Why are US budget implications estimated "over 10 years"?

Question

The federal budget in the US is proposed and approved annually. However, analysts and commentators very often explain budgetary measures "will cost X USD over 10 years" or "cuts program P by X USD over 10 years".

A few examples:

• A question here on Poitics.SE.
• An article in The Washington Post about the proposed federal budget.
• Estimates of the effect of the 2018 tax cut on Bloomberg.

Is there some actual significance to these 10-year periods? Or is it just a way of mutiplying numbers by 10 for greater dramatic effect?

Answer 1

Is there some actual significance to these 10-year periods?

Yes, it's the law.

2 U.S. Code § 933.

(d) OMB PAYGO scorecards

(1) In general
OMB shall maintain and make publicly available a continuously updated document containing two PAYGO scorecards displaying the budgetary effects of PAYGO legislation as determined under section 639 of this title, applying the look-back requirement in subsection (e) and the averaging requirement in subsection (f), and a separate addendum displaying the estimates of the costs of provisions designated in statute as emergency requirements.

(4) 5-year scorecard
The first scorecard shall display the budgetary effects of PAYGO legislation in each year over the 5-year period beginning in the budget year.

(5) 10-year scorecard
The second scorecard shall display the budgetary effects of PAYGO legislation in each year over the 10-year period beginning in the budget year.

Answer 2

There are several reason that projections are over 10 years. The primary reason is that many initiatives take several years to implement, so using a 10 year period can more accurately capture the effects. For example, building a four lane bridge takes years of planning and construction, and will likely cost billions. After it's built their are possible tolls and increases to economic activity that offset some or of that cost, three or 5 year projections may only capture the construction phase and no benefits. 10 years is a bit of a compromise between long enough to capture effects and short enough to still have some accuracy.

A more nefarious reason to use the 10 year standard is to hide the true costs of doing something. Many bills that claim to be "budget neutral" over ten years are front loaded with spending in the first few years, then have some combination of new taxes, economic increase, or fees balance out those first years of spending. Then in the later years the proposed tax is canceled or the income is reallocated to some other project, or the growth never happened so money was spent and the ROI never happens. Additionally by using a 10 year window a bill that is really 9 billion over two years in spending can be called a 10 billion over ten years by spending a nominal amount for the latter years with most being spent early on.

Answer 3

Interestingly a 10 year period is also important in a process known as budget reconciliation. This is, however, probably not the primary reason for using a 10 year period.

Normally passing a bill in the Senate requires 60 votes in order to avoid a filibuster. A process known as budget reconciliation allows the Senate to pass a single bill each year that changes revenue and spending with only a simple majority. They can however only do this if the bill is revenue neutral over a 10-year period.