Sunday, June 24, 2012

On the Faillibility of CBO Projections

"A major point of contention has been the crop insurance program, which cost about $7.3 billion last year, up from $951 million in 2000, or about $1.2 billion adjusted for inflation.”

Now I copied that from somewhere, but I've now had a senior moment and forgotten where--perhaps the NY Times story on the consideration of the farm bill.

Anyway, my point: I don't know how CBO scored the 2002 and 2008 farm bills, but I strongly suspect they didn't project $7.3 billion.

Got going and found this:

More specifically, when the 2008 farm bill was enacted, CBO estimated that the five-year cost
(FY2008-FY2012) for the major farm support programs—commodities, conservation, crop
insurance, renewable energy, and exports—would be $83.3 billion, or an average of $16.7 billion
per year. More current CBO projections, which include actual spending in FY2008 and FY2009
for these programs, show that spending for these programs is expected to total $86.7 billion (an
average of $17.3 billion per year), or $3.4 billion above the five-year 2008 CBO estimate. Most
of the difference between the 2008 estimate and more recent estimates, however, is attributable to
higher than expected crop insurance spending ($6.7 billion above estimates in 2008), [emphasis aqdded] which is offset by lower than expected spending for farm commodity and farm conservation programs.

My point: CBO is the best we've got, but their record isn't perfect. And decisions Congress makes based on the projections (which they often ignore) will also be imperfect.

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