The Budget Enforcement Act (BEA) of 1990 created a pay-as-you-go (PAYGO) system prohibiting any policy changes which increased the estimated deficit in any year in the subsequent six-year period. Another type of possible PAYGO system would prohibit any policy changes which increase the present value of the deficit over the entire six-year period. Discuss the relative advantages and disadvantages of these “annual” and “cumulative” PAYGO systems.
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