About CBO's Cost Estimates

Posted by Teri Gullo on
September 11, 2018

Today, CBO released a section-by-section tutorial on how to read and understand its formal cost estimates. Cost estimates are among the many products CBO provides to policymakers and analysts to help them assess the effects of differing policies on budgetary outcomes.

A formal cost estimate summarizes a bill’s provisions, describes its budgetary effects, lists mandates, and indicates any significant long-term consequences. Throughout each year, several hundred formal cost estimates are posted on CBO’s website as they are released to the Congress.

The Congressional Budget Act of 1974, often called the Budget Act, requires CBO to prepare cost estimates for legislation at certain points in the legislative process. Various provisions in that act—primarily sections 202, 402, and 424—govern CBO’s preparation of cost estimates. Provisions in other budget laws—for example, section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985—also contain instructions for preparing cost estimates.

CBO’s cost estimates provide information that the Congress can use as it implements rules and procedures in considering legislation that would affect the federal budget. However, cost estimates are advisory only. They can—but need not—be used to enforce budgetary rules or targets. Moreover, CBO does not enforce budgetary rules; the budget committees do.

Theresa Gullo is CBO’s Assistant Director for Budget Analysis.