An Evaluation of CBO’s Projections of Outlays From 1984 to 2021
In this report, CBO uses various measures to assess the quality of its past projections of federal outlays. The analysis focuses on three fiscal years within each projection period: the budget year, the 6th year, and the 11th year.
Since its inception, the Congressional Budget Office has regularly published baseline projections of federal outlays, which, as required by law, reflect the assumption that current laws will generally remain unchanged. Those projections encompass the current year—the year in which the projections are made—and a projection period of 5 or (in the case of baseline projections since December 1995) 10 years in the future. In this report, CBO assesses the quality of the baseline projections of outlays it has made each spring from 1984 to 2021.
The report focuses on three fiscal years within each projection period: the budget year (typically the year beginning several months after the projections were made); the 6th year (counting the year that projections were made as the first year); and the 11th year. Comparing actual outlays with projected outlays is complicated by changes in law made after the projections were prepared. Therefore, for this analysis, CBO adjusted the original projections to reflect the estimated effects of legislation enacted after the projections were developed.
The results of CBO’s assessment are as follows:
Total Outlays. CBO has tended to overestimate total outlays. Projections for the budget year have been more accurate than those for the 6th and 11th years for most categories of spending, primarily because changes in the economy and a variety of other factors are more difficult to anticipate over longer time horizons.
Mandatory Outlays. The agency’s projections of total mandatory outlays for the budget year have generally been close to actual outlays, but projections for the 6th and 11th years have been less accurate. Projections of spending on Social Security have been the most accurate over all time horizons. Projections of spending on Medicare and Medicaid have been the least accurate of the 6th- and 11th-year projections. For the budget year, projections of other mandatory outlays (which consist of all mandatory spending other than that for Social Security, Medicare, and Medicaid) have been the least accurate.
Discretionary Outlays. CBO’s projections of total discretionary outlays for the budget year, the 6th year, and the 11th year have generally been close to actual outlays. The major differences between the projections and actual outlays stem from misestimates of the rate at which funding was spent.
Net Interest Outlays. The agency’s least accurate projections of federal outlays have been those of net interest outlays, which it has almost always overestimated. Those misestimates have been driven by CBO’s overestimates of interest rates.
Comparison With Other Estimates. CBO’s and the Administration’s projections of outlays for the budget year have been similar in quality. (The Administration does not publish data about the accuracy of its projections beyond the budget year.) CBO’s projections, particularly of discretionary outlays, have been slightly more accurate than the Administration’s.