In the January 27, 2010 edition of The Washington Post, and on Page A8 to be precise, there is a graph showing the federal budget surplus and deficit projected out to the year 2020. The source of this prognostication is the Congressional Budget Office (CBO).
Predictions are a curious facet of human nature. People and organizations forecast what will occur in the future, but, at best, their attempts are guesses based on what is known in the here-and-now. The problem with predictions is that the future is so full of variable unknowns, that predictions are quite worthless.
However, my main problem with predictions from organizations and folks in the media (i.e., pundits) is that no one ever calls them to task for getting their prediction dead wrong. For example, if it becomes known that the CBO had a horrible record in their projections, would anybody listen to them in the future.
So that is why I have created the term “veridiction”, the act of verifying predictions. Who better to start out with than with the CBO.
As it so happens, I have a graph from Page A4 of January 30, 2003 edition of The Washington Post. That graph, as you might surmise, shows the federal budget surplus and deficit project out to the year 2012.
So how did they do seven years ago?
Well, for starters, they didn’t even forecast the base year correctly. On the graph, the CBO projects the federal budget deficit to be $199 billion. It turned out to be $374 billion.
In addition, the CBO projects that by 2007 the federal budget will show a surplus. In actuality, the federal budget deficit was $161 billion.
Let’s move forward in time and see how the projections of the CBO fared from 2007. Courtesy of a graph seen on Page A3 of the February 5, 2007 edition of the Post, we learn that the CBO projects, two years out, that the federal budget deficit for 2009 is around $150 billion. In reality, the budget deficit for 2009 was the largest on record at $1,400 billion (or $1.4 trillion for those who like really large numbers).
Yes, I understand that in 2003, the CBO did not include the numbers for the war in Iraq. Yes, I understand that in 2007, the CBO could not have foreseen the financial meltdown.
Which is precisely my point. What good is a prediction when it can’t see what’s around the next bend in the road? Why should I look at last week’s numbers from the CBO and put any faith in them?