Welcome to the second installment in our examination of the history of annual CBO projections!
The Congressional Budget Office is an agency in the legislative branch of the United States Government tasked with providing economic projections on legislative proposals. The CBO was first created near the end of the Nixon administration in the Budget Control Act of 1974.
The Economic and Budget Outlook, an annual production of the CBO, is where we concentrate our attention for this series. In the last article, we took a look at the CBO’s history of revenue projections (generally, receipts from taxes). In this article, we take a look at the spending projections for the Government. This is a more interesting series, as the one thing the the Government can control, for the most part, is its own spending.
The Economic and Budget Outlook Projections
Since 1996, CBO predictions have taken the form of a one year “Estimate” followed by 10 years of projections. Take the current report, for example – it gives predictions for 2013 outlays and revenues, followed by projections of budgetary effects through 2023. The CBO often will project both current law (a ‘Baseline’ estimate), along with their estimates of the most likely changes. This is how the CBO deals with things like the infamous ‘Doc Fix’ – the ultimate cynical example of a temporary government program. The Baseline estimates are what we have collated. Arguably, they weren’t the best guesses in previous years, but recent events (the tax hikes at the beginning of the year, the Sequester) seem to point to the Baseline estimates coming back to prominence.
Outlays is much more interesting than revenues, since the government is able to control, to a high degree, how much it spends. As Milton Friedman has argued, the true measure of a government boils down to that number, exactly – how much a government spends. In that framework, all spending, whether taxed, granted, or borrowed crowds out private spending. Additionally, it makes these outlay projections the most important entry in our series.
A History of CBO Outlay Projections, Graphed Against Actual Spending
Today’s (massive) effort: Outlay projections (and results!) since 1976. We’ll roll out the Surplus/Deficit chart as schedule permits – which is a combination of this article and the previous post.
Warning: there is a ton of data encapsulated in this chart. Enough, yes, to crash Flash in some instances and options. Give it a second – you can wait it out. I assure you it’ll work eventually (well, you might need more RAM).
The above visualization encapsulates every single outlay estimate made by the CBO since 1976. It’s a motion chart – in the bar and bubble graph sections you can drag the timeline to see how the actual revenue lined up with projections. You can follow individual projections by checking the boxes on the right side. If you hit the ‘Play’ triangle, you can see a quick overview of projections over time.
We defined our methodology back in the first article. Go read it there.
Just like last time – if these look weird, blame Google:
1995: http://www.cbo.gov/publication/15689 (* End of 5 year projections)
1978: http://www.cbo.gov/publication/21328 (Dec, ’77)
1977: http://www.cbo.gov/publication/21376 (Dec, ’76, using extended inflation expectation)
1976: http://www.cbo.gov/publication/21058 (Path A, 6% GNP Growth, TQ Estimate: 86, 101.7)