[Analytical Perspectives]
[Dimensions of the Budget]
[20. Comparison of Actual to Estimated Totals]
[From the U.S. Government Printing Office, www.gpo.gov]



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              20.  COMPARISON OF ACTUAL TO ESTIMATED TOTALS

  In successive budgets, the Administration publishes several estimates 
of the surplus or deficit for a particular fiscal year. Initially, the 
year appears as an outyear projection at the end of the budget horizon. 
In each subsequent budget, the year advances in the estimating horizon 
until it becomes the ``budget year.'' One year later, the year becomes 
the ``current year'' then in progress, and the following year, it 
becomes the just-completed ``actual year.''
  The budget is legally required to compare budget year estimates of 
receipts and outlays with the subsequent actual receipts and outlays for 
that year. Part I of this chapter meets that requirement by comparing 
the actual results for 2006 with the current services estimates shown in 
the 2006 Budget, published in February 2005.
  Part II of the chapter presents a broader comparison of estimates and 
actual outcomes. This part first discusses the historical record of 
budget year estimates versus actual results over the last two decades. 
Second, it lengthens the focus to estimates made for each year of the 
budget horizon, extending four years beyond the budget year. This longer 
focus shows that the differences between estimates and the eventual 
actual results grow as the estimates extend further into the future.

       PART I:  COMPARISON OF ACTUAL TO ESTIMATED TOTALS FOR 2006

   This part of the chapter compares the actual receipts, outlays, and 
deficit for 2006 with the current services estimates shown in the 2006 
Budget, published in February 2005. \1\ This part also presents a more 
detailed comparison for mandatory and related programs, and reconciles 
the actual receipts, outlays, and deficit totals shown here with the 
figures for 2006 previously published by the Department of the Treasury.
---------------------------------------------------------------------------
  \1\ The current services concept is discussed in Chapter 24, ``Current 
Services Estimates.'' For mandatory programs and receipts, the February 
2005 current services estimate was based on laws then in place, adjusted 
to reflect extension of certain expiring provisions in the 2001 and 2003 
tax acts. For discretionary programs the current services estimate was 
based on the current year estimates, excluding one-time emergency 
appropriations, adjusted for inflation.
---------------------------------------------------------------------------

                                Receipts

  Actual receipts for 2006 were $2,407 billion, $229 billion more than 
the $2,178 billion current services estimate in the 2006 Budget 
(February 2005). As shown in Table 20-1, this increase was the net 
effect of legislative and administrative changes; economic conditions 
that differed from what had been expected; and technical factors that 
resulted in different collection patterns and effective tax rates than 
had been assumed.

                                     

          Table 20-1.  COMPARISON OF ACTUAL 2006 RECEIPTS WITH THE INITIAL CURRENT SERVICES  ESTIMATES
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                         Enacted
                                           February   legislation/    Different  Technical     Net
                                             2005    administrative   economic     factors    change     Actual
                                           estimate      actions     conditions
----------------------------------------------------------------------------------------------------------------
Individual income taxes.................       965           -11            10         81         79      1,044
Corporation income taxes................       223             *            -5        136        131        354
Social insurance and retirement receipts       819   ..............         16          3         19        838
Excise taxes............................        76             *            -1         -1         -2         74
Estate and gift taxes...................        26             1             *          1          2         28
Customs duties..........................        27            -*             1         -3         -2         25
Miscellaneous receipts..................        43             *             3         -1          2         45
                                         -----------------------------------------------------------------------
  Total receipts........................     2,178           -10            23        216        229      2,407
----------------------------------------------------------------------------------------------------------------
* $500 million or less.

   Policy differences. Several laws were enacted after February 2005 
that reduced 2006 receipts by a net $10 billion. The emergency tax 
relief provided to individuals and businesses affected by hurricanes 
Katrina, Rita and Wilma in the Katrina Emergency Tax Relief Act of 2005 
and the Gulf Opportunity Zone Act of 2005 accounted for $5 billion of 
the net reduction in 2006 receipts. The provisions of the Tax Increase 
Prevention and Reconciliation Act of 2005 (TIPRA), primarily the 
increase in the alternative minimum tax (AMT) exemp

