year the president releases a budget plan, and each year we get two
different sets of projections about what the effects of the budget
plan would be if it were enacted.
First, accompanying the budget plan, we get the White House’s
outlook—the projections from the Office of Management and Budget
(OMB). A little while later, we get a different set of projections
from the Congressional Budget Office (CBO).
The CBO report compares the president’s budget against the
current baseline—what the CBO expects from the budget should all
current legislation stay in place. It’s revealing, however, to also
compare the CBO’s estimates to those produced by OMB. Inevitably,
some of the estimates that come from within the White House are
via Gordon Gray at the American Action Forum, a conservative
think tank, here’s how the White House’s projections of debt held
by the public as a percentage of GDP stack up against the CBO’s
projections of the same, which were released this morning.
That’s a pretty big difference. There are numerous reasons for
the difference, many of which are fairly technical. But in general,
the CBO and the OMB use somewhat different baselines, meaning the
projections have different starting points. The OMB also tends to
rely on brighter assessments of the economy’s future, which in turn
makes its overall outlook sunnier.
It’s a good thing that we have these competing estimates. For
one thing, each one provides a check on the other. Both
scorekeepers know that their estimates will be checked against the
other, so neither wants to go too far out on a limb. This is
especially useful for helping check OMB’s natural political
incentives for optimism. As part of the White House, there are
obvious reasons why OMB tends to see brighter economic futures;
CBO’s follow-up score helps make sure that optimism doesn’t get too
far out of hand.
For another thing, the competition serves as a reminder that
these estimates are just that—estimates, subject to all sorts of
uncertainties and prediction problems. Official Washington has a
tendency to treat these projections as something approaching gospel
truth, but no forecaster has a crystal ball. These best experts
often disagree, which means that someone, and possibly everyone, is
wrong. These projections offer generally helpful expert guides to
the possible effects of policy making, but they don’t tell us what
will happen, only what might.
Granted, there’s an added wrinkle when it comes to President
Obama’s consistently dead-on-arrival budget frameworks. We can’t be
exactly sure of what would happen if we implemented the
administration’s budget blueprint, but we can be fairly certain
that it doesn’t matter much either way, because that’s not going to