United States Government Required Supplementary Information (Unaudited) For the Years Ended September 30, 2012, and 2011

Fiscal Projections for the U.S. Government–Fiscal Year 2012

This section of the FR is prepared pursuant to Statement of Federal Financial Accounting Standard (SFFAS) 36, Reporting Comprehensive Long-Term Fiscal Projections for the U.S. Government. It is intended to help readers assess whether future budgetary resources will be sufficient to sustain public services and to meet future obligations as they come due, and the extent to which federal benefits received by current taxpayers will be shifted to future taxpayers, assuming that the Federal Government's current policies for spending and taxation are continued. Such an assessment requires prospective information about receipts and spending, the resulting debt, and how these amounts relate to the economy. The assessment is also referred to as reporting on "fiscal sustainability." A sustainable policy, as defined in the following analysis, is one where the ratio of federal debt held by the public to GDP (the debt-to-GDP ratio) is ultimately stable or declining. This section of the FR does not assess the sustainability of State and local government fiscal policy.

The projections and analysis presented here are extrapolations based on an array of assumptions described in detail below. Among these is the assumption that current Federal policy will not change. This assumption is made so as to inform the question of whether current fiscal policy is sustainable and, if it is not sustainable, the magnitude of needed reforms to make it sustainable. The projections are therefore neither forecasts nor predictions. If policy changes are implemented, perhaps in response to projections like those presented here, then actual financial outcomes will of course be different than those projected.

This is the third year that this section has been included in the FR. The methods and assumptions underlying the projections are still evolving.