The Congressional Budget Act of 1974 requires CBO to produce an annual report on federal spending, revenues, and deficits or surpluses. This document provides answers to questions about how CBO prepares those baseline budget projections.
The Congressional Budget Act of 1974, often called the Budget Act, established the House and Senate Committees on the Budget to set broad federal tax and spending policy and identify priorities for allocating budgetary resources. To help those committees carry out their responsibilities, the Budget Act also established the Congressional Budget Office and required it to produce an annual report on federal spending, revenues, and deficits or surpluses, as well as subsequent revisions to that report as may be necessary.
To fulfill that requirement, CBO provides the Congress with projections of revenues from each major revenue source, spending for every federal budget account, and the resulting deficits or surpluses, along with forecasts of the nation’s economy for the current fiscal year and for the ensuing 10 years. Those projections, which constitute CBO’s budget baseline, are developed under the assumption that current laws governing taxes and spending generally remain in place.
Baseline projections supply the Congress with information about the budgetary outlook over the coming decade under current laws and a benchmark to use in determining whether proposed legislation is subject to various budget enforcement procedures. Most of the rules that govern the baseline are specified in law, although some have been developed jointly by the House and Senate Committees on the Budget, the Office of Management and Budget (OMB), and CBO. This document provides answers to questions that CBO is frequently asked about how it prepares its baseline projections.