What is CBO’s estimate of the budget deficit for 2022? What was the deficit for 2021?
CBO’s latest estimate (reported in May 2022) is that the total federal budget deficit for fiscal year 2022 (which ends on September 30), will be $1.0 trillion, or 4.2 percent of gross domestic product (GDP). The federal government ran a budget deficit of $2.8 trillion in fiscal year 2021, equal to 12.4 percent of GDP.
Our Budget page provides quick links to our 10-year and long-term budget projections.
Where can I find CBO's latest budget and economic projections?
CBO issues 10-year budget projections (usually three times a year), 10-year economic forecasts (usually twice a year), reports on spending and revenues in the current fiscal year (monthly), and long-term budget projections (once a year).
|10-Year Budget Projections||10-Year Economic Projections||Long-Term Budget Projections|
|Monthly Budget Reviews||Historical Budget Data|
How do I find budget options and reports with policy options?
CBO produces numerous reports with specific options and broad approaches for changing federal tax and spending policies.
CBO periodically issues a volume of policy options—often referred to as "Budget Options"—covering a broad range of issues as well as separate reports that include policy options in particular areas.
Find budget options from recent volumes as well as some options that appeared in separate reports on CBO's digital budget options page. You can sort by major budget category (mandatory spending, discretionary spending, or revenues), budget function (such as national defense, transportation, or income security), and by topic (such as housing, Medicare, or business and finance).
A related page—Reports with Policy Options—organizes CBO's analytic reports that include policy options by broad issue area.
In addition to the budget options volume and various analytic reports, another report—Choices for Deficit Reduction: An Update—frames the choices that policymakers need to make, summarizes policy alternatives, and provides criteria that might be used to evaluate policy changes. (This is a companion report to CBO's 2013 budget options volume, but the information presented is still largely relevant.)
Note: The agency's most recent estimate of the budgetary effects of an option might differ from previous estimates or future estimates for various reasons. One reason is that the effects of policy options are measured relative to CBO's latest projections of budget outcomes under current law; when CBO's "baseline" projections change, the options' estimated budgetary effects can change as well. Another reason is that CBO regularly incorporates new analysis—by the agency or others—in order to improve its estimates. A third reason that estimates can change over time is that the details of largely similar options may differ in ways that give rise to differences in their budgetary effects.
What is a cost estimate? When does CBO prepare cost estimates for legislation? How can I get a cost estimate?
A cost estimate states the likely effects of proposed legislation on the federal budget—compared with what future spending and revenues would be under current law.
CBO is required by law to produce a formal cost estimate for nearly every bill that is approved by a full committee of either the House or the Senate; the only exceptions are appropriation bills, which do not receive formal written cost estimates but whose budgetary effects CBO estimates for the Appropriations Committees. CBO also produces formal cost estimates at other stages of the legislative process if requested to do so by a relevant committee or by the Congressional leadership. Moreover, CBO produces informal cost estimates for a much larger number of legislative proposals—including some that Congressional committees consider during the process of developing legislation, and some that receive consideration at other stages in the legislative process.
For requests for cost estimates from individual Members' offices, when time permits, CBO tries to provide informal feedback on possible direct spending effects, usually by phone or email. If you’re seeking a cost estimate from CBO, simply submit your request, with any draft language attached or the bill number referenced, by email to firstname.lastname@example.org. That address is monitored by our Budget Analysis Division, and they will route your request to the proper analyst. If we cannot work on your estimate right away, CBO will try to give you a sense of whether and when the estimate can be prepared.
Our Cost Estimates page provides all of our estimates in chronological order, with the most recent estimates shown first. The estimates are searchable by the number, title, committee, and program area of bills. View our Frequently Asked Questions About CBO Cost Estimates to learn more about CBO’s estimates.
What is a budget resolution? What role does CBO play when the Congress considers a budget resolution?
A budget resolution is basically a blueprint to guide Congressional action on budget-related legislation over the course of the year. It does not provide funding for federal programs or change tax law; rather, it sets overall spending and revenue targets, sometimes for as many as 10 years. A budget resolution is not a law, because it is not signed by the President; it takes effect if approved by both Houses of Congress.
