How Close Did CBO Get?

The Treasury Department released its final estimate of the budget figures for FY 2013 last week, with a final deficit figure of $680 billion. Today, CBO followed up with a breakdown of the differences between their May estimate and the actual totals.

So, how close did CBO get? Pretty close. Overall, CBO projected a deficit of $642 billion in May, $38 billion less than the final estimate from Treasury. Revenues were $39 billion lower than expected, while outlays were $1 billion lower. Below is a full breakdown.

There are a few revisions of note. First, remittances from Fannie Mae and Freddie Mac were $15 billion lower than had been projected in May. Spending by the Department of Education was also $10 billion greater than May's estimate, largely due to the Bipartisan Student Loan Certainty Act of 2013 that increased outlays by $8 billion. These changes were offset by lower spending levels elsewhere in the budget.

There is always some margin of error in CBO's projections, though the agency does a fantastic job. But some future drivers of the long-term debt, especially the changes in demographics, are well established. CBO's longer-term projections show convincingly that without significant deficit reductions efforts, debt will be on an upward trajectory at the end of the decade and balloon in the years after. Even faster economic growth would likely not be enough to reverse course. Given the evidence, we still have a debt problem we need to solve.