US: in 2001 a $5.6T budget surplus was projected for 10 years. The outcome: a $6.1T deficit
US: federal budget balance, 10-year total
73% of the gap came from laws passed after the projection: tax cuts, wars, crisis measures. CBO’s baseline assumes current law.
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The US Congressional Budget Office publishes a 10-year baseline of revenues, outlays and the deficit every year. It is not a prediction of policy: it assumes current law. Plus is a surplus, minus a deficit.
By year: blue, the balance CBO projected in January 2001; orange, the outcome (in CBO’s evaluation definition). The shading is the gap.
- January 2001 baseline, 2002–2011
+$5.6T
- Actual, 2002–2011
−$6.1T
- Of the gap: laws after the baseline
−$8.5T
- Of the gap: economic and technical
−$3.2T
Totals for fiscal 2002–2011 and the split of the gap: CBO’s June 2012 table “Changes in CBO’s Baseline Projections Since January 2001”. The yearly points: CBO’s evaluation data (eval-projections).
Of the −$11.7T gap, legislation accounts for −$8.5T, the economy and technical factors for −$3.2T (CBO estimates at enactment). It goes the other way too: in January 1995 CBO projected a $284B deficit for 2000; the outcome was a $236B surplus.
A question for this picture
What is a projection worth if it rules out, by design, the decisions of those who will carry it out?