In this report, the Congressional Budget Office assesses the quality of the baseline projections of deficits and debt that it has made each spring from 1984 to 2023. Since its inception, CBO has regularly published a budget baseline—projections of federal revenues, spending, deficits or surpluses, and debt held by the public—along with a forecast of the nation’s economy. As required by law, the baseline reflects the assumption that current laws governing taxes and spending will generally remain unchanged.
The projections are not predictions of budgetary outcomes; rather, they give lawmakers a benchmark for measuring the effects of policy options or proposed legislation. The projections encompass the current year—the year in which the projections are made—and a period of 10 years in the future (or 5 years in the case of baseline projections made before December 1995).
To assess the quality of its projections, CBO has adjusted them to account for the estimated effects of legislation enacted after the projections were developed. That way, the focus is on the projection errors: The resulting differences between projected and actual deficits and debt exclude the effects of subsequent legislation.
CBO measures the quality of its projections by their tendency to be overestimates or underestimates (centeredness), by the spread in the size of errors (dispersion), and by how much actual outcomes differ from projected ones (accuracy).
The results of CBO’s evaluation are as follows:
Deficits. CBO has tended to overestimate deficits. Projections for the budget year have been more accurate than those for the 6th and 11th years, mainly because changes in the economy and a variety of other factors are more difficult to anticipate over longer time horizons.
Debt. The agency’s debt projections have been centered for the budget year and 6th year but have tended to be overestimates for the 11th year. The projections have been less accurate over longer time horizons. The dispersion of errors has been much larger for debt projections than for deficit projections because errors in annual debt projections compound over the projection period. As a result, CBO’s projections of debt are more uncertain than the agency’s projections of deficits.
Comparison With the Administration’s Projections. For years for which comparable projections are available, 1993 to 2023, errors in CBO’s budget-year projections of deficits were similar to errors in budget-year projections of deficits made by the Office of Management and Budget.
Effects of Enacted Legislation. On average, errors in CBO’s deficit projections have been substantially smaller than the estimated budgetary effects of legislation enacted after the projections were made.