The committee report that accompanies the budget resolution provides an allocation of new spending authority and outlays among the Congressional committees that have jurisdiction over legislation that governs such spending. Sometimes those allocations give committees the budgetary flexibility to propose legislation that would increase projected deficits, and sometimes such allocations require the committees to take actions that would reduce those deficits. A budget resolution may include “reconciliation instructions” that direct committees to propose legislation having a certain budgetary result; any bill aimed at satisfying those instructions is entitled to expedited consideration in the House and Senate.
CBO assists the budget committees by providing baseline budget projections that show what the budget would look like if current laws about federal spending and revenues generally remained in place. Those projections usually serve as the basis for the budget resolution. We also provide a reference volume examining options for reducing budget deficits (usually every two years) and informal estimates of the budgetary effects of various legislative proposals that the committees might want to allow for in the budget resolution; the budget committees may use those estimates as a guide in setting the spending and revenue targets for the budget as a whole and for individual committees. Although the budget committees’ reports provide some information about what policies they envision, the budget resolution itself does not specify those policies.
CBO does not analyze or prepare estimates of budget resolutions, because they are targets for the Congress and its committees and do not contain legislative language about specific proposals whose budgetary effects we could estimate. Thus, CBO does not assess the budget deficits or the amounts of spending and revenues that would result from any budget resolution approved by either of the budget committees.
Additionally, although CBO does not analyze budget resolutions themselves, the budget committees have sometimes found it helpful for CBO to evaluate the budgetary impact of streams of revenues and outlays specified by their respective Chairmen (as we did in 2015 and in 2017, for example).
Does CBO do "dynamic analysis"?
The short answer: Yes, but not for most cost estimates.
CBO’s cost estimates focus on the budgetary consequences of proposed legislation, and they generally reflect likely behavioral responses to a proposal—for example, changes in the likelihood that people will claim a government benefit. "Dynamic analysis" refers to something different: instances in which CBO takes into account further behavioral changes that would affect total output in the economy. Those broad macroeconomic changes—which include changes in the labor supply or private investment—resulting from changes in fiscal policy can themselves have additional budgetary consequences. By long-standing convention, such consequences are not generally reflected in CBO’s cost estimates.
To date, the 117th Congress has not required dynamic analysis for any cost estimates, although previous Congresses have done so. During the 114th and 115th Congresses, for example, CBO was required to prepare dynamic analyses under certain circumstances. Specifically, the agency was required, to the greatest extent practicable, to incorporate the budgetary impact of macroeconomic effects into its 10-year cost estimates for "major" legislation that Congressional authorizing committees approved. (Major legislation was defined as either having a gross budgetary effect, before macroeconomic effects were incorporated, equal to or greater than 0.25 percent of gross domestic product in any year over the next 10 years, or having been designated as such by the Chairman of either the House Budget Committee or the Senate Budget Committee.) That requirement appeared in the concurrent resolution on the budget for fiscal year 2016, in the concurrent resolution on the budget for fiscal year 2018, and in a House rule for the 115th Congress.
An example of how CBO implemented the requirement can be seen in a cost estimate for H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act. For a more general discussion, see a presentation and a blog post about dynamic analysis, both published in 2015.
Completing dynamic analyses of all proposed legislation is not practicable, because such analyses tend to require complex modeling and a significant amount of time and resources. Furthermore, most of the legislation that CBO analyzes would have negligible macroeconomic effects and thus negligible feedback to the federal budget. (Among the few exceptions was a cost estimate in 2013 for immigration legislation that would have substantially expanded the U.S. labor force.)
In certain analyses other than cost estimates, CBO does study how proposals that would significantly change federal spending and tax policies would affect the overall economy, as well as how such effects would feed back into the federal budget. In 2021, for example, CBO published Effects of Physical Infrastructure Spending on the Economy and the Budget Under Two Illustrative Scenarios. Other recent reports presenting such analyses include the agency’s analysis of the macroeconomic effects of Public Law 115-97 (originally called the Tax Cuts and Jobs Act), examinations of the economic impact of the President’s budget, and several reports on the macroeconomic effects of alternative budgetary paths. And finally, CBO’s baseline budget projections, published in its recurring reports about the budget and economic outlook, and the long-term projections in its annual Long-Term Budget Outlook also incorporate macroeconomic effects.
