About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 The Accuracy of CBO's Baseline Estimates for Fiscal Year 2019 1 (December 12, 2019)

handle is hein.congrec/cboacbsl0001 and id is 1 raw text is: L/ DECEMBER 2019 The Accuracy of CBO's Baseline Estimates for Fiscal Year 2019 After each fiscal year has ended, the Congressional Budget Office reviews its baseline projections of federal revenues, outlays, and deficits and compares them with actual budgetary outcomes for that year. By assessing the quality of its projections and identifying the factors that might have led to under- or overestimates of federal revenues and outlays in particular categories, CBO seeks to improve the accuracy of its work. This report reviews CBO's projections for fiscal year 2019 (specifically, those that were reported in what CBO calls its adjusted April 2018 baseline) and compares them with actual outcomes) The differences between the projections and the outcomes for revenues, outlays, and the deficit were smaller than the mean absolute errors in projections for previous years.2 1. For last year's edition of this report, see Congressional Budget Office, 7he Accuracy of CBO's Baseline Estimates for Fiscal Year 2018 (December 2018), www.cbo.gov/publication/54872. 2. The mean absolute error is the arithmetic average of the projection errors without regard to whether they are positive or negative, so errors in different directions do not offset one another. CBO calculated projection errors by subtracting the actual amounts of outlays or revenues from the projections and dividing that difference by the actual outlay or revenue amounts. The mean absolute error in the deficit projections was expressed as a percentage of gross domestic product rather than as a percentage calculated from dollar values in order to account for years in which the actual deficit or surplus was small, causing relatively small projection errors (in dollar terms) to result in large percentage errors. To make the comparison, CBO updated its projections to account for subsequently enacted legislation. CBO also removed outlays for Fannie Mae and Freddie Mac from both its projections and the actual outcomes because CBO and the Administration account differently for the transactions of those housing entities.3 With those adjust- ments, the overall differences were as follows (see Table 1): Revenues. CBO's projection of $3.49 trillion for federal revenues in 2019 was too high-by $28 billion, or 0.8 percent. That difference was much smaller than the mean absolute error of 5.0 percent in revenue projections made for the years from 1983 to 2018. Outlays. CBO's projection of $4.46 trillion for federal outlays in 2019 was too low-by $3 billion, or 0.1 percent. That difference was likewise much smaller than the mean absolute error of 2.3 percent in outlay projections made for the years from 1993 to 2018. The Deficit. Those outlay and revenue differences resulted in a deficit projection for 2019 that was $31 billion less than the actual amount: $972 billion rather than $1,004 billion.4 That difference was 3. For more information about the differences, see Congressional Budget Office, Accounting for Fannie Mae and Freddie Mac in the Federal Budget (September 2018), www.cbo.gov/ publication/5 4475. 4. Removing outlays for Fannie Mae and Freddie Mac reduced projected outlays by $2.5 billion and increased actual outlays by $19.2 billion. Without that adjustment, the 2019 deficit, as reported by the Treasury, totaled $984 billion. Notes: Unless this report indicates otherwise, all years referred to are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Numbers in the text and tables may not add up to totals because of rounding.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most