United States Government Supplemental Information (Unaudited) for the Years Ended September 30, 2010, and 2009

Fiscal Projections in Context

As indicated earlier, the projections discussed here are neither forecasts nor predictions. Their purpose is to help readers assess whether current fiscal policy is sustainable and, if it is not sustainable, the magnitude of needed reforms to make it sustainable. If policy changes, perhaps in response to projections like those presented here, then the projections will of course prove to be untrue.

In addition, projections of how Federal finances will evolve over several decades under current policies are extremely uncertain. However, the conclusion that current policies are unsustainable is almost certainly robust to reasonable alternative assumptions.

One way to place these long-range fiscal projections in context is in comparison to projections for other developed nations. Several countries have begun to produce long-range fiscal projections in the last two decades. However, comparisons are difficult because the coverage of the reports and the time horizon projected vary across countries. The horizon for most of these reports is less than 75 years, and the projections are not always updated annually. Some of the countries that have produced long-range projections have shown sustainable policies in the long run, although the recent financial crisis will have worsened the near-term budget outlook in almost every country. Early developers of such fiscal projections include Australia, New Zealand, Canada, the United Kingdom, Denmark, Sweden, Norway, and the Netherlands.¹⁰

Footnotes

¹⁰ The Organization for Economic Cooperation and Development (OECD) released a policy brief in October 2009 (available at http://www.oecd.org/dataoecd/40/26/43836144.pdf) describing the efforts of different member countries to produce long-term fiscal projections.