The Accuracy of CBO’s Budget Projections for Fiscal Year 2024
Report
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In its May 2023 budget projections for fiscal year 2024, CBO underestimated revenues by 1 percent and outlays by 6 percent. CBO’s projection of the federal budget deficit for 2024 was less than the actual amount by 1.1 percent of GDP.
After each fiscal year ends, the Congressional Budget Office reviews its projections of federal revenues and outlays and the government’s budget deficit and compares them with actual budgetary outcomes for that year. By identifying the factors that might have led to under- or overestimates of particular categories of federal revenues and outlays, CBO seeks to improve the accuracy of its work.
The agency’s baseline projections do not include forecasts of future changes in law. Therefore, to compare those projections with actual outcomes, CBO adjusted them to include the estimated effects of legislation enacted after the projections were developed.
For several reasons discussed later in the report, this analysis mainly compares CBO’s May 2023 budget projections with actual outcomes for 2024. But actual outcomes can also be usefully compared with the agency’s most recent budget projections, published this past June. After adjusting those June 2024 projections, CBO found that it overestimated the 2024 deficit by $84 billion. That overestimate occurred mostly because CBO’s June projections included estimated budgetary effects of the Administration’s proposed rule to reduce many borrowers’ balances on student loans, but the Administration did not record any costs related to the rule in 2024.
The overall differences between CBO’s updated May 2023 baseline projections and actual outcomes in 2024 were as follows:
Deficit. CBO underestimated the 2024 deficit, which totaled $1.8 trillion, by $306 billion. That underestimate equals 1.1 percent of gross domestic product (GDP), which is the size of the average absolute error in the agency’s deficit projections for 1985 to 2023.
Revenues. CBO’s projection of $4.8 trillion for federal revenues in 2024 was too low—by $72 billion, or 1 percent. That difference was much smaller than the average absolute error of about 6 percent in CBO’s revenue projections for 1983 to 2023.
Mandatory outlays. CBO’s projection of $3.8 trillion for mandatory outlays in 2024 was too low—by $252 billion, or 6 percent. That difference was about twice the average absolute error of 3 percent in projections of mandatory outlays for 1993 to 2023. The largest factor was an underestimate of outlays for higher education loans and programs, primarily stemming from the Administration’s revision of its estimates of the costs of previously issued student loans.
Discretionary outlays. CBO’s projection of $1.8 trillion for discretionary outlays in 2024 was too high—by $11 billion, or 1 percent. That difference was smaller than the average absolute error of about 2 percent in CBO’s projections of discretionary outlays for 1993 to 2023.
Net outlays for interest. CBO’s projection of $0.7 trillion for net interest outlays in 2024 was too low—by $137 billion, or 16 percent. That difference was larger than the average absolute error of about 11 percent in CBO’s projections of such outlays for 1993 to 2023, and it occurred mainly because CBO’s forecast of interest rates was too low.
