pressure for federal government expenditures to be limited by the tax liabilities preferred by taxpayers with full information. An unmodified plan that provides for a government budget balance over a five-year moving average partly on the basis of individual taxpayer’s preferences for financing their pro-rata tax liabilities is described first. The plan is modified to provide a five-year moving average balance of that part of the deficit in excess of the amount required to maintain a constant debt/GNP or debt/GDP ratio. The plan also allows automatic and discretionary countercyclical fiscal policy.