[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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                        DIMENSIONS OF THE BUDGET

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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 2007 with the current services estimates shown in 
the 2007 Budget, published in February 2006.
  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 and a half 
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 2007

   This part of the chapter compares the actual receipts, outlays, and 
deficit for 2007 with the current services estimates shown in the 2007 
Budget, published in February 2006. \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 2007 previously published by the Department of the Treasury.
---------------------------------------------------------------------------
  \1\ The current services concept is discussed in Chapter 25, ``Current 
Services Estimates.'' For mandatory programs and receipts, the February 
2006 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 2007 were $2,568 billion, $124 billion more than 
the $2,444 billion current services estimate in the 2007 Budget 
(February 2006). 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 2007 RECEIPTS WITH THE INITIAL CURRENT SERVICES  ESTIMATES
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                         Enacted
                                           February   legislation/    Different  Technical     Net
                                             2006    administrative   economic     factors    change     Actual
                                           estimate      actions     conditions
----------------------------------------------------------------------------------------------------------------
Individual income taxes.................     1,119           -38             7         75         45      1,163
Corporate income taxes..................       265           -12            15        102        105        370
Social insurance and retirement receipts       884   ..............        -10         -4        -15        870
Excise taxes............................        75            -*            -2         -8        -10         65
Estate and gift taxes...................        24             1             *          1          2         26
Customs duties..........................        29            -1             1         -3         -3         26
Miscellaneous receipts..................        48   ..............          2         -3         -1         48
                                         -----------------------------------------------------------------------
  Total receipts........................     2,444           -49            13        161        124      2,568
----------------------------------------------------------------------------------------------------------------
* $500 million or less.

   Policy differences. Several laws were enacted after February 2006 
that reduced 2007 receipts by a net $49 billion. The provisions of the 
Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), 
primarily the increase in the alternative minimum tax (AMT) exemption 
amount and a modification of the timing of estimated tax payments by 
corporations, reduced 2007 receipts by a net $34 billion. Enactment of 
the Tax Relief and Health Care Act of 2006, which extended a number of 
expired or expiring tax provisions,

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reduced 2007 receipts by an additional $16 billion. The effects of other 
legislative and administrative changes on 2007 receipts were largely 
offsetting.
   Economic differences. Differences between the economic assumptions 
upon which the current services estimates were based and actual economic 
performance increased 2007 receipts by a net $13 billion above the 
February 2006 estimate. Higher-than-expected corporation income tax 
liability in tax years 2006 and 2007, attributable to higher-than-
expected taxable profits, increased collections of 2007 corporation 
income taxes $15 billion above the February 2006 estimate. Higher-than-
anticipated non-wage sources of personal income, which more than offset 
lower-than-anticipated wages and salaries, were in large part 
responsible for the increase in individual income taxes of a net $7 
billion. These increases in individual and corporation income taxes were 
partially offset by a $10 billion decrease in social insurance and 
retirement receipts, attributable in large part to lower-than-expected 
wages and salaries. Differences between anticipated and actual economic 
performance increased other sources of receipts by a net $1 billion.
   Technical reestimates. Technical factors increased receipts by a net 
$161 billion above the February 2006 current services estimate. This net 
increase was in large part attributable to higher-than-expected 
collections of individual and corporation income taxes and estate and 
gift taxes, which were partially offset by lower-than-expected 
collections of other sources of receipts. Different collection patterns 
and effective tax rates than assumed in February 2006 were primarily 
responsible for the higher-than-anticipated collections of individual 
and corporation income taxes of $75 billion and $102 billion, 
respectively. Greater-than-anticipated numbers and values of taxable 
estates increased 2007 receipts an additional $1 billion above the 
February 2006 estimate. Court decisions that effectively invalidated 
part of the Federal telephone tax were in large part responsible for the 
$8 billion reduction in excise tax collections relative to the February 
2006 estimate. Technical factors reduced collections of the remaining 
sources of receipts (social insurance and retirement receipts, customs 
duties and miscellaneous receipts) below the February 2006 estimates by 
smaller amounts.

                                 Outlays

  Outlays for 2007 were $2,730 billion, $30 billion more than the $2,701 
billion current services estimate in the 2007 Budget (February 2006).
   Table 20-2 distributes the $30 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. 
---------------------------------------------------------------------------

                                     


  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 2007, policy changes 
increased outlays by an estimated $133 billion relative to the initial 
current services estimates.
  Policy changes increased discretionary outlays by $124 billion. 
Defense discretionary outlays increased by $105 billion and nondefense 
discretionary outlays increased by $19 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, veterans' care, and hurricane recovery in 2006 and 2007. Policy 
changes increased mandatory outlays by a net $6 billion

           Table 20-2.  COMPARISON OF ACTUAL 2007 OUTLAYS WITH THE INITIAL CURRENT SERVICES ESTIMATES
                                              (Outlays in billions)
----------------------------------------------------------------------------------------------------------------
                                                     Current                   Changes
                                                     Services -----------------------------------------
                                                      (Feb.                                     Total    Actual
                                                      2006)     Policy   Economic  Technical   changes
----------------------------------------------------------------------------------------------------------------
Discretionary:
  Defense.........................................        463       105  ........        -18        86       549
  Nondefense......................................        500        19  ........        -25        -7       493
                                                   -------------------------------------------------------------
    Subtotal, discretionary.......................        962       124  ........        -44        80     1,042

