Expected Federal Budget Surplus: How Much Confidence Should the Public and Policymakers Place in the Projections? (ICPSR 1240)

Version Date: Jun 12, 2001

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Principal Investigator(s):
Kevin L. Kliesen, Federal Reserve Bank of St. Louis; Daniel L. Thornton, Federal Reserve Bank of St. Louis

https://doi.org/10.3886/ICPSR01240.v1

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Summary

When the government runs a deficit, it can borrow from the public -- that is, it can create debt. Conversely, when the government runs a surplus, it can retire that debt. For the past three years, the federal government has recorded budget surpluses, and both the White House Office of Management and Budget and the Congressional Budget Office project that these surpluses will increase for at least the next decade. If these projections prove to be accurate, the $3.5 trillion of publicly held federal debt could be eliminated by around 2010. This article, which was written prior to the updated estimates published in January 2001, assesses the likelihood that these projected surpluses will materialize, and consequently eliminate the public debt, by comparing previous budget projections with actual outcomes. The authors show that the long-term budget projections have not provided a useful indicator of actual experience. Principally, these errors occur because of changes in macroeconomic conditions or unforeseen legislative actions, which both result in unanticipated increases or decreases in revenues or outlays. Not surprisingly, the projections have proven to be less reliable the longer the projection horizon. Moreover, over the period of available data, the projections have been biased upward, i.e., the actual deficits have been larger than projected. Accordingly, the authors suggest that prospects for eliminating the public debt may be overstated.

Citation

Kliesen, Kevin L., and Thornton, Daniel L. Expected Federal Budget Surplus:  How Much Confidence Should the Public and Policymakers Place in the Projections? Inter-university Consortium for Political and Social Research [distributor], 2001-06-12. https://doi.org/10.3886/ICPSR01240.v1

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Distributor(s)

Inter-university Consortium for Political and Social Research
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Data Collection Notes

  1. (1) One file was submitted, 0103kkd.xls. The file contains data and calculations. (2) These data are part of ICPSR's Publication-Related Archive and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigators if further information is desired.

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Original Release Date

2001-06-12

Version History

2018-02-15 The citation of this study may have changed due to the new version control system that has been implemented. The previous citation was:
  • Kliesen, Kevin L., and Daniel L. Thornton. Expected Federal Budget Surplus: How Much Confidence Should the Public and Policymakers Place in the Projections?. ICPSR01240-v1. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2001-06-02. http://doi.org/10.3886/ICPSR01240.v1
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Notes

  • These data are flagged as replication datasets and are distributed exactly as they arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.

  • The public-use data files in this collection are available for access by the general public. Access does not require affiliation with an ICPSR member institution.