How does CBO account for new information in its estimates?
CBO typically updates its baseline budget projections at specific times each year to reflect legislative action, economic changes, and other developments. Generally, the budgetary impact of legislation being considered in the House or Senate is measured relative to the baseline produced in the spring.
During the course of a year, however, events sometimes occur that are different from those anticipated in developing the baseline projections. In such cases, CBO follows long-standing procedures governing when and how to take into account such developments, which sometimes include the enactment of legislation, actions by the courts, or decisions by executive branch agencies.
If new information indicates that an action or event that would affect CBO’s baseline has happened or definitely will happen (such as a Supreme Court decision, or an agency issuing a final rule or making an official announcement that clearly indicates an intended action by the Administration), CBO incorporates that information in its next regular baseline update. In addition, CBO immediately takes that information into account in assessing what will happen under current law when it analyzes the effects of legislation being considered by the Congress, even if the agency has not published new baseline projections.
Does CBO take into account the effects of climate change in its economic projections?
CBO takes into account many factors in producing its standard 10-year and long-term (spanning 30 years) economic forecasts, including the effects of climate change on the growth of real U.S. gross domestic product (that is, the growth of GDP adjusted to remove the effects of inflation).
Climate change is expected to affect GDP in many ways, some of which will increase economic output and some of which will reduce it. CBO expects that climate change will, on net, reduce GDP. Consistent with the best available research, CBO’s analytical approach allows for both positive and negative effects of climate change. Still, any projections of the economic effects of climate change involve a great deal of uncertainty.
Drawing on studies that examine the historical relationship between regional output and regional temperature and precipitation, along with projections of future conditions, CBO has projected that, on net, climate change will lower real GDP in 2051 by 1.0 percent from what it would have been if climatic conditions from 2021 to 2051 were the same as they were at the end of the 20th century. That figure represents a projection in the middle of a wide range of possible outcomes and does not reflect all the ways that climate change could affect GDP. Of that 1.0 percent reduction in GDP, 0.8 percent is attributable to changes in temperature and precipitation, and 0.2 percent is attributable to hurricane damage.
How does climate change affect the federal budget?
Climate change increases federal budget deficits, on net, by reducing revenues and increasing mandatory spending, both through its broad effects on the economy—which are negative, on average—and its specific effects on certain programs.
In particular, revenues are affected by net reductions in the productivity of outdoor labor and agricultural land and by damage to physical capital and infrastructure. Those changes affect the amount of federal revenues from income taxes, payroll taxes, and other sources. Climate change can also affect mandatory spending programs through changes in the economy overall and through specific effects on particular programs, including agricultural support programs, the National Flood Insurance Program, and a broad range of other insurance and benefit programs, such as those for income security, health, and financial institutions.
Climate change may also increase the amount of discretionary funding the Congress provides for certain activities and programs. For instance, military installations and equipment and public infrastructure may require repairs or modifications in response to damage from, or risks posed by, storms, sea-level rise, and other events. Various assistance programs may also be affected, such as those for disaster relief, wildfire control, and loans and loan guarantees for home mortgages.
Learn more in our 2021 report on the subject.
How would the federal government’s efforts to adapt to climate change or mitigate its impact affect the budget? Does CBO take into account the potential budgetary savings from those efforts in its cost estimates?
Investment by the government or others in various types of mitigation or adaptation efforts—for example, efforts to reduce emissions of greenhouse gases or to restore coastal wetlands to decrease the risk of floods—could reduce the budgetary costs of climate change. The benefits of successful investments would generally accrue gradually over many years and might be only partially reflected in future savings to the federal budget. The extent of future budgetary savings might sometimes be a small proportion of the up-front costs. Currently, CBO has no basis for estimating future savings from such investments because many of the linkages between climate change and the federal budget require further assessment.
For some sufficiently large and effective efforts, increases in total output of the economy would be the main channel by which future budgetary savings would occur. Those savings might be less important than other benefits. One key challenge in estimating future budgetary savings from investments in mitigation or adaptation is that, at present, we do not have enough information to estimate the long-lasting and diffuse effects of such investments. CBO continues to consult with various experts and to seek new data and scientific research on climate change.
