Fictional expectations and fiscal realities: when forecast accuracy matters for the politics of expectations

Abstract A prevailing perspective in economic sociology suggests that economic forecasts do not need to be accurate to hold political value; instead, what matters is the credibility of the accompanying narrative. However, drawing on the case of the 2012 Kansas tax cuts, I argue that the accuracy of forecasts can significantly influence forecast credibility and the associated politics of expectations. I show how initial supply-side expectations for the policy were embedded in official revenue forecasts, raising the political consequences of their eventual failure. As repeated forecast errors mounted, typical narrative strategies used to defend forecasting errors lost plausibility, making the tax cuts politically untenable and eventually contributing to their repeal. This study highlights that the relationship between forecast accuracy and political credibility is crucial for shaping public perception and policy outcomes.