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1 An Overview of CBOLT: The Congressional Budget Office Long-Term Model 1 (April 2018)

handle is hein.congrec/cbomayj0001 and id is 1 raw text is: ., APRIL 2018 An Overview of CBOLT: The Congressional Budget Office Long-Term Model To help the Congress understand the nation's long- term fiscal challenges, the Congressional Budget Office produces projections of the economy and federal bud- get that extend beyond its standard 10-year projection window. The Congressional Budget Office Long-Term model-known as CBOLT-is the main analytical tool that the agency uses to make those projections. CBOLT was created in the early 2000s to produce long- term projections of Social Security's finances, and CBO has continually expanded the model's capabilities and uses since then. Today, CBOLT is used to make long- term projections of the federal budget and economy; the size and composition of the population; the distribu- tion of Social Security benefits and taxes among various groups; the effects of proposed changes to the Social Security system; and the effects of uncertainty about economic, budgetary, and demographic factors. Those projections and others underlie several recurring CBO products, including The Long- Term Budget Outlook, Long- Term Projections for Social Security: Additional Information, Social Security Policy Options, and selected options from Options for Reducing the Deficit. CBOLT is complex, and this report will not cover all of its aspects in detail. For example, it will not explain how marital status, labor force participation, earnings, the claiming of Social Security auxiliary benefits, or spending for major federal health care programs are projected. Instead, it will focus on several key topics: 0 CBOLT's four components-the demographic model, the microsimulation model, the long-term budget model, and the policy growth model-and how they relate to one another; 1. For more information about CBOLT, see Congressional Budget Office, CBO Long-Term Model: An Overview (June 2009), www.cbo.gov/publication/20807. 0 The data used in CBOLT; a How CBOLT's demographic model is used to make projections of the population; 0 How CBOLT's microsimulation model works, including how it is used to project demographic characteristics and to estimate the claiming of Social Security benefits; a How CBOLT is used to produce long-term projections of the overall federal budget; and a How CBOLT is used to project long-term economic outcomes. The Structure of CBOLT CBOLT consists of four components: 0 The demographic model projects the population by age and sex, using annual projections of the number of births, deaths, immigrants, and emigrants. 0 The microsimulation model projects year-to-year changes in demographic characteristics and economic outcomes for individuals in a representative sample of the population. 0 The long-term budget model projects federal outlays, revenues, deficits, and debt beyond CBO's standard 10-year budget window. 0 The policy growth model simulates how demographics, fiscal policy, and economic factors affect the U.S. economy and, in turn, the federal budget. Those four components interact in a variety of ways. For example, the demographic model projects how many

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