The problem with CBO projections

American Thinker ^ | 04/20/2018 | Jack Hellner

[SeekAndFind]

In January 2016, the Congressional Budget Office (CBO) projected economic growth for 2018 to be 2.3% and for 2019 to be 1.9%   Now the office projects that GDP will expand by 3.3% in 2018 and 2.4% in 2019, and then it will slow down.  Why would anyone believe these people's long-term projections when they are frequently so far off on their short-term projections?  Why do the media report the numbers as if they were gospel when they are just guesses?

The tax cuts for individuals and corporations are all still in effect until 2025, so why the massive slowdown after just one year of substantial growth?  Won't the extra money flowing through the private sector, being spent, invested, or saved, yield a substantial multiplier effect?

In CBO's projections, real GDP expands by 3.3 percent this year and by 2.4 percent in 2019

The CBO's Obamacare projections have a poor track record:

In 2013 CBO predicted that 24 million would be on the exchanges in 2017, but only 9.5 million are now enrolled.

In 2013, the CBO projected that 201 million would be covered by private health insurance by 2016.  The CBO's people projected that without Obamacare, 186 million would be covered.  The actual number covered in 2016 was 177 million, so why don't the media report that 9 million fewer Americans had private health care under Obama instead of reporting how great it is?  The answer is that facts are irrelevant when pushing an agenda.

Three years ago, on the eve of Obamacare's implementation, the Congressional Budget Office (CBO) projected that President Obama's centerpiece legislation would result in an average of 201 million people having private health insurance in any given month of 2016.

[DoughtyOne]

The CBO figures more closely remind me of Leftist propaganda.

[ClearCase_guy]

Companies hire accountants to manage income and expenses and to plan for future operations. If the accountants do a bad job, the company goes bankrupt and likely ceases to exist. Therefore, companies take this seriously, and they try to hire good accountants.

The US government cannot go bankrupt and is unlikely to go out of businesses. The CBO is an activist organization which simply exists to persuade people to adopt a certain political agenda. It doesn’t matter if they are right or wrong.

[Leaning Right]

This criticism of the Congressional Budget Office is very unfair. The CBO is very careful! They use only the most advanced mathematical models to make their predictions.

[babble-on]

Director of CBO is a Republican. And the increase in the growth estimate after the Jan 2016 estimate was a response to the policy changes put in place by the Republican congress last year, signed by Trump.

But those tax cuts do not provide additional growth stimulus beyond the first year unless there is an increase in investment spending, which is unlikely because of the tariff concerns.

[House Atreides]

“...But those tax cuts do not provide additional growth stimulus beyond the first year unless there is an increase in investment spending, which is unlikely because of the tariff concerns.”
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American businesses which currently import large amounts of Chinese products would be wise to quickly diversify to use of other sources — IF they’re smart. And American companies which have vision and which are in a position to become viable producers of product currently China sourced will make necessary timely investment and preparations.

The ”stimulus” of the lower taxes are continuous and not limited to the first year. Why would they be limited unless the ‘RATS somehow undo them?

[babble-on]

Yes, the stimulus will remain in place, but it won't be NEW stimulus in the second year. GDP will continue to perform from the stimulus, but to see an ADDITIONAL contribution to GDP growth you'd have to cut the taxes again the following year, or else have the tax cuts lead to a huge wave of investment, that so far seems to be the opposite of what is occurring.