Long term fiscal projections are a good antidote to politicians talking about tax cuts

Every July the OBR publishes fiscal projections looking fifty years ahead. Each year the headline is the same. The public finances are on an unsustainable path, and if nothing is done government debt will be at some record level in half a century’s time. It’s a signal for general hand wringing. The first point to make is that this has nothing to do with current government policy. This Telegraph headline is predictably silly, unless they believe Burnham will be Prime Minister for a very long time. The UK’s fiscal rules ensure that current policy is sustainable. Instead the report is about longer term trends in government spending and tax receipts. As the report says repeatedly, it is not a forecast because the government will act to ensure that debt remains sustainable. It is also wrong to say that it’s just not possible to forecast fifty years ahead so the numbers are meaningless. This is not a normal macroeconomic forecast. For reasons that I will discuss below, the assumptions made…