Trump’s Defense Budget: Results and Expert Predictions

• Diversity of opinion.  Lots of different backgrounds and perspectives.
• Independence.  People's opinions aren't determined by the opinions of those around them. (This avoids the “madness of crowds” problem.)
• Decentralization.  People can draw on specialized knowledge, which increases the total amount of knowledge brought to bear.
• Aggregation.  Some method of gathering the opinions.  CSIS is providing that though this tool.

Crowd wisdom is (sort of) supported by Phillip Tetlock’s work.  Tetlock, a professor of psychology and management at the University of Pennsylvania and director of the Good Judgment Project, argued that “foxes” (who, in an Isaiah Berlin essay, know about a lot of subjects) do better in making predictions than hedgehogs (who know a lot about one thing).  (See, for example, Expert Political Judgment: How Good Is It? How Can We Know?).  For our purposes that means that well informed generalists will do better than specialists, who statistically do about as well as dart throwing monkeys, though that may be unfair to the monkeys.  (“Talking heads” on television, the most visible expert predictors, are entertaining but have an abysmal record on prediction accuracy.)

Daniel Kahnemen made similar points in his classic Thinking Fast and Slow.  Experts tend to be overconfident, have an illusion of personal skill, and display a love of coherent narrative, even where none is warranted.

Recent research has been kinder to experts.  A study of strategic intelligence forecasting inside government showed a very good track record, much better than what Tetlock found (David R. Mandel and Alan Barnes, “Accuracy of Forecasts in Strategic Intelligence,” Proceedings of the National Academy of Sciences, v.111, No. 30).  Further, experienced analysts did better than inexperienced.   The key to more accurate assessments may have been the anonymity of large staffs, which allowed more dispassionate perspectives (a phenomenon Tetlock also found), personal accountability, and the professional norms of an analytic community. 

In June, 2015, CSIS conducted a survey on the outcome of that year’s budget stalemate. That survey asked for predictions of three events: the nature of the budget outcome, whether there would be a government shutdown, and when the defense appropriation would be signed. 

In the end, CSIS scholars and the broader community did equally well.  Both forecast no shutdown.  Compared to the broader community, CSIS scholars were too late on timing but were closer, on average, about the outcome.  However, neither the experts nor the crowd did particularly well, likely because the outcome (Speaker of the House John Boehner sacrificing his job to get an agreement) was so unexpected.

There were two winners who correctly predicted the outcome and timing.  They had lunch with the CSIS team.

We’ll see how well both the crowd and the experts do this time.  So stay tuned!

CSIS Expert Predictions

Mark Cancian, Senior Adviser, International Security Program
Budget Prediction: Large increase
Announcement date: February 5, 2018
OCO prediction: No significant change
There’s a lot of uncertainty here, so I don’t have high confidence in my predictions, but here’s my thinking: Defense hawks will want full implementation of the September speech, but pressures from other initiatives and deficit hawks will limit the budget increases.  Changing OCO is theoretically attractive but will not be worth the political capital required. The administration will want to put out a multi-year program early, but there are too many moving parts to lock something in before the full FY 2019 budget development.

Kathleen Hicks, Senior Vice President; Henry Kissinger Chair; Director, International Security Program
Budget Prediction: Limited increase.
Announcement date: May 2017
OCO prediction: Criteria expanded
Only in defense would an add of $20B-$40B/yr be considered “limited.” This amount would signal a serious commitment to increase spending on the U.S. military while balancing against multiple domestic commitments.  Even then, it will be extremely challenging to build the necessary coalition to enable such a broad tax and spending plan. I think the White House will put its proposed defense FYDP out relatively early in order to stake a strong negotiating position.  It is quite possible it will do so without yet knowing how this 5-year defense topline fits into a broader budget plan.  The slow national security transition will make it difficult to do this very quickly, but I think the incentive to stake territory is so significant that they will aim to present their preferred position by late spring 2017. Given the political difficulties of arriving at defense spending caps higher than those in the current Budget Control Act, I believe OCO criteria will at a minimum remain the same for the first year of the administration and likely will be expanded.  The Administration may well state its long-term intention to tighten the criteria and shift more enduring costs from OCO into the base budget, but there are a variety of rationales it could use for why that is not feasible immediately.

Melissa Dalton, Senior Fellow and Chief of Staff, International Security Program
Budget Prediction: Large increase
Announcement date: February 5, 2018
OCO prediction: Criteria expanded
The Trump Administration is in the early days of defining its strategy and priorities for government spending. Based on initial indications, I predict that countervailing pressures both within the Administration and on the Hill to cut government spending while also increasing the capacity and capabilities of the U.S. military will forestall a large plus-up on defense until the FY19 budget. The Administration will use this year to outline its FY18 priorities in a “skinny budget” to build towards in next year’s budget. The Administration will also make a pitch to expand OCO to fund an amplified counterterrorism approach.

Andrew Hunter, Director, Defense-Industrial Initiatives Group 
Budget Prediction: Obama funding level
Announcement date: mid to late March 2017
OCO prediction: Criteria expanded

International Security Program Research Associates
Budget Prediction: Limited increase
Announcement date: January 16, 2018
OCO prediction: No significant change
President Trump’s views on the status of the defense budget are hard to pin down. The most prevailing narrative emerging from the Trump Administration after the election has been highlighting wastefulness throughout the defense budget, while calls for broad increases have tapered off. This observation along with the appointment of deficit hawk Rep. Mick Mulvaney (R-SC) to run the Office of Budget and Management make it unlikely that the administration is looking to increase the defense budget “bigly”.