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tion amount and a modification of the timing of estimated tax payments 
by corporations, also reduced 2006 receipts by a net $5 billion. The 
effects of other legislative and administrative changes on 2006 receipts 
were largely offsetting.
   Economic differences. Differences between the economic assumptions 
upon which the current services estimates were based and actual economic 
performance increased 2006 receipts by a net $23 billion. Higher-than-
anticipated wages and salaries and other sources of personal income were 
in large part responsible for the increases in individual income taxes 
and social insurance and retirement receipts of $10 billion and $16 
billion, respectively. These increases were partially offset by a $5 
billion decrease in corporation income taxes, attributable to lower-
than-expected corporate profits. Differences between anticipated and 
actual economic performance increased other sources of receipts by a net 
$3 billion.
   Technical reestimates. Technical factors increased 2006 receipts by a 
net $216 billion above the February 2005 current services estimate. This 
net increase was primarily attributable to higher-than-anticipated 
collections of individual and corporation income taxes of $81 billion 
and $136 billion, respectively. Different collection patterns and 
effective tax rates than assumed in February 2005 were primarily 
responsible for the higher-than-anticipated collections of individual 
and corporation income taxes. Changes in other sources of receipts 
attributable to technical factors were largely offsetting.

                                 Outlays

  Outlays for 2006 were $2,655 billion, $116 billion more than the 
$2,539 billion current services estimate in the 2006 Budget (February 
2005).
   Table 20-2 distributes the $116 billion net increase in outlays among 
discretionary and mandatory programs and net interest. \2\ The table 
also makes rough estimates according to three reasons for the changes: 
policy; economic conditions; and technical estimating differences, a 
residual.
---------------------------------------------------------------------------
  \2\ Discretionary programs are controlled by annual appropriations, 
while mandatory programs are generally controlled by authorizing 
legislation. Mandatory programs are mostly formula benefit or 
entitlement programs with permanent spending authority that depend on 
eligibility criteria, benefit levels, and other factors. 
---------------------------------------------------------------------------

                                     

           Table 20-2.  COMPARISON OF ACTUAL 2006 OUTLAYS WITH THE INITIAL CURRENT SERVICES ESTIMATES
                                              (Outlays in billions)
----------------------------------------------------------------------------------------------------------------
                                                     Current                   Changes
                                                     Services -----------------------------------------
                                                      (Feb.                                     Total    Actual
                                                      2005)     Policy   Economic  Technical   changes
----------------------------------------------------------------------------------------------------------------
Discretionary:
  Defense.........................................        437        93  ........        -11        83       520
  Nondefense......................................        477        48  ........        -28        20       497
                                                   -------------------------------------------------------------
    Subtotal, discretionary.......................        914       141  ........        -39       103     1,017
 
Mandatory:
  Social Security.................................        540  ........         7         -3         4       544
  Other programs..................................        876        15        -1        -22        -7       868
                                                   -------------------------------------------------------------
    Subtotal, mandatory...........................      1,416        15         6        -25        -4     1,412
 
Net interest......................................        209         3        12          2        17       227
                                                   -------------------------------------------------------------
    Total outlays.................................      2,539       160        18        -61       116     2,655
----------------------------------------------------------------------------------------------------------------

  Policy changes are the result of legislative actions that change 
spending levels, primarily through higher or lower appropriations or 
changes in authorizing legislation, which may themselves reflect 
responses to changed economic conditions. For 2006, policy changes 
increased outlays by an estimated $160 billion relative to the initial 
current services estimates.
  Policy changes increased discretionary outlays by $141 billion. 
Defense discretionary outlays increased by $93 billion and nondefense 
discretionary outlays increased by $48 billion. A significant portion of 
both defense and nondefense outlay increases resulted from enactment of 
emergency supplemental appropriation acts for defense, the Global War on 
Terror, and hurricane recovery in 2005 and 2006. Policy changes 
increased mandatory outlays by a net $15 billion above current law. This 
increase largely reflects a $19 billion increase in outlays for the 
National flood insurance program in response to hurricane recovery, 
partly offset by a $5 billion decrease in Medicare outlays, largely 
enacted in the Deficit Reduction Act of 2005.

          Table 20-3.  COMPARISON OF THE ACTUAL 2006 DEFICIT WITH THE INITIAL CURRENT SERVICES ESTIMATE
                                                  (In billions)
----------------------------------------------------------------------------------------------------------------
                                                      Current                  Changes
                                                     Services -----------------------------------------
                                                       (Feb.                                    Total    Actual
                                                       2005)    Policy   Economic  Technical   changes
----------------------------------------------------------------------------------------------------------------
Receipts...........................................     2,178       -10        23        216       229     2,407
Outlays............................................     2,539       160        18        -61       116     2,655
                                                    ------------------------------------------------------------
  Deficit..........................................       361       170        -6       -277      -113       248
----------------------------------------------------------------------------------------------------------------
Note: Deficit changes are outlays minus receipts. For these changes, a plus indicates an increase in the
  deficit.

