A draft of our Tuesday editorial.
Idaho politicians and economic experts have a strange working relationship.
On the one hand, the politicos count on the economists to read the trends and help them figure out how much tax revenue they should budget. For part-time, citizen legislators, the expert counsel is essential.
On the other hand, the politicians sometimes like to trust their gut instead of banking on the experts. Never mind that those gut-level predictions may be based on anecdotal evidence — or a view of economic conditions in the home legislative district, which may or may not be indicative of statewide trends.
During the Great Recession, the experts took a bath. They seemed to agree on one point: For Idaho, better days were just around the corner. The rosy predictions never quite blossomed, the expected quick recovery never quite materialized.
The fact that the forecasts went wrong is not news — not to those who were paid to make them, and not to the politicians who were paid to factor these predictions into their decisionmaking.
What is news — and, looking forward, what is most significant — is why those prognosticators missed the mark.
As the Statesman’s Bill Roberts explained Sunday, the Great Recession was fundamentally different. Unlike downturns caused by overproduction, this was a recession marked by lost personal wealth and decreased consumer buying power. The experts also could not predict the tumbling home values — so important in Idaho, a state that had enjoyed a 20-year housing and construction boom — and shriveling credit markets.
Forecasters use history as their guide. This recession had no historical precedent. No surprise, then, that the economists struggled to predict the severity, and the duration, of the downturn.
Then again, who could have?
When politicians used their gut instincts, they fared little better. They lowballed revenue forecasts, and programs such as education and Medicaid paid the price.
In all fairness to them, the politicians were thrust into a frustrating situation, as they attempted to write budgets 18 months into what was a bafflingly uncertain future. They governed under the premise that it’s better to underestimate revenues than it is to overshoot the runway, and cut budgets later. And they seemed to believe that it was every bit as good — if not better — to make complicated decisions based on intuition rather than evidence.
Let’s just chalk it up as a learning experience all around. For experts who were reminded of the economy’s ability to behave unpredictably. And for politicians, who were shown that the eyeball test has its limits.