Congressional Budget Office Inaccuracy 5-26-25

Inaccuracies in the Congressional Budget Office (CBO) budget projections for 2025 have been noted, particularly regarding revenue and spending estimates. The CBO has admitted underestimates of increased Medicaid spending and overestimations of the deficit impact of tax relief. For example, in its May 2023 projections for fiscal year 2024, the CBO underestimated revenues by 1 percent and outlays by 6 percent. 

Here's a more detailed look at the issues: 

Revenue Projections: The CBO tends to overestimate revenues, with an average error of 1.2% for budget-year projections. This means they sometimes project higher revenues than actually occur. 

Spending Projections: The CBO also underestimates spending, particularly for Medicaid, with inaccuracies linked to enrollment assumptions. They have admitted that their underestimates of increased Medicaid spending are directly attributable to inaccurate enrollment assumptions. 

Medicaid Spending: The CBO has admitted to underestimating the increased spending on Medicaid. 

Tax Relief: The CBO has also been criticized for overstating the deficit impact of tax relief for Americans. 

Debt Projections: The CBO's long-term outlook shows that federal debt will surge past record levels, rising from 100 percent of Gross Domestic Product (GDP) in Fiscal Year (FY) 2025 to 156 percent of GDP by 2055. 

Deficit Projections: The federal budget deficit for fiscal year 2025 is projected to be $1.9 trillion by the CBO. 

Transparency Efforts: The CBO has been working to enhance transparency and accuracy in its budget projections. 

Spending Will Continue to Outpace Revenue. Revenue is projected to grow from 17.1 percent of GDP in 2025 to 18.2 percent in 2027 as the Tax Cuts and Jobs Act expires, then increase gradually to 19.3 percent of GDP in 2055. Historically, revenue has averaged 17.3 percent of GDP and spending 21.1 percent of GDP.

The Congressional Budget Office (CBO) was created in 1974 primarily to strengthen Congress's role in budget matters. Specifically, the Congressional Budget and Impoundment Control Act of 1974 aimed to reassert congressional authority over the federal budget, which had been weakening in the early 1920s. The CBO was established as part of this act to provide Congress with independent, nonpartisan information and analysis to assist in the budget process. 

https://www.google.com/search?q=why+was+the+congressional+budget+office+created+in+1974

Comments

The Congressional Budget Office was created in 1974. It did not recognize the increase in revenue under President Kennedy’s tax rate cuts in 1960.  I did not recognize the Laffer Curve, or the revenue increases after the Reagan tax rate cuts in the 1980s. It does not recognize the revenue increases after Trump’s tax rate cuts in 2017. The CBO does not include Trump’s Tariff Revenue. It does not recognize growth that occurs with reductions in the US Trade Deficit. The CBO, like the Federal Reserve, is not set up to make “accurate projections”.

The US Nominal GDP needs to be tracked to follow the Private Sector GDP v the Government GDP to total the Combined US Nominal GDP. US economic growth will come to the Private Sector. We are reshoring manufacturing to the US to increase the Private Sector GDP. Trump is pursuing “Reciprocal Trade” to reduce the US Trade Deficit from $1 trillion to $500 billion. Trump is pursuing automation and systems upgrades in Government to reduce National Debt Interest from $1 trillion to zero.

Norb Leahy, Dunwoody GA Tea Party Leader