  Economic conditions that differed from those forecast in February 2005 
resulted in a net increase in outlays of $18 billion. The most 
significant changes consist of a $7 billion increase in Social Security 
benefits largely resulting from higher cost-of-living adjustments and a 
$12 billion increase in net interest due to higher-than-expected 
interest rates.
  Technical estimating differences and other changes resulted in a net 
decrease in outlays of $61 billion. Technical changes result from 
changes in such factors

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as the number of beneficiaries for entitlement programs, crop 
conditions, or other factors not associated with policy changes or 
economic conditions. Outlays for discretionary programs decreased an 
estimated $39 billion, because budget authority for both defense and 
nondefense programs was spent more slowly than expected. Outlays for 
mandatory programs decreased by a net $25 billion, largely because 
higher-than-anticipated outlays for higher education and mortgage credit 
programs were more than offset by lower-than-anticipated outlays for 
Medicaid, Medicare, unemployment compensation, and other programs. Net 
interest outlays increased by $2 billion due to technical factors 
compared to the February 2005 estimates.

                                 Deficit

  The preceding two sections discussed the differences between the 
initial current services estimates and the actual amounts of Federal 
Government receipts and outlays for 2006. This section combines these 
effects to show the net impact of these differences.
  As shown in Table 20-3, the 2006 current services deficit was 
initially estimated to be $361 billion. The actual deficit was $248 
billion, which was a $113 billion decrease from the initial estimate. 
Receipts were $229 billion more than the initial estimate and outlays 
were $116 billion more. The table shows the distribution of the changes 
according to the categories in the preceding two sections.
  The net effect of policy changes for receipts and outlays increased 
the deficit by $170 billion. Economic conditions that differed from the 
initial assumptions in February 2005 accounted for an estimated $6 
billion decrease in the deficit. Technical factors reduced the deficit 
by an estimated $277 billion.

Comparison of the Actual and Estimated Outlays for Mandatory and Related 
                            Programs for 2006

  This section compares the original 2006 outlay estimates for mandatory 
and related programs under current law in the 2006 Budget (February 
2005) with the actual outlays. Major examples of these programs include 
Social Security and Medicare benefits, agricultural price support 
payments to farmers, and deposit insurance for banks and thrift 
institutions. This category also includes net interest outlays and 
undistributed offsetting receipts.

                                     

  Table 20-4.  COMPARISON OF ACTUAL AND ESTIMATED OUTLAYS FOR MANDATORY AND RELATED PROGRAMS UNDER CURRENT LAW
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                                          2006
                                                                       -----------------------------------------
                                                                          Feb. 2006
                                                                          estimate       Actual        Change
----------------------------------------------------------------------------------------------------------------
Mandatory outlays:
  Human resources programs:
    Education, training, employment, and social services..............        11            38            27
    Health:
      Medicaid........................................................       193           181           -12
      Other...........................................................        20            21             1
                                                                       -----------------------------------------
      Total health....................................................       213           201           -11
    Medicare..........................................................       340           325           -15
    Income security:
      Retirement and disability.......................................       106           102            -3
      Unemployment compensation.......................................        37            31            -6
      Food and nutrition assistance...................................        51            48            -3
      Other...........................................................       113           116             3
                                                                       -----------------------------------------
        Total, income security........................................       307           298            -9
    Social security...................................................       540           544             4
    Veterans benefits and services:
      Income security for veterans....................................        35            36             *
      Other...........................................................         3             2            -1
                                                                       -----------------------------------------
        Total veterans benefits and services..........................        38            37            -1
                                                                       -----------------------------------------
        Total mandatory human resources programs......................     1,449         1,444            -6
                                                                       -----------------------------------------
  Other functions:
    Agriculture.......................................................        21            20            -1
    International.....................................................        -2            -7            -4
    Deposit insurance.................................................        -1            -1            -*
    Other functions...................................................        15            24             9
                                                                       -----------------------------------------
        Total, other functions........................................        33            37             4
                                                                       -----------------------------------------
  Undistributed offsetting receipts:
    Employer share, employee retirement...............................       -60           -61            -1
    Rents and royalties on the outer continental shelf................        -7            -7            -*
    Other undistributed offsetting receipts...........................        -*            -*            -*
                                                                       -----------------------------------------
        Total undistributed offsetting receipts.......................       -67           -68            -1
                                                                       -----------------------------------------
      Total, mandatory................................................     1,416         1,412            -4
                                                                       -----------------------------------------
Net interest:
  Interest on Treasury debt securities (gross)........................       391           406            15
  Interest received by trust funds....................................      -172          -169             2
  Other interest......................................................       -10           -10            -*
                                                                       -----------------------------------------
        Total net interest............................................       209           227            17
                                                                       -----------------------------------------
        Total outlays for mandatory and net interest..................     1,625         1,639            14
----------------------------------------------------------------------------------------------------------------
* $500 million or less.

