Jim Pethokoukis offers a wonderful example of CBO 10-year projection failure: in 2002, the CBO projected that debt would be 7.4% of GDP by 2012. The actual figure: closer to 74%.
Did a lot of unexpected things happen between 2002 and 2012? Of course they did. They always do. This is precisely why you should never regard 10-year budget forecasts as “facts.” It’s why I apply what I call Crank’s First Law: government budget and financial forecasts are always, always wrong.
5 thoughts on “CBO Projection Fail”
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A lot of expected things happened between 2002 and 2012 as well. It’s no surprise (to those of us paying attention) it will take decades to get out from under the mess the nation was saddled with by the GWB administration.
an unfunded war will blow up any projected budget. I know the details get in the way of any political opinion masked as fact.
You can’t call it a failure because some people believe those projections are somehow an accurate prediction of the government’s future spending decisions. That’s not what they are intended to do. It’s a back-of-the-envelope, “all else being equal” analysis of the impact of specific policies. It’s not supposed to be perfect.
javaman – You might want to look into when we did most of the debt accumulating in those years. Also, when was the last time we went 10 years without a war, a new federal program or a surprising economic event?
“ou might want to look into when we did most of the debt accumulating in those years.”
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It was when the economy crashed due to deregulation and lax oversight of the financial industry. And, of course, the epic fraud committed by the banks and Wall Street.
Fun fact: Fraud is still considered a felony and punishable by prison time when committed by the poor and minorities.