CBO Explains How It Incorporates Administrative and Judicial Actions When Updating Its Baseline Projections and Preparing Cost Estimates

The Congressional Budget Office regularly publishes baseline projections of what the federal budget would look like in the current fiscal year and over the following 10 years if laws governing revenue and spending generally remained unchanged. CBO typically releases its initial set of projections in January or February each year and then publishes updated projections in the spring, after the release of the President's annual budget request. In some years, the agency releases updated baseline projections again later in the summer.

Each time CBO publishes a new baseline, it accounts for the budgetary effects of recently enacted legislation and economic changes (if CBO has also updated its economic forecast). The agency also incorporates other, "technical" changes that reflect new information about program operations and spending—including recent administrative or judicial actions.

In addition to publishing baseline projections, CBO prepares many cost estimates that compare the budgetary effects of proposed legislation with CBO's baseline projections. (The Congressional Budget Act of 1974, as amended, requires CBO to use estimates prepared by the staff of the Joint Committee on Taxation of the effects on revenue of changes in tax law; CBO incorporates those estimates into its cost estimates.) To ensure consistency, CBO's cost estimates incorporate the same technical and economic assumptions that underlie the baseline used by lawmakers to enforce budgetary rules and procedures.

When CBO accounts for recent administrative and judicial actions in its baseline projections and cost estimates, it must assess the likelihood, timing, and resulting budgetary effects of those actions—which are often particularly uncertain. CBO has adopted certain procedures to address that uncertainty as consistently as possible. This primer summarizes the practices that CBO follows when incorporating the effects of recent administrative and judicial actions in its baseline projections and cost estimates.