  A number of factors may cause differences between the amounts 
estimated in the budget and the actual mandatory outlays. For example, 
legislation may change benefit rates or coverage; the actual number of 
beneficiaries may differ from the number estimated; or economic 
conditions (such as inflation or interest rates) may differ from what 
was assumed in making the original estimates.
  Table 20-4 shows the differences between the actual outlays for these 
programs in 2006 and the amounts originally estimated in the 2006 
Budget, based on laws in effect at that time. Actual outlays for 
mandatory spending and net interest in 2006 were $1,639 billion, which 
was $14 billion more than the initial estimate of $1,625 billion, based 
on existing law in February 2005.
  As Table 20-4 shows, actual outlays for mandatory human resources 
programs were $1,444 billion, $6 billion less than originally estimated. 
This decrease was the net effect of legislative action, differences 
between actual and assumed economic conditions, differences between the 
anticipated and actual number of beneficiaries, and other technical 
differences. Outlays for other functions were $4 billion more than 
originally estimated. Undistributed offsetting receipts were $1 billion 
higher than expected, thus reducing total outlays.
  Outlays for net interest were $227 billion, or $17 billion more than 
the original estimate. This increase was the net effect of changes in 
interest rates from those initially assumed, changes in borrowing 
requirements due to differences in deficits, and technical factors.

  Reconciliation of Differences with Amounts Published by Treasury for 
                                  2006

  Table 20-5 provides a reconciliation of the receipts, outlays, and 
deficit totals published by the Department of the Treasury in the 
September 2006 Monthly Treasury Statement and those published in this 
Budget. The Department of the Treasury made adjustments to the estimates 
for the Combined Statement of Receipts, Outlays, and Balances, which 
decreased receipts by $6 million and increased outlays by $499 million. 
Nearly all of the outlay adjustment was the correction of reporting for 
the Exchange Stabilization Fund. Additional adjustments for this Budget 
increased receipts and outlays by $579 million and $557 million, 
respectively. Several financial transactions that are not reported to 
the De

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partment of the Treasury, including those for the Affordable Housing 
Program, the Public Company Accounting Oversight Board, and the United 
Mine Workers of America benefit funds, are included in the budget. 
Reporting for these programs adds roughly equivalent amounts to outlays 
and receipts, with little impact on the deficit. Another significant 
conceptual difference in reporting is for the National Railroad 
Retirement Investment Trust (NRRIT). Reporting to the Department of the 
Treasury for the NRRIT is done with a one month lag so that the fiscal 
year total provided in the Treasury Combined Statement covers September 
2005 through August 2006. The budget has been adjusted to reflect 
transactions that occurred during the actual fiscal year, which begins 
in October.

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                              Table 20-5.  RECONCILIATION OF FINAL AMOUNTS FOR 2006
                                            (In millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                     Receipts         Outlays         Deficit
----------------------------------------------------------------------------------------------------------------
Totals published by Treasury (September 30 MTS).................       2,406,681       2,654,379        -247,698
  Miscellaneous Treasury adjustments............................              -6             499            -505
                                                                 -----------------------------------------------
Totals published by Treasury in Combined Statement..............       2,406,675       2,654,878        -248,203
 
  Affordable Housing Program....................................             307             307  ..............
  Public Company Accounting Oversight Board.....................             131             131  ..............
  United Mine Workers of America benefit funds..................             119             114               5
  National Railroad Retirement Investment Trust.................  ..............             -48              48
  Other.........................................................              22              53             -31
                                                                 -----------------------------------------------
  Total adjustments, net........................................             579             557              22
 
Totals in the budget............................................       2,407,254       2,655,435        -248,181
 
MEMORANDUM:
  Total change since year-end statement.........................             573           1,056            -483
----------------------------------------------------------------------------------------------------------------

                                     

  Part II:  HISTORICAL COMPARISON OF ACTUAL TO ESTIMATED SURPLUSES OR 
                                DEFICITS

  This part of the chapter compares estimated surpluses or deficits to 
actual outcomes over the last two and a half decades. The first section 
compares the estimate for the budget year of each budget with the 
subsequent actual result. The second section extends the comparison to 
the estimated surpluses or deficits for each year of the budget window: 
that is, for the current year through the fourth year following the 
budget year. This part concludes with some observations on the 
historical record of estimates of the surplus or deficit versus the 
subsequent actual outcomes.

