To keep politicians from hiding financial timebombs in the budget, The White House and Congress are required to provide a look into the future with each spending and taxing plan.
So no one’s really to blame when the numbers are off a bit, and a bit here is regularly several hundred billion of dollars per year in a single budget category. This isn’t about blaming. It’s just a heads-up that the many five-year projections you’ll see published about the president’s budget could be labeled “for entertainment purposes only.”
Some items have consistently cost more than projected. Support for the poor and unemployed was running $30 billion or $40 billion higher than projections year-by-year. Then the 2007 recession began and the costs went haywire, $233 billion higher than they had been projected to be. Over the next three years spending was $627 billion higher than the projections had been. As the economy improves, reality has been inching closer to the predictions, and for 2015 will have dipped below the forecast.
Defense spending is another area that has been consistently costlier than foreseen. Defense spending rose during the recession. But it was absolutely jolted by sequestration – the mandatory across-the-board cuts negotiated between President Obama and Congress to settle a budget battle. Now is about $100 billion less than the expected amount.
Federal support for education and job training shows the single most aberrant year because of Obama’s support for local teachers as part of the stimulus response to the recession. Spending for education often hovered close to the projection – hitting the estimated value on the nose in 2008. But the 2009 stimulus bumped spending from an anticipated $89 billion up to $168 billion. It was entirely short-lived, however. Education spending for 2010 came back down, and has remained well below the projected amount.
The biggest problem in future projections has been the size of debt payments. Until the recession, interest rates were expected to rise, ratcheting up the cost. But rates plummeted and have stayed low, costing the government about $100 billion a year less than expected for 2009 through 2011. The savings shrunk after that, but the projections into the middle of this decade anticipated big increases that have not materialized, so hundreds of billions of additional savings are kicking in -- $800 billion less than expected for 2015 alone.