CBO’s Projections of Federal Receipts and Expenditures in the National Income and Product Accounts
How do CBO’s projections of federal receipts and expenditures in the national income and product accounts compare with CBO’s baseline projections of revenues and outlays in the federal budget?
The fiscal transactions of the federal government are recorded in two major sets of accounts. One is The Budget of the United States Government, prepared by the Office of Management and Budget, which is the framework generally used by executive branch agencies and the Congress and commonly discussed in the press. It focuses on cash flows—the inflow of revenues (funds generated from taxes and fees) and the outflow of spending (cash disbursed for the various federal functions). The main objectives of the budget are to provide information that can assist lawmakers in their policy deliberations, to facilitate the management and control of federal activities, and to help the Treasury manage its cash balances and determine its borrowing needs.
The second major set of accounts is the national income and product accounts (NIPAs), which are produced by the Department of Commerce’s Bureau of Economic Analysis (BEA). Like the budget, the NIPAs record the federal government’s fiscal transactions, but they have different objectives in doing so. The NIPAs are intended to provide a comprehensive accounting of activity in the U.S. economy, and as such, they are used extensively in macroeconomic analysis. Specifically, they measure current production (the process by which goods and services are provided for use) and the income generated by that production. A well-known measure of overall production in the NIPAs is gross domestic product (GDP). The accounts divide the economy into four major sectors—business, government, household, and the “rest of the world” (that is, the foreign sector)—each with its own set of accounts. This report focuses on the federal sector, which is one component of the government sector. Because the aims of the NIPAs differ from those of the federal budget, the two accounting systems treat some government transactions very differently.
For the 2013–2023 period, CBO’s projection of federal receipts in the NIPAs are about 4 percent higher than CBO’s baseline projections of federal revenues in the budget, and CBO’s projection of federal expenditures in the NIPAs exceeds its projections of federal outlays in the budget by about 5 percent. Over that period, in the NIPAs, projected expenditures exceed projected receipts by $8.3 trillion, whereas in the agency’s baseline budget projections, estimated deficits total $7.8 trillion.