We have a winner of the budget forecast contest! We also have answers for what people got right, what they got wrong, and whether the broader community did better than the CSIS experts. Over 1,100 people participated, so there were a lot of perspectives provided.
The contest. Back in June, CSIS asked interested members of the public to participate in a budget survey. The survey asked for forecasts of three events: the nature of the budget outcome (Grand Bargain, President’s Budget, Republican Budget, Murray–Ryan 2.0, Full Year Continuing Resolution), whether there would be a government shutdown, and when the defense appropriation would be signed. More than 1,100 people participated, and we can now assess the results.
What actually happened. In late October, reports emerged that House Speaker John Boehner, Senate Majority Leader Mitch McConnell, and President Obama were close to a budget deal, and on October 26 the deal was announced. This was a surprise to nearly everyone since the continuing resolution (CR) did not expire until December 11, and previous budget deals had been preceded by weeks of public wrangling and posturing.
The agreement, formally known as the Bipartisan Budget Act of 2015, boosts spending by $80 billion over two years, divided between defense and domestic, and allocates additional war funding (“OCO”) that is not restricted by budget caps. For FY 2016, the subject of our survey, the deal raises the national defense budget cap by $25 billion and provides an extra $8 billion in uncapped war funding. It thus avoids the deep cuts in defense that sequestration or a full year CR would have required. The deal also raises the debt ceiling until March 2017, curbs premium increases for Medicare Part B enrollees, and pays for the increases with savings or revenue from an array of other programs, such as reforms in the Social Security disability insurance program. Perhaps most importantly, it averts a government shutdown and puts off the next budget negotiation until after the 2016 election.
The deal wound its way through the legislative process, finally being signed by the president on November 2, 2015. But the budget deal merely raised the budget caps—Congress still had to write and pass appropriations bills that fit within the budget caps. On December 18, Congress passed an omnibus appropriations bill, which included defense appropriations, and on the same day the president signed it into law.
So two of the survey questions—government shutdown and the appropriations bill date—have clear answers.
The third question—outcome—did not have as clear a result because the deal did not fit cleanly into any of the outcome categories.
On balance, the CSIS team judged that the deal looks most like a Murray-Ryan 2.0.
What people forecast. In the charts below, we show what people forecast and provide some analysis.
Most (85 percent) forecast that there would be no government shutdown, and in this they were correct. This forecast followed the conventional wisdom that the Republicans had been burned in the October 2013 government shutdown and did not want to go through that experience again, despite their sharp political differences with the president.
The largest number forecast “Before October,” reflecting the intended legislative process of passing appropriations before the fiscal year begins. Given that in 8 of the last 10 years defense has had a continuing resolution for part of the year, this may have represented the triumph of hope over experience. The next largest number forecast December, which was correct and likely reflected the 2013 Murray–Ryan budget deal, which was reached in December 2013.
On the outcome, by far the largest group forecast a full year CR. That was followed by Murray–Ryan 2.0, a Grand Bargain, and the Republican budget. The President’s budget was last and chosen by very few. This fit the conventional wisdom that the two parties were far apart and unlikely to find common ground. We are heartened by the number of people who chose Grand Bargain, since most budget observers believe that such a deal is needed for the long-term fiscal health of the nation. We note that the president did much better in the budget deal than nearly anyone expected. That shows once again the power of the presidency in budget negotiations.
Let’s look at the responses in more depth:
There’s a clear divide between “optimists” who saw a Murray-Ryan 2.0 deal and with it a lower likelihood of government shutdown, and the “pessimists” who saw partisan stalemate, a full year CR, and a higher likelihood of shutdown.
A few observations on how forecasts about outcome related to forecasts about timing:
What the CSIS scholars forecast, and why they were wrong almost right. All the CSIS scholars predicted that there would be no government shutdown. They split between a full year CR (four) and Murray–Ryan 2.0 (three). They were late on the timing, with an average forecast of late-January.
The team notes the unusual circumstance of the deal, which affected both the outcome and the date. The unusual circumstance was that the House Speaker, John Boehner, resigned unexpectedly and created the path to reaching a deal. He did not have enough Republican votes to get the legislation passed and therefore had to rely on Democratic votes. Normally, this would have cost him his job, as the Republican caucus would likely have expressed its anger by voting him out of office. Ultimately, this deal may not have happened without Boehner’s resignation.
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. When the CSIS team created the survey, it speculated whether the experts or the broader community would do better. Some of the academic literature indicated that getting many independent forecasts would come out better than the experts. That did not happen in this instance, likely because the outcome was so unexpected.
The winners. The three winners were Jeffrey Harris, Lindy Wolner, and Glen Jackman (plus two anonymous winners who did not leave e-mail addresses). They forecast no government shutdown, Murray–Ryan 2.0 as the outcome, and the exact date, December 18. As recognition of their forecasting excellence, the CSIS team will take them to lunch at the Army Navy Club in Washington, D.C. Congratulations! Here’s a little more about our winners:
A. Voters will take note and long remember if Congress is doing its principal job of authorizing and appropriating in an election year. Full year CR is too little, too late.
B. Democrats and Republicans lamented the impact of sequestration on defense in these security challenged times. " I will support and defend the Constitution of the United States against all enemies, foreign and domestic."
C. New money required in a budget compromise to better balance domestic programs with defense to fuel necessary cross-aisle collaboration.
D. The reality of a Christmas break schedule that is nonnegotiable.
I was among the multitude of DoD federal employees who were furloughed in 2013 due to sequestration and the government shutdown, so I have scars from that experience. My response the CSIS Budget Survey last June was prompted by a friendly debate at that time with office colleagues who were convinced that congressional dysfunction and continued absence of White House leadership would lead to another defense budget impasse and shutdown. My prediction was shaped by international events (expanding ISIS, refugee crisis, assertive China and Russia, etc.) that demand the full attention of the U.S. military and diplomatic leaders. I was confident those in Congress with the wisdom to keep a strategic eye on international events would find a way to reach a budget solution by the end of December.
And thanks to everyone who participated in this budget survey. Stay tuned—we are looking for future opportunities to have this kind of collaborative exercise.
Mark Cancian is a senior adviser with the International Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
This report is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2015 by the Center for Strategic and International Studies. All rights reserved.
