Problems in Estimating Federal Government Expenditures

Abstract

This paper discusses a number of problems in estimating Federal expenditures and a number of problems in interpreting such estimates as are publicly available. For long-range projections, the paper argues that a program-by-program analysis of budgetary issues and trends is superior to mechanical projection of expenditures as a function of gross national product. For a one-year projection, it is pointed out that the Federal budget should be just a starting point for the forecaster because the expenditure estimates in the official annual budget document cannot be viewed as forecasts. The reasons for this include: the long lead-time required in the preparation of the budget; the dependence of some program results on economic and weather conditions that can change rapidly; and the fact that by its very nature the budget necessarily reflects Presidential policy recommendations rather than a detached forecast of the final results of legislative and executive branch actions. For quarterly and monthly forecasts, a program-by-program method of appraising expenditure trends is also advised.