CBO

SEPTEMBER 2015

CBO’s Projections of 

Federal Receipts and Expenditures in the 

National Income and Product Accounts

The fiscal transactions of the federal government are 

recorded in two major sets of accounts that are conceptually quite different. One is The Budget of the United States 

Government, prepared by the Office of Management and 

Budget. It is the framework generally used by executive 

branch agencies and the Congress and is the presentation 

of the federal government’s budgetary activity that is most 

often discussed in the press. The other set of accounts 

is the national income and product accounts (NIPAs), 

produced by the Department of Commerce’s Bureau of 

Economic Analysis (BEA).1

The purposes served by the budget and the NIPAs and the 

relationship between the two sets of accounts are examined 

briefly below and more thoroughly in previous publications of the Congressional Budget Office.2

 CBO recently 

reported its latest baseline projections of federal revenues 

and outlays using the standard structure for budget 

accounting.3

 This report presents those projections using 

the NIPA framework (see Table 1) and shows how the two 

presentations differ (see Table 2 on page 4). 

Over the 2015–2025 projection period spanned by 

CBO’s baseline, conceptual differences cause receipts in 

the NIPAs to be greater than revenues in the budget by 

about 5 percent and expenditures in the NIPAs to exceed 

outlays in the budget by about 8 percent.4

 Projected 

expenditures in the NIPAs exceed projected receipts by 

a total of $9.4 trillion, whereas deficits in CBO’s baseline 

budget projections total $7.4 trillion.

The Federal Budget

The budget of the federal government is best understood 

as an information and management tool.5

 Its main objectives are to provide information that can assist lawmakers 

in their policy deliberations, to facilitate the management 

and control of federal activities, and to help the Treasury 

manage its cash balances and determine its borrowing 

needs. In most cases, items in the federal budget are 

reported on a cash accounting basis, a method that records 

the inflow of revenues and the outflow of spending over a

1. See Mark S. Ludwick and Benyam Tsehaye, “NIPA Translation 

of the Fiscal Year 2016 Federal Budget,” Survey of Current 

Business, vol. 95, no. 3 (Bureau of Economic Analysis, March 

2015), www.bea.gov/scb/toc/0315cont.htm; and Bruce E. Baker 

and Pamela A. Kelly, “BEA Briefing: A Primer on BEA’s 

Government Accounts,” Survey of Current Business, vol. 88, no. 3 

(Bureau of Economic Analysis, March 2008), www.bea.gov/scb/

toc/0308cont.htm.

2. See Congressional Budget Office, CBO’s Projections of Federal 

Receipts and Expenditures in the National Income and Product 

Accounts (May 2013), www.cbo.gov/publication/44140.

3. See Congressional Budget Office, An Update to the Budget and 

Economic Outlook: 2015 to 2025 (August 2015), www.cbo.gov/

publication/50724.

4. As specified in law, and to provide a benchmark against which 

potential policy changes can be measured, CBO constructs its 

baseline estimates of federal revenues and spending under the 

assumption that current laws generally remain unchanged.

5. Another approach to assessing the government’s fiscal 

performance is reflected in the annual Financial Report of the 

United States Government (www.fms.treas.gov/fr), which uses an 

accrual basis of accounting to measure assets, liabilities, revenues, 

and expenses. See Congressional Budget Office, Comparing Budget 

and Accounting Measures of the Federal Government’s Fiscal 

Condition (December 2006), www.cbo.gov/publication/18262.

Note: Numbers in the text and tables may not add up to totals because of rounding.
2 CBO’S PROJECTIONS OF FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS SEPTEMBER 2015

CBO

Table 1.

Baseline Receipts and Expenditures as Measured by the National Income and Product Accounts 

Billions of Dollars

Source: Congressional Budget Office.

a. Includes Social Security taxes, Medicare taxes and premiums, and unemployment insurance taxes.

b. Negative numbers indicate that federal expenditures exceed federal receipts.

Actual, 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Current Tax Receipts

Taxes on personal income 1,370 1,502 1,628 1,731 1,811 1,885 1,970 2,068 2,176 2,288 2,406 2,533

Taxes on corporate income 412 455 506 481 454 439 441 459 473 493 518 544

Taxes on production and imports 135 140 140 147 151 153 157 161 165 169 173 178

Taxes from the rest of the world 21 22 21 22 24 25 26 28 29 30 32 34 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Subtotal, Current Tax Receipts 1,939 2,119 2,295 2,382 2,439 2,503 2,595 2,716 2,843 2,981 3,129 3,288

Contributions for Government Social Insurancea 1,131 1,175 1,218 1,265 1,316 1,371 1,432 1,496 1,566 1,629 1,693 1,774