You can learn more in our 2021 report on the subject.
What are CBO's latest projections for Medicare, Medicaid, and other health care programs?
For CBO’s latest projections of spending for major health care programs, see Table 3-2 of The Budget and Economic Outlook: 2022 to 2032.
How many people under age 65 are projected to have health insurance?
The most recent estimates by CBO and the staff of the Joint Committee on Taxation (JCT) are included in the September 2020 report Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2020 to 2030.
CBO and JCT currently project that, if current laws remained in place, an average of 240 million people under age 65 would have health insurance in an average month in 2021. Fifty-six percent of the population under 65 are projected to obtain coverage through an employer, and 28 percent, to be enrolled in Medicaid or the Children’s Health Insurance Program. A smaller number are expected to have nongroup coverage or coverage through the Basic Health Program, Medicare, or one of various other miscellaneous sources. On average, about 32 million people—12 percent of people under age 65—are projected to be uninsured in 2021.
The sum of the estimates of the number of people enrolled in health insurance plans and the number of people who are uninsured exceeds the estimate of the total population under age 65 by about 14 million in 2021, because some people (about 5 percent of the insured population) will have multiple sources of coverage. To arrive at these estimates, CBO and JCT did not assign a primary source of coverage to people who reported multiple sources; the resulting amounts align better with estimates of spending as well as with information about health insurance coverage from household surveys and administrative data.
How large are the projected federal subsidies, taxes, and penalties associated with health insurance coverage for people under age 65?
The most recent estimates of these amounts by CBO and the staff of the Joint Committee on Taxation (JCT) are included in the September 2020 report Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2020 to 2030.
By CBO and JCT’s estimates, if current laws remained in place, federal subsidies, taxes, and penalties associated with health insurance coverage would result in a net federal subsidy of $920 billion, or 4.4 percent of gross domestic product (GDP) in 2021 In 2040, that annual amount is projected to reach $1.4 trillion, also 4.4 percent of GDP. For the 2021–2030 period, net federal subsidies are projected to total $10.8 trillion. Two types of costs account for most of that amount:
- Federal spending for people under age 65 with full benefits from Medicaid or the Children’s Health Insurance (CHIP) Program (excluding those who reside in a nursing home or other institution) is projected to amount to $4.7 trillion. That amount includes $1.1 trillion in subsidies for people made eligible for Medicaid by the Affordable Care Act and $168 billion for CHIP enrollees.
- Federal subsidies for work-related coverage for people under age 65 are projected to be $3.9 trillion. Those subsidies stem mainly from the effect that the exclusion of premiums for such coverage from federal income and payroll taxes has on tax revenues.
Other subsidy costs were smaller:
- Medicare benefits for noninstitutionalized people under age 65 (net of their payments for premiums and other offsetting receipts) are projected to total $1.6 trillion. Such spending is primarily for people who qualify for Medicare because they participate in the Social Security Disability Insurance program or have been diagnosed with end-stage renal disease.
- Net subsidies for coverage obtained through the marketplaces established under the Affordable Care Act and payments for the Basic Health Program are estimated to total $637 billion.
How many people, according to CBO and JCT's estimates, will have insurance coverage through the health insurance marketplaces?
Many people can purchase subsidized health insurance coverage through the marketplaces established by the Affordable Care Act, which are operated by the federal government, state governments, or partnerships between the federal and state governments. CBO and the staff of the Joint Committee on Taxation (JCT) estimate that, in an average month, about 10 million people will be covered by insurance purchased through the marketplaces in 2020. The agencies estimate that 9 million of those people will receive subsidies to purchase their coverage.
A total of 11 million people selected plans through the marketplaces by the close of the open-enrollment period. However, CBO and JCT estimate that the average monthly enrollment during the year will be lower than the total number of people who will have coverage at some point during the year because some people are covered for only part of the year—mostly because they stop paying the premiums or leave their marketplace-based coverage as they become eligible for insurance through other sources. That decline in coverage is partly offset because people who experience a qualifying life event (such as a change in income, the addition of a dependent, or the loss of employment-based insurance) may be allowed to purchase coverage later in the year. In 2020, the difference between total enrollment and average monthly enrollment is further reduced because some states have allowed otherwise uninsured individuals to enroll in marketplace coverage outside the open-enrollment period.