                                     

                Table 20-6.  COMPARISON OF ESTIMATED AND ACTUAL SURPLUSES OR DEFICITS SINCE 1982
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                              Surplus          Differences due to
                                            or deficit ----------------------------------
                                                (-)                                                     Actual
                 Budget                      estimated                                       Total    surplus or
                                                for       Enacted    Economic  Technical  difference   deficit(-
                                              budget    legislation   factors    factors                   )
                                             year \1\
----------------------------------------------------------------------------------------------------------------
 
1982......................................         -62          15        -70        -11        -66        -128
1983......................................        -107         -12        -67        -22       -101        -208
1984......................................        -203         -21         38         -0         17        -185
1985......................................        -195         -12        -17         12        -17        -212
1986......................................        -180          -8        -27         -7        -41        -221
1987......................................        -144           2        -16          8         -6        -150
1988......................................        -111          -9        -19        -16        -44        -155
1989......................................        -130         -22         10        -11        -23        -153
1990......................................         -91         -21        -31        -79       -131        -221
1991......................................         -63          21        -85       -143       -206        -269
1992......................................        -281         -36        -21         48         -9        -290
1993......................................        -350          -8        -13        115         95        -255
1994......................................        -264          -8         16         52         61        -203
1995......................................        -165         -18          1         18          1        -164
1996......................................        -197           6         53         30         89        -107
1997......................................        -140           1         -4        121        118         -22
1998......................................        -121          -9         48        151        190          69
1999......................................          10         -22         56         82        116         126
2000......................................         117         -42         88         73        119         236
2001......................................         184        -129         32         41        -56         128
2002......................................         231        -104       -201        -84       -389        -158
2003......................................         -80         -86        -34       -177       -297        -378
2004......................................        -307        -122        -22         39       -105        -412
2005......................................        -364         -67        -11        123         45        -318
2006......................................        -390        -141          6        277        142        -248
 
Average...................................  ..........         -34        -12         26        -20   ..........
Absolute average \2\......................  ..........          38         39         70         99   ..........
Standard deviation........................  ..........          46         57         94        136   ..........
----------------------------------------------------------------------------------------------------------------
\1\ Surplus or deficit estimate includes the effect of the budget's policy proposals.
\2\ Absolute average is the average without regard to sign.

Historical Comparison of Actual to Estimated Results for the Budget Year

  Table 20-6 compares the estimated and actual surpluses or deficits 
since the deficit estimated for 1982 in the 1982 Budget. The estimated 
surpluses or deficits for each budget include the Administration's 
policy proposals. Therefore, the original deficit estimate for 2006 
differs from that shown in Table 20-3, which is on a current services 
basis. Earlier comparisons of actual and estimated surpluses or deficits 
were on a policy basis, so for consistency the figures in Table 20-6 are 
on this basis.
  On average, the estimates for the budget year underestimated actual 
deficits (or overestimated actual surpluses) by $20 billion over the 25-
year period. Policy outcomes that differed from the original proposals 
increased the deficit by an average of $34 billion. Differences between 
economic assumptions and actual economic performance increased the 
deficit an average of $12 billion. Differences due to these two factors 
were partly offset by technical revisions, which reduced the deficit an 
average of $26 billion.
  The relatively small average difference between actual and estimated 
deficits conceals a wide variation in the differences from budget to 
budget. The differences ranged from a $389 billion underestimate of the 
deficit to a $190 billion overestimate. The $389 billion underestimate, 
in the 2002 Budget, was due largely to receipt shortfalls related to the 
2001 recession and associated weak stock market performance. About a 
quarter of the underestimate was due to increased spending for recovery 
from the September 11, 2001 terrorist attacks, homeland security 
measures, and the war on terror, along with lower receipts due to tax 
relief in the March 2002 economic stimulus act. The $190 billion 
overestimate of the deficit in the 1998 Budget stemmed largely from 
stronger-than-expected economic growth and a surge in individual income 
tax collections beyond that accounted for by economic factors.
  Because the average deficit difference obscures the degree of under- 
and overestimation in the historical data, a more appropriate statistic 
to measure the magnitude of the differences is the average absolute 
difference. This statistic measures the difference without regard to 
whether it was an under- or overestimate. Since 1982, the average 
absolute difference has been $99 billion.
  Another measure of variability is the standard deviation. This 
statistic measures the dispersion of the data around the average value. 
The standard deviation of the deficit differences since 1982 is $136 
billion. Like the average absolute difference, this measure illustrates 
the high degree of variation in the difference between estimates and 
actual deficits.
  The large variability in errors in estimates of the surplus or deficit 
for the budget year underscores the inherent uncertainties in estimating 
the future path of the Federal budget. Some estimating errors are 
unavoidable, because of differences between the President's original 
budget proposals and the legislation that Congress subsequently enacts. 
Occasionally such differences are huge, such as additional 
appropriations for disaster recovery, homeland security, and war efforts 
in response to the terrorist attacks of September 11, 2001, which were 
obviously not envisioned in the