Current Transfer Receipts 87 65 73 83 92 96 97 96 101 106 109 113

Income Receipts on Assets 107 50 60 63 69 70 73 76 79 81 85 88

Current Surpluses of Government Enterprises -10 -8 -13 -12 -11 -11 -10 -10 -9 -9 -9 -9 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Total Current Receipts 3,253 3,400 3,634 3,782 3,905 4,030 4,187 4,374 4,580 4,788 5,007 5,254

Consumption Expenditures

Defense

Compensation and purchased goods and services 450 438 430 438 445 454 463 473 484 495 507 520

Consumption of fixed capital 166 168 170 173 176 179 181 184 186 188 190 192 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Subtotal, Defense 615 605 600 611 621 632 644 657 670 683 697 712

Nondefense

Compensation and purchased goods and services 251 255 263 263 264 269 272 278 286 292 302 310

Consumption of fixed capital 100 103 106 109 113 116 119 122 125 128 131 133 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Subtotal, Nondefense 350 358 369 372 377 386 392 401 411 420 432 443

Current Transfer Payments

Government social benefits

To persons 1,850 1,931 2,013 2,099 2,209 2,316 2,454 2,600 2,763 2,916 3,085 3,275

To the rest of the world 18 18 19 20 21 22 23 25 27 28 29 32 ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Subtotal, Government Social Benefits 1,868 1,950 2,032 2,119 2,229 2,338 2,477 2,624 2,790 2,944 3,114 3,307

Other transfer payments 

Grants-in-aid to state and local governments 485 528 554 572 586 599 618 639 664 691 719 751

To the rest of the world 48 50 48 50 52 53 54 55 56 57 58 60 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Subtotal, Other Transfer Payments 533 578 602 622 637 652 672 694 720 748 777 810

Interest Payments 442 424 492 556 635 724 809 881 955 1,031 1,104 1,172

Subsidies 58 54 56 55 56 57 58 58 59 60 61 62 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Total Current Expenditures 3,867 3,969 4,151 4,334 4,555 4,789 5,052 5,316 5,605 5,886 6,185 6,506

Net Federal Government Savingb -613 -569 -517 -552 -650 -759 -865 -942 -1,025 -1,098 -1,178 -1,252

Memorandum:

Total Federal Consumption 966 963 969 983 998 1,018 1,036 1,058 1,081 1,103 1,129 1,155

Expenditures

Receipts

Net Federal Government Saving
SEPTEMBER 2015 CBO’S PROJECTIONS OF FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS 3

CBO

given period. The main period of interest for the budget 

is the federal fiscal year, which runs from October 1 

through September 30. 

The budget incorporates a few exceptions to cash-based 

accounting in cases in which lawmakers have decided that 

alternative approaches would improve the budget’s usefulness as a decisionmaking tool. For example, when the 

federal government makes direct loans or provides loan 

guarantees, tracking annual cash flows provides a misleading view of the true costs or savings associated with 

such transactions. Therefore, as specified in the Federal 

Credit Reform Act of 1990, the budget records as outlays 

an estimate of the net costs or savings to the government 

over the lifetime of a loan—that is, the net present value 

of all expected future cash flows related to the loan—at 

the time it is made. Such estimates are often revised 

later in response to changes in interest rates and to other 

developments.

The National Income and 

Product Accounts

The treatment of the federal sector in the NIPAs reflects 

none of the planning and management goals that underlie the budget. Instead, the NIPAs indicate how the federal government fits into a general economic framework 

by detailing current production and income over specific 

periods, the major sources of that production, and recipients of income resulting from current output. The NIPAs 

are constructed to cover calendar years and calendar quarters, but totals for fiscal years can be derived from 

the quarterly estimates. (The tables in this report show 

fiscal year numbers.) 

From the perspective of the NIPAs, the federal government is both a producer and a consumer. Its workforce 

uses purchased goods and services and governmentowned capital (buildings, equipment, software, and 

research and development) to produce services for the 

public at large. Because those services are consumed by 

the public, such purchases, by convention, are regarded 

as federal consumption expenditures in the NIPAs. In 

addition, through its taxes and transfers, the federal 

government affects the resources available to the private 

sector. The NIPAs record all of those activities in a 

manner consistent with the treatment accorded to other 

sectors of the economy.

In incorporating federal transactions into the framework 

used to determine gross domestic product, the NIPAs 

reflect judgments about how best to treat transactions 

such as government investment, the sale and purchase of 

existing assets, the provision of loans and guarantees, and 

other federal activities that resemble those of businesses. 