Mandatory:
  Social Security.................................        581  ........         3         -3         *       581
  Medicare and Medicaid...........................        589         3        -1        -29       -28       561
  Other programs..................................        324         3         1        -19       -16       308
                                                   -------------------------------------------------------------
    Subtotal, mandatory...........................      1,495         6         2        -51       -44     1,451

Net interest......................................        244         4         3        -14        -7       237
                                                   -------------------------------------------------------------
    Total outlays.................................      2,701       133         6       -109        30     2,730
----------------------------------------------------------------------------------------------------------------
* $500 million or less.


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above current law. This increase reflects a $3.5 billion increase in 
outlays for the Commodity Credit Corporation, enacted in the Emergency 
Supplemental Appropriations and Additional Supplemental Appropriations 
for Agriculture and Other Emergency Assistance Act for 2007, and a $3 
billion increase in Medicare outlays, enacted in the Tax Relief and 
Health Care Act of 2006. Debt service costs associated with the policy 
receipt and outlay changes were $4 billion. 


  Economic conditions that differed from those forecast in February 2006 
resulted in a net increase in outlays of $6 billion. The most 
significant changes consist of a $3 billion increase in Social Security 
benefits largely resulting from higher cost-of-living adjustments and a 
$3 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 $109 billion. Technical changes result from 
changes in such factors 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 $44 billion, because budget authority for both 
defense and nondefense programs was spent more slowly than expected. 
Outlays for mandatory programs decreased a net $51 billion, largely due 
to lower-than-anticipated outlays for Medicare, Medicaid, and the 
Commodity Credit Corporation. Net interest outlays also decreased by $14 
billion due to technical factors compared to the February 2006 
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 2007. This section combines these 
effects to show the net deficit impact of these differences.
  As shown in Table 20-3, the 2007 current services deficit was 
initially estimated to be $257 billion. The actual deficit was $162 
billion, which was a $95 billion decrease from the initial estimate. 
Receipts were $124 billion more than the initial estimate and outlays 
were $30 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 $183 billion. Economic conditions that differed from the 
initial assumptions in February 2006 accounted for an estimated $7 
billion decrease in the deficit. Technical factors reduced the deficit 
by an estimated $270 billion.

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

  This section compares the original 2007 outlay estimates for mandatory 
and related programs under current law in the 2007 Budget (February 
2006) 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.
  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 2007 and the amounts originally estimated in the 2007 
Budget, based on laws in effect at that time. Actual outlays for 
mandatory spending and net interest in 2007 were $1,688 billion, which 
was $50 billion less than the initial estimate of $1,738 billion, based 
on existing law in February 2006.
  As Table 20-4 shows, actual outlays for mandatory human resources 
programs were $1,525 billion, $28 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 $24 billion less 
than originally estimated. Undistributed offsetting receipts were $9 
billion lower than expected, thus increasing total outlays.
  Outlays for net interest were $237 billion or $7 billion less than the 
original estimate. This decrease was the net effect of changes in 
interest rates from those ini

          Table 20-3.  COMPARISON OF THE ACTUAL 2007 DEFICIT WITH THE INITIAL CURRENT SERVICES ESTIMATE
                                                  (In billions)
----------------------------------------------------------------------------------------------------------------
                                                      Current                  Changes
                                                     Services -----------------------------------------
                                                       (Feb.                                    Total    Actual
                                                       2006)    Policy   Economic  Technical   changes
----------------------------------------------------------------------------------------------------------------
Receipts...........................................     2,444       -49        13        161       124     2,568
Outlays............................................     2,701       133         6       -109        30     2,730
                                                    ------------------------------------------------------------
  Deficit..........................................       257       183        -7       -270       -95       162
----------------------------------------------------------------------------------------------------------------
Note: Deficit changes are outlays minus receipts. For these changes, a plus indicates
an increase in the deficit.


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  Table 20-4.  COMPARISON OF ACTUAL AND ESTIMATED OUTLAYS FOR MANDATORY AND RELATED PROGRAMS UNDER CURRENT LAW
                                            (In billions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                                          2007
                                                                       -----------------------------------------
                                                                          Feb. 2006
                                                                          estimate       Actual        Change
----------------------------------------------------------------------------------------------------------------
Mandatory outlays:
  Human resources programs:
    Education, training, employment, and social services..............        10            12             2
    Health:
      Medicaid........................................................       199           191            -9
      Other...........................................................        22            23             1
                                                                       -----------------------------------------

      Total health....................................................       221           214            -7
    Medicare..........................................................       390           371           -19
    Income security:
      Retirement and disability.......................................       111           111             1
      Unemployment compensation.......................................        38            32            -5
      Food and nutrition assistance...................................        49            49            -*
      Other...........................................................       114           117             3
                                                                       -----------------------------------------

