June 7, 2012
Updated June 7, 2012, to reflect actual results for 2011. The previous version used projections for 2011.
Each year, the Congressional Budget Office (CBO) issues baseline projections of federal spending and revenues for the following 10 years. Those projections are not intended as a forecast of future outcomes; rather, they are estimates of spending and revenues under the laws that are in effect at that time and are designed to provide a benchmark against which to measure future policy changes.
In January 2001, CBO's baseline projections showed a cumulative surplus of $5.6 trillion for the 2002–2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO's forecast, and other factors. As a result, the federal government ran deficits from 2002 through 2011. The cumulative deficit over the 10-year period amounted to $6.1 trillion—a swing of $11.7 trillion from the January 2001 projections.
The attached table summarizes the differences between CBO's baseline projections in January 2001 and the actual results for each of the years over the 2002–2011 period. (CBO published a similar table in May 2011; this document updates the comparison using actual results for 2011.) The table divides changes to those baseline projections between those that stemmed from legislative actions and those that resulted from factors related to economic or other, technical assumptions. Such categorizations were done each year as new projections were prepared—no new analysis has been done to compile this table. Thus, the revisions attributable to legislation represent CBO's estimates of costs or savings associated with new laws relative to the baseline projections that were current at the time of enactment. The effects of legislation may have turned out to be different from the original estimates either because those baseline projections were off-target or because the results of the legislation deviated from what CBO anticipated, but no adjustments have been made in this table to those initial assessments of the legislation.
To illustrate this point, the table reports total outlays associated with the Troubled Asset Relief Program (TARP) of $189 billion, which reflects CBO's initial baseline estimate of the costs of the program. The agency's latest estimate of the costs of the TARP, released in March 2012, takes into account all activities that have occurred since the program's implementation and equals $32 billion (including some costs that will be incurred after 2011). The subsequent revisions to CBO's initial projection of TARP outlays were considered "technical" changes, and the entry in the table attributable to legislation has not been changed to reflect that updated estimate. In fact, for most legislation, there is no way to identify the actual impact on spending or revenues over time, and a retroactive analysis of actual costs is not possible.
Consequently, the table is only a very rough approximation of how changes since January 2001 have contributed to the swing from projected surpluses to actual deficits over the 2002–2011 period and should not be interpreted as a precise tracking of all the components of that cumulative change over the past decade. Because the actual budget results are now known for all of the years covered by CBO's January 2001 baseline projections, this table is now complete and no further updates will be required.