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President's Budget submitted the previous February. Even aside from 
differences in policy outcomes, errors in budget estimates can arise 
from new economic developments, unexpected changes in program costs, 
shifts in taxpayer behavior, and other factors. The budget impact of 
changes in economic assumptions is discussed further in Chapter 12 of 
this volume, ``Economic Assumptions.''

    Five-Year Comparison of Actual to Estimated Surpluses or Deficits

  The substantial difference between actual surpluses or deficits and 
the budget year estimates made less than two years earlier raises 
questions about the degree of variability for estimates of years beyond 
the budget year. Table 20-7 shows the summary statistics for the 
differences for the current year (CY), budget year (BY), and the four 
succeeding years (BY+1 through BY+4). These are the years that are 
required to be estimated in the budget by the Budget Enforcement Act of 
1990.
  On average, the budget estimates since 1982 overstated the deficit in 
the current year by $26 billion, but underestimated the deficit in the 
budget year by $20 billion. The budget estimates understated the deficit 
in the years following, by amounts growing from $59 billion for BY+1 to 
$141 billion for BY+4. While these results suggest a tendency to 
underestimate deficits toward the end of the budget horizon, the 
averages are not statistically different from zero in light of the high 
variation in the data.
  The average absolute difference between estimated and actual deficits 
grows dramatically over the six years from CY through BY+4, from $58 
billion in the current year to $99 billion for the budget year, to $269 
billion for BY+4. While under- and overestimates of the deficit have 
historically tended to average out, the absolute size of the under- or 
overestimates grows as the estimates extend further into the future. The 
standard deviation of the deficit differences shows the same pattern. 
The standard deviation grows from $71 billion for current year estimates 
to $136 billion for the budget year estimates and continues to increase 
steadily as the estimates extend further out, reaching $289 billion for 
BY+4.

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Table 20-7.  DIFFERENCES BETWEEN ESTIMATED AND ACTUAL SURPLUSES OR DEFICITS FOR FIVE-YEAR BUDGET ESTIMATES SINCE
                                                      1982
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                             Estimate for budget year plus
                                                 Current     Budget  -------------------------------------------
                                                   year       year                            Three       Four
                                                 estimate   estimate   One year  Two years    years      years
                                                                        (BY+1)     (BY+2)     (BY+3)     (BY+4)
----------------------------------------------------------------------------------------------------------------
Average difference \1\........................         26        -20        -59        -97       -128       -141
Average absolute difference \2\...............         58         99        149        202        245        269
Standard deviation............................         71        136        202        249        271        289
----------------------------------------------------------------------------------------------------------------
\1\ A positive figure represents an underestimate of the surplus or an overestimate of the deficit.
\2\ Average absolute difference is the difference without regard to sign.

  The estimates of variability in the difference between estimated and 
actual deficits can be used to construct a range of uncertainty around a 
given set of estimates. Statistically, if these differences are normally 
distributed, the actual deficit will be within a range of two standard 
deviations above or below the estimate about 90 percent of the time. 
Chart 20-1 shows this range of two standard deviations applied to the 
deficit estimates in this Budget. This chart illustrates that unforeseen 
economic developments, policy outcomes, or other factors could give rise 
to large swings in the deficit estimates.