Over the weekend, Jared Bernstein flagged a budget-projection chart from the Office of Management and Budget to make an excellent point: Wereally don't know where the deficit is going in the medium term, let alone the long term. As he says: "By 2019, the deficit has a 90% chance of being within a range of +4.6% of GDP and -9.1% of GDP. And this is just the five-year range. The 10-year range fans out much more."
And even that uncertainty assumes current policies remain in place, and that's an assumption that won't hold. By 2019, new policies enacted by a new president and a new Congress will be in place. It's even possible that new laws with important effects on the budget will be enacted during the last three years of Barack Obama's presidency.
I agree with Bernstein (no relation, by the way) that the projections are worth making. The fact that we don't know much doesn't mean that we shouldn't use what little we know. But as he says, "we should be a) very mindful that these are estimates that grow increasingly uncertain over time and thus b) very careful about asserting certain policy courses based on them."
Just remember that most deficit scolds are basing their concern not on the five-year projections, or even the 10-year ones, but are relying on the wildly fanciful long-term projections, out to 75 years.
We don't know what the federal budget deficit is going to be five, 10 or 20 years from now. That means we really don't know which of today's deficit policies will be helpful down the road.
And nice catch!
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(Jonathan Bernstein covers U.S. politics for Bloomberg View. He is co-editor of "The Making of the Presidential Candidates 2012." Follow him onTwitter at @JBPlainblog.)
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