In some cases, federal budgetary transactions are shown 

in a nonfederal sector of the NIPAs or are excluded from 

the NIPAs entirely. In other cases, the NIPAs record as 

receipts items that the federal budget reports as offsetting 

collections (that is, as negative outlays), or they adjust the 

timing of federal transactions to better match the timing 

of related production or income flows. 

In Table 2, the major differences between CBO’s baseline 

budget projections and the corresponding NIPA amounts 

are shown in three categories: 

 Coverage—transactions that are included in either the 

budget or the NIPAs but not both, 

 Netting—transactions that are recorded as offsets to 

outlays in the budget but as receipts in the NIPAs, and 

 Timing—receipts and outlays that are recorded on a 

cash basis in the budget but on an accrual basis in the 

NIPAs. 

All three categories can differentiate total receipts and 

expenditures in the NIPAs from total revenues and outlays in the budget. However, netting differences have no 

impact on the NIPA measure of the federal deficit 

because they affect revenues and outlays equally.

In 2013, BEA changed how it measures the transactions 

of pension plans that pay defined benefits.6

 The current 

approach counts as an expenditure the value of the benefits that employees accrue during the year, rather than the 

contributions made by the employer. For federal government pensions, those accrual costs are reflected in both 

defense and nondefense consumption expenditures in 

Table 1. (In contrast to the NIPAs, the federal budget 

shows the net costs of those pensions as outlays when the 

benefits are paid.) BEA’s treatment also includes an 

imputed interest calculation for periods when the government’s pension plans are underfunded—that is, when the 

plans’ financial assets are not sufficient to cover promises 

of future benefits—because, in BEA’s view, the government 

6. See Brent Moulton, “Briefing on the 2013 Comprehensive NIPA 

Revision” (briefing prepared for the National Accounts Data 

Users’ Conference by the Bureau of Economic Analysis, May 15, 

2013), http://go.usa.gov/E4WQ (PDF, 753 KB).
4 CBO’S PROJECTIONS OF FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS SEPTEMBER 2015

CBO

Table 2.

Relationship of the Budget to the Federal Sector of the National Income and Product Accounts

Billions of Dollars

Continued

Actual,

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Revenues in CBO's Baseline 3,021 3,251 3,514 3,628 3,730 3,847 4,004 4,164 4,359 4,560 4,772 4,999

Differences

Coverage

Adjustments related to government

employees' retirement -3 -4 -4 -4 -4 -4 -5 -5 -6 -6 -7 -7

Estate and gift taxes -19 -20 -19 -20 -21 -22 -23 -24 -25 -26 -27 -29

Universal Service Fund receipts -10 -9 -11 -12 -12 -12 -12 -12 -13 -13 -13 -13 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Subtotal, Coverage -33 -33 -34 -36 -37 -39 -40 -41 -43 -45 -47 -49

Netting

Medicare premiums 72 75 89 92 96 103 112 121 135 140 146 163

Deposit insurance premiums 9 8 11 12 16 17 14 11 12 13 13 14

Government contributions for 

OASDI and HI for employees 20 20 21 22 22 23 24 25 26 26 27 28

Income receipts on assets 100 42 51 53 58 59 61 63 66 68 71 73

Surpluses of government enterprises -10 -8 -13 -12 -11 -11 -10 -10 -9 -9 -9 -9

Other 57 42 33 31 32 32 32 32 33 34 32 33 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Subtotal, Netting 247 178 191 198 212 223 232 241 262 272 281 303

Timing Shift of Corporate Estimated

Tax Payments 0 0 0 * * 0 -6 6 0 0 0 0

Other 17 4 -38 -8 * -1 -3 4 3 1 1 1 ____ ____ ____ ____ ___ ____ ____ ____ ____ ____ ____ ____

Total Differences 232 149 120 154 175 183 183 210 221 228 235 255

Receipts in the NIPAs 3,253 3,400 3,634 3,782 3,905 4,030 4,187 4,374 4,580 4,788 5,007 5,254

Outlays in CBO's Baseline 3,506 3,677 3,928 4,044 4,184 4,443 4,690 4,931 5,244 5,455 5,657 6,007

Differences

Coverage

Treatment of investment and

depreciation 9 14 13 15 15 16 16 15 13 11 8 4

Adjustments related to government 

employees' retirement 84 94 101 114 122 131 141 151 161 172 184 190

Capital transfers -77 -74 -73 -73 -72 -73 -74 -75 -76 -77 -77 -78

Lending and financial

adjustments 80 64 10 14 15 14 8 8 8 7 8 8

Universal Service Fund payments -9 -9 -10 -11 -11 -11 -11 -11 -11 -12 -12 -12 ____ ___ ___ ___ ___ ___ ___ ___ ___ ____ ____ ____

Subtotal, Coverage 87 89 41 58 70 77 80 88 95 101 110 112

Expenditures

Receipts
SEPTEMBER 2015 CBO’S PROJECTIONS OF FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS 5

CBO

Table 2. Continued

Relationship of the Budget to the Federal Sector of the National Income and Product Accounts

Billions of Dollars

Source: Congressional Budget Office.

