Government Forecasts and Budget Projections: 

An Analysis of Recent History 

George A. Plesk; 

U.S. Treasury Department 

OTA Paper 58 October 1987 

OTA Papers and Briefs are circulated so that the preliminary findings of tax research 

conducted by staff members and others associated with the Office of Tax Analysis may reach a 

wider audience. The views expressed are those of the author@),and do not reflect Treasury 

policy. Comments are invited, but OTA Papers and Briefs should not be quoted without 

permission from the authorts). Additional copies of this publication may be purchased from 

the National Technical Information Service, 5285 Port Royal Rd., Springfield, Virginia 

22 16 I. Phone: (703) 487-4660. 

Office of Tax Analysis 

U.S. Treasury Department, Room 4040 

Washington, D.C. 20220 

The views expressed in this paper are those of the author, and do not necessarily 

represent the views of the U.S. Department of the Treasury. Comments from Howard "Skip" 

Nester, Janet Holtzblatt, Tom Neubig, Marty Sullivan, Pat Driessen and Doug Nowood are & 

appreciated. Particular thanks is owed David Weiner for discussions and comments. All 

errors are my own. 
Table of Contents 

I. Introduction 

11. Background 

111. The Accuracy of Recent Budget Forecasts 

A. GNP Projections 

B. Current Service Receipts 

C. Current Service Outlays 

D. Deficits 

IV. Summary 

Footnotes 

References 

List 'of Tables 

Table 1 CBO and OMB Forecasts of Nominal Gross National 

Product, 1975 - 1986 

Table 2 Summary of Nominal GNP Forecast Errors 

Table 3 CBO and OMB Forecasts of Current Service Receipts, 

FY 1976 - FY 1986 

Table 4 Summary of Receipt Forecast Errors 

Table 5 CBO and OMB Forecasts of Current Service Outlays, 

FY 1976 - FY 1986 

Page 

1 

2 

6 

6 

10 

15 

15 

19 

22 

24 

7 

9 

11 

12 

16 
Table 6 Summary of Outlay Forecast Errors 

Table 7 CBO and OMB Forecasts of the Current Service 

Deficit, FY 1976 - FY 1986 

Table 8 Summary of Deficit Forecast Errors 

List of Figures 

Figure 1 Summary Timetable of Budget Related Activity 

Figure 2 Effect of ERTA on Receipts Forecast 

17 

18 

20 

3 

14 
GOVERNMENT FORECASTS AND BUDGET PROJECTIONS: 

AN ANALYSIS OF RECENT HISTORY 

I. INTRODUCTION 

In recent years, increasing attention has been paid to budget-related economic forecasts 

published by the Congressional Budget Office (CBO) and the Offke of Management and Budget 

(OMB). With the passageof the Grmm-Rudman-Hollings"BalancedBudgetand EmergencyDeficit 

Control Act of 1985" (G-R-H$ , forecasts of budget receipts, outlays, and the deficit made 

by these agencies are used to determine the amount of spending reductions needed in an 

upcoming fiscal year if the federal deficit is estimated to exceed a predetermined level. 

As a result of the increased legislative focus on budget estimates, and the implications 

of a deficit estimate which exceeds the G-R-Hguidelines, the accuracy of government 

economic forecasts has come under greater scrutiny. Some commentators have suggested that 

budget estimates are inherently sensitive to political pressures which, it is presumed, 

sacrifice accuracy in order to mitigate the need to undertake program cuts. While others 

have examined the accuracy of selected government macroeconomic forecasts, none have focused 

upon the accuracy of the economic forecasts under which budget estimates are made. 

This paper examines the record of accuracy of the receipt, outlay, and deficit estimates 

derived from administration and congressional macroeconomic forecasts to determine the 

historical reliability of each agency's estimates. The results suggest that short-run 

forecasts (two to three years forward) of both CBO and OMB do not contain systematic bias. 

Over longer periods, however, the forecasts deteriorate rapidly, particularly that of the 

budget deficit, as they reflect long term goals for proposed economic policy rather than an 

actual forecast. 
-- 

2 

11. BACKGROUND 

An abbreviated timetable of the