In this policy paper released by CRFB's Fiscal Roadmap Project, CRFB argues that unless we change course, "a fiscal crisis in one form or another will surely ensue." The paper discusses six realistic crisis scenarios the U.S. could face if debt continues on its upward trajectory. A crisis could be gradual or it could be sudden.
The U.S. is not alone in facing massive budget deficits and an exploding debt, nor is it the first country to face this type of situation. There are important lessons we can learn from other countries' fiscal turnarounds. In this paper CRFB discusses the experiences of Canada, Denmark, Finland, Ireland, and Sweden in successfully bringing their debt under control.
A year after its creation, the ARRA has disbursed about $300 billion, of the now $862 billion, through spending increases and tax breaks. Almost all economists agree that the ARRA has helped to mitigate the crisis, but there is debate over the extent to which it has helped. If policymakers decide to enact additional stimulus or extend existing provisions, they should focus on measures which can do the most good at the least cost, and should fully offset any costs over the long-run.