Notes: Differences in coverage arise when a transaction is reported in either the budget or the NIPAs but not both; in netting, when an item 

appears as an offset to outlays in the budget but as a receipt in the NIPAs; and in timing, when receipts or outlays are shifted between 

fiscal years.

OASDI = Old-Age, Survivors, and Disability Insurance; HI = Hospital Insurance; * = between -$500 million and $500 million; 

NIPAs = National Income and Product Accounts.

a. Negative numbers indicate that federal expenditures exceed federal receipts. 

Actual,

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Differences (Continued)

Netting

Medicare premiums 72 75 89 92 96 103 112 121 135 140 146 163

Deposit insurance premiums 9 8 11 12 16 17 14 11 12 13 13 14

Government contributions for 

OASDI and HI for employees 20 20 21 22 22 23 24 25 26 26 27 28

Income receipts on assets 100 42 51 53 58 59 61 63 66 68 71 73

Surpluses of government enterprises -10 -8 -13 -12 -11 -11 -10 -10 -9 -9 -9 -9

Other 57 42 33 31 32 32 32 32 33 34 32 33 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Subtotal, Netting 247 178 191 198 212 223 232 241 262 272 281 303

Timing 6 6 -47 -4 47 0 0 0 -64 -5 69 0

Other 21 19 37 38 42 47 50 56 68 63 68 84 ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Total Differences 360 292 223 291 371 346 362 385 361 431 528 499

Expenditures in the NIPAs 3,867 3,969 4,151 4,334 4,555 4,789 5,052 5,316 5,605 5,886 6,185 6,506

Budget Deficit in CBO's Baseline -485 -426 -414 -416 -454 -596 -687 -767 -885 -895 -886 -1,008

Differences

Coverage

Treatment of investment and

depreciation -9 -14 -13 -15 -15 -16 -16 -15 -13 -11 -8 -4

Adjustments related to government

employees' retirement -87 -97 -105 -118 -127 -135 -146 -156 -167 -178 -190 -197

Estate and gift taxes -19 -20 -19 -20 -21 -22 -23 -24 -25 -26 -27 -29

Capital transfers 77 74 73 73 72 73 74 75 76 77 77 78

Lending and financial 

adjustments -80 -64 -10 -14 -15 -14 -8 -8 -8 -7 -8 -8

Universal Service Fund -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 ___ ___ __ __ __ __ __ __ __ __ ___ ___

Subtotal, Coverage -119 -122 -75 -94 -107 -115 -120 -129 -138 -146 -157 -161

Timing -6 -6 47 3 -46 0 -6 6 64 5 -69 0

Other -3 -15 -74 -46 -43 -48 -53 -52 -65 -61 -67 -83 ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Total Differences -129 -143 -103 -137 -196 -163 -178 -175 -139 -202 -293 -244

Net Federal Government Saving (NIPAs)a -613 -569 -517 -552 -650 -759 -865 -942 -1,025 -1,098 -1,178 -1,252

Expenditures (Continued)

Net Federal Government Saving
6 CBO’S PROJECTIONS OF FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS SEPTEMBER 2015

CBO

has effectively borrowed from those plans. That imputed 

interest is included in the line labeled “Interest Payments” 

in Table 1 and is the largest source of the discrepancy 

between net federal government saving as reported in the 

NIPAs and the deficit as reported in the federal budget. 

The annual differences between the budget presentation 

and BEA’s accrual approach for recording the costs of 

federal pensions under CBO’s baseline projections are 

shown in the “Coverage” category in Table 2, in the line 

labeled “Adjustments related to government employees’ 

retirement.” Those differences amount to $1.6 trillion 

between 2015 and 2025. All told, the difference between 

projected budget deficits and projected net federal government saving as reported in the NIPAs amounts to 

$2.0 trillion over that period. 

Daniel Ready of CBO’s Budget Analysis Division 

wrote the report with guidance from Jeffrey Holland 

and Theresa Gullo. Pamela Greene contributed to the 

analysis. An electronic version is available on CBO’s 

website (www.cbo.gov/publication/50819).

Keith Hall

Director