Are budget prediction worth anything?

I once took a look at about 15 years of budget predictions made in the President's Budget. I found no correlation whatsoever between the predictions and what happened in reality. The budget predictions were mostly too optimistic, but just as often they were way too negative.

For instance, look at Clinton's budget prediction he made in the 1996 President's Budget which is released in February 1995 (FY1995 is not completed yet). He basically predicted no improvement in the deficit for the rest of his presidency.

Yet, the budget went into surplus during his last three years. The surplus was because receipts were far higher than he predicted (not because of reductions in outlay). President Clinton is still happy to take credit for the first budget surplus since 1969.

Fis. Year	PB1996	actuals
1993	-$255,110	-$255,110
1994	-$203,169	-$203,275
1995	-$192,506	-$164,007
1996	-$196,671	-$107,510
1997	-$213,091	-$21,990
1998	-$196,376	$69,187
1999	-$197,446	$124,579
2000	-$194,426	$236,392

I rather suspect such documents are oriented towards public relations more than fiscal responsibility.

Was it Diane Feinstein who insisted there had been no deficit in the city's fiscal spending, there had only been an "income shortfall".

With vocabulary like that, no wonder you have fiscal irresponsibility.

We could do the budget like W and just not add the cost of his Iraq invasion into the budget.

Quote: Wavy70

We could do the budget like W and just not add the cost of his Iraq invasion into the budget.

Better yet do like Obama and not calculate $800 Billion in stimulus to keep state governemnt workers employed?

The fact that kills me is that in FY1993 when Clinton was elected the federal government outlay was $1.409 trillion. Now in the year 2010 the deficit is $1.413 trillion.

I mean we went into massive deficit spending in 1931 to pull us out of the Great Depression, but we were balanced by 1938. Immediately we went back into deficit spending in 1939 for the onset of WWII, but we were back to a balanced budget by 1947.

We are looking at a 75% deficit for this fiscal year (we are 6 months into the fiscal year). It's encouraging to see that we will be back under 20% in three years. But then it's back to my original post.

So in 1998 did US Inc actually make 69 billion dollars, or was it financial shennigans? EvenBob mentioned that it was all smoke and mirrors (elsewhere).

Quote: thecesspit

So in 1998 did US Inc actually make 69 billion dollars, or was it financial shennigans? EvenBob mentioned that it was all smoke and mirrors (elsewhere).

Well, the US applied 69 billion on it's long term debt in 1998. That is a very insignificant payment on the huge debt, but the really important thing is that it gives the economy a chance to grow it's Gross Domestic Product for a few years without the debt getting any larger.

In 1997 the US GDP was $8212 billion , and it grew 25% by end of 2001 to $10,225 billion.

In 2009 the US GDP shrank for the first time since 1933. At the same time the debt is growing exponentially.

The UK has had several recessions that shrank GDP for more than a year. One in the 70's, one in the early 80's, one in the early 90's. Of course that is partly offset by the more stable population growth in the UK compared to the USA.

Cheers, useful information to learn.

The current UK government is pursuing a policy or large expenditure cuts. Many of the form that I am sure some of the more right leaning board members would approve of. Personally I think many of the cuts are mis-directed and the decisions are very much political over economic. But seeing as the party I voted for is the minor party in the coalition there, I got the government I voted for in many ways.

(I won't vote Liberal Democrat again for their part in the cuts in the education system... being as it's one of the policies that made me vote FOR them... you can off course say that I am naive and wrong for believing that higher education should be free/cheap at the point of use, but that's again a different debate).

This guy nails it pretty well and no, I didn't read it before I made the post in the other thread.

http://www.craigsteiner.us/articles/16

Politicians are in the business of making promises, not of living up to them.
A politician wants to be known for a balanced budget, but there is too much pressure to spend in return for reputations and votes.

Quote: pacomartin

We went into massive deficit spending in 1931 to pull us out of the Great Depression, but we were balanced by 1938. Immediately we went back into deficit spending in 1939 for the onset of WWII, but we were back to a balanced budget by 1947.

If you think that the U.S. will see a balanced budget in our lifetime, you shouldn't hold your breath.

US Debt clock is a terrifying web site.

Quote: EvenBob

This guy nails it pretty well and no, I didn't read it before I made the post in the other thread.

http://www.craigsteiner.us/articles/16

Nice link. Good articles.

Well, there were 4 things I liked about Bill Clinton.
Monica, Hillary, He plays Sax ( and did on TV) and he ran a budget surplus in my lifetime.

OK. Now I am left with 3.