How the rise of AI matters for fiscal policy

Predictions of the effects of AI on the economy and society tend to focus on productivity growth, job losses, and shifts in the distribution of income. This column examines various potential scenarios for the macroeconomic effects of AI, using Congressional Budget Office projections to estimate their effects on the US federal budget, and discusses their implications for US fiscal policy. The conclusions show that the fiscal consequences of AI will depend not only on how much it raises national income, but also on who receives that income and how policymakers respond.