Why Government Budgets Use Fantasy Economic Forecasts

Episode 23 digs into a quietly devastating problem in public finance: official government budget forecasts are almost always wrong, and not by accident. Lucas and Luna walk through how the US Office of Management and Budget and the Congressional Budget Office produce their baseline projections, why they systematically overestimate revenue growth and underestimate spending increases, and what that means for any debate about the national debt. The episode anchors on a specific 2025 example: OMB projected 2.4% real GDP growth for fiscal year 2026 while the CBO projected 1.8% — a 60-basis-point gap that, over a $7 trillion budget, translates to roughly $42 billion in phantom revenue. They explore the institutional incentives that encourage rosy scenarios, the difference between a forecast and a target, and why voters rarely hold politicians accountable for fantasy numbers when the real numbers arrive two years later. No jargon, no partisan axe-grinding — just the mechanics of how governments cook the books before they even write them. #GovernmentSpending #PublicFinance #BudgetForecasting #OMB #CBO #GDPGrowth #FiscalPolicy #EconomicForecasts #BaselineProjections #RevenueEstimates #DeficitProjections #FantasyBudgets #FiscalIllusion #BudgetProcess #Economics #PublicPolicy #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo