Macro prudential instruments are often forward looking and preventive in nature and it may be difficult, if the legal framework places the burden of proof on the macro prudential authority, to justify a tightening of macro prudential policy, particularly in a situation in which financial tensions are not clearly evident to outside observers. Nonetheless, there is evidence that such policies can be successful.
Several times in the past two decades this long run actuarial budget constraint for Social Security has been responsible for cuts in future benefits to bring the forward-looking Social Security budget into long term actuarial balance. Many have argued for strengthening this separation by removing Social Security altogether from the federal government’s budget.