Balancing Fiscal Support with Fiscal Solvency

Fiscal deficits cannot be lowered in the immediate future. For the time being, fiscal (and monetary) policies must continue to support economic activity. The economic recovery is uneven and could be threatened by any premature withdrawal of policy support. Private demand is still unable to stand on its own two feet. This gives rise to a policy conundrum. How can we reconcile the competing requirements of short-term support for the economy and longer term fiscal solvency?