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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:

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?

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  • It allows good/bad things to be multiplied by 10/divided by 10 by the proposers/opposition. Is more explanation required? After all, 10 years is necessarily outside of the current administration. – puppetsock Feb 14 at 15:48
  • I suspect that there were negative implications to doing it over a 5 year period because of the cold war and Russia's 5 year plans, but also because many of the budgetary allocations promise funds over multi year periods - for example, the tax cuts you provide as an example makes changes that expire over various multi-year periods, so that the numbers look great for year 1, bit not so great for year 5 or 10. But my thoughts on this are incomplete at best, so I defer to a better expert for an actual answer. – cpcodes Feb 14 at 16:57
  • after the census was a time when coalitions reformed and budget priorities were re-examined. – dandavis Feb 14 at 19:59
  • @puppetsock: As you can see from the accepted answer, there's a concrete reason for this. – einpoklum Feb 14 at 21:11
  • @einpoklum OK. This calls to mind another question. – puppetsock Feb 14 at 21:21
5

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.

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  • This is what I was looking for. – einpoklum Feb 14 at 21:10
  • I have given you a thumbs-up. The document you linked is quite curious. In particular, it has quite a few links to itself. For example, in the first paragraph you quoted there are three. Curious. – puppetsock Feb 14 at 21:20
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    @puppetsock - I am so used to the self-referencing links, I use other means to lookup terms. For example, "budgetary effects" is defined at law.cornell.edu/uscode/text/2/932 . – Rick Smith Feb 14 at 21:54
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.

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  • "Many initiatives take 10 years to implement" - Then you look at a single year at the end of implementation. Also, you've only argued why it may be expedient to use more than 1 year, but - why this common use of 10? ... And why would this be common in US politics but completely unheard in many other places? – einpoklum Feb 14 at 17:36
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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.

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