        Total, income security........................................       312           310            -2
    Social security...................................................       581           581             *
    Veterans benefits and services:
      Income security for veterans....................................        36            36            -*
      Other...........................................................         3             2            -1
                                                                       -----------------------------------------

        Total veterans benefits and services..........................        39            38            -2
                                                                       -----------------------------------------

        Total mandatory human resources programs......................     1,554         1,525           -28

  Other functions:
    Agriculture.......................................................        21            12            -9
    International.....................................................        -2            -6            -4
    Deposit insurance.................................................        -2            -1             *
    Other functions...................................................        15             4           -11
                                                                       -----------------------------------------

        Total, other functions........................................        32             8           -24

  Undistributed offsetting receipts:
    Employer share, employee retirement...............................       -62           -62             *
    Rents and royalties on the outer continental shelf................        -9            -7             3
    Other undistributed offsetting receipts...........................       -20           -14             6
                                                                       -----------------------------------------

        Total undistributed offsetting receipts.......................       -91           -82             9
                                                                       -----------------------------------------

      Total, mandatory................................................     1,495         1,451           -44

Net interest:
  Interest on Treasury debt securities (gross)........................       438           430            -8
  Interest received by trust funds....................................      -181          -178             3
  Other interest......................................................       -13           -15            -2
                                                                       -----------------------------------------

        Total net interest............................................       244           237            -7
                                                                       -----------------------------------------

        Total outlays for mandatory and net interest..................     1,738         1,688           -50
----------------------------------------------------------------------------------------------------------------
* $500 million or less.


tially assumed, changes in borrowing requirements due to differences in 
deficits, and technical factors.

  Reconciliation of Differences with Amounts Published by Treasury for 
                                  2007

  Table 20-5 provides a reconciliation of the receipts, outlays, and 
deficit totals published by the Department of the Treasury in the 
September 2007 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 
increased receipts by $2 million and decreased outlays by $6 million. 
Additional adjustments for this Budget increased receipts by $566

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million and decreased outlays by $258 million. Several financial 
transactions that are not reported to the Department of the Treasury, 
including those for the Affordable Housing Program, the Public Company 
Accounting Oversight Board, the Electric Reliability Organization, 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 2006 through August 2007. The budget has been adjusted 
to reflect transactions that occurred during the actual fiscal year, 
which begins in October.

                              Table 20-5.  RECONCILIATION OF FINAL AMOUNTS FOR 2007
                                            (In millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                                                     Receipts         Outlays         Deficit
----------------------------------------------------------------------------------------------------------------
Totals published by Treasury (September 30 MTS).................       2,567,671       2,730,505        -162,834
  Miscellaneous Treasury adjustments............................               2              -6               8
                                                                 -----------------------------------------------
Totals published by Treasury in Combined Statement..............       2,567,673       2,730,499        -162,826

  Affordable Housing Program....................................             315             315  ..............
  Public Company Accounting Oversight Board.....................             122             122  ..............
  Electric Reliability Organization.............................              65              65  ..............
  United Mine Workers of America benefit funds..................              44              49              -5
  National Railroad Retirement Investment Trust.................  ..............            -782             782
  Other.........................................................              20             -27              47
                                                                 -----------------------------------------------

  Total adjustments, net........................................             566            -258             824

Totals in the budget............................................       2,568,239       2,730,241        -162,002

MEMORANDUM:
  Total change since year-end statement.........................             568            -264             832
----------------------------------------------------------------------------------------------------------------



   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.

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 $12 billion over the 26-
year period. Policy outcomes that differed from the original proposals 
increased the deficit by an average of $36 billion. Differences between 
economic assumptions and actual economic performance increased the 
deficit an average of $11 billion. Differences due to these two factors 
were partly offset by technical revisions, which reduced the deficit an 
average of $35 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 $192 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. As discussed above, the 
$192 billion overestimate of the deficit in the 2007 Budget stemmed 
largely from higher-than-anticipated collections of individual and 
corporation income taxes due to different collection patterns and 
effective tax rates than initially assumed, as well as lower-than-
expected outlays due to technical factors.
  Because the average deficit difference obscures the degree of under- 
and overestimation in the historical

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                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        -413
2005......................................        -364         -67        -11        123         45        -318
2006......................................        -390        -141          6        277        142        -248
2007......................................        -354         -85          7        270        192        -162

Average...................................                     -36        -11         35        -12
Absolute average \2\......................                      40         38         77        103
Standard deviation........................                      47         56        104        140
----------------------------------------------------------------------------------------------------------------
\1\ Surplus or deficit estimate includes the effect of the budget's policy proposals.

\2\ Absolute average is the average without regard to sign.

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 $103 
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 $140 
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 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 $28 billion, but underestimated the deficit in the 
budget year by $12 billion. The budget estimates understated the deficit 
in the years following, by amounts growing from $50 billion for BY+1 to 
$147 billion for BY+4. While

[[Page 337]]

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.

                                     

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\........................         28        -12        -50        -89       -122       -147
Average absolute difference \2\...............         59        103        149        197        235        269
Standard deviation............................         70        140        202        246        266        284
----------------------------------------------------------------------------------------------------------------
\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.

                                     
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]