Over the 2021–2030 period, average enrollment is projected to be 9 million people. Between 7 million and 8 million of them are expected to receive subsidies to purchase their coverage through the marketplaces every year.
How do the current projections compare with previous ones?
The projections included in the September 2020 report Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2020 to 2030 update the projections of health insurance coverage and the related federal subsidies published in Baseline Budget Protections as of March 6, 2020. The 2020–2030 projection of net federal subsidies for health insurance for people under age 65 is $84 billion higher than it was previously. The increase results primarily from including the federal government’s spending on Part D (prescription drugs) of Medicare in the September 2020 estimates to more accurately reflect the government’s expenditures for people under age 65 enrolled in that program. Without that technical estimating change, the current estimate of net federal subsidies would show a reduction from the previous one, reflecting the effects of the 2020 coronavirus pandemic, tempered by the legislation enacted in response.
What is CBO and JCT's current estimate of the budgetary effects of the Affordable Care Act (ACA)?
Although baseline projections by CBO and the staff of the Joint Committee on Taxation (JCT) incorporate the budgetary effects of the Affordable Care Act’s (ACA’s) insurance coverage provisions over the coming decade, the agencies cannot readily provide updated estimates that separately identify all of those effects. The reasons are explained in a June 2014 blog post, which highlights the following points:
- The incremental budgetary effects of many provisions of the ACA are embedded in baseline projections for preexisting programs and in tax revenues, and they cannot be separately identified using the agencies’ normal estimating procedures—which are generally based on data that reflect all of the provisions of current law, including the ACA.
- A retrospective analysis of the effects of a current law is very different from a cost estimate for proposed legislation, particularly because it requires formulation of a counterfactual benchmark representing what would have happened if the law had not been enacted—a challenging undertaking that is beyond the scope of the agencies’ usual analyses.
- Therefore, CBO and JCT cannot readily provide a retrospective analysis of the ACA that is analogous to the cost estimate the agencies did when the legislation was considered in 2010. That problem is not unique to the ACA but is common to most legislation that affects preexisting federal programs.
How often does CBO update its model underlying the agency’s baseline estimates of health insurance coverage?
CBO updates its health insurance simulation model at least once a year to incorporate information from the most recent administrative and survey data, CBO’s most recent macroeconomic forecast, and relevant judicial decisions, enacted legislation, and administrative actions.
How is HISIM2 different from the previous version of the model?
For use beginning in its 2019 baseline, in addition to making regular updates, CBO developed the new version of its health insurance simulation model, HISIM2.
The revised model includes changes to the base data, incorporating new sources of survey and administrative data. It also includes reassessments of consumers’ and employers’ behavior, including the way businesses take workers’ preferences into account when deciding whether to offer employment-based coverage and how individuals and families choose among coverage options. In addition, the new version of the model incorporates CBO and the staff of the Joint Committee on Taxation’s (JCT’s) estimate of a link between people’s income and their preference for employment-based coverage that is stronger than the previous version of this model. The revisions allow CBO and JCT to better account for employers’ and consumers’ selections among different types of insurance plans and to more easily simulate the effects of new insurance products.
How different are CBO’s baseline projections of health insurance coverage with HISIM2 compared to the older version?
Because HISIM2 includes changes to the underlying data and in the relationships among individuals, families, employment, income, and insurance coverage, it yields somewhat different coverage decisions and budgetary costs than the old version would have. The changes in the baseline stemming from HISIM2 are not large, however, and are similar in magnitude to the changes seen in previous baselines because of the use of more recent data and technical improvements.
How do I find CBO's major reports?
Looking for current and previous installments of CBO's Budget and Economic Outlook, Long-Term Budget Outlook, or Analysis of the President's Budget?
CBO's page on major recurring reports has links to those and other key reports going back to 2000.
How can I learn about CBO's products, processes, and organization?
Visit our About CBO section to learn more.
Where can I learn about CBO's career and business opportunities?
Visit our About CBO section to learn more.
Where can I find some definitions of key terms used in your reports? For example, what's the difference between the deficit and the debt?
CBO' s glossary defines various economic and budgetary terms as they are used in our reports. The document is updated periodically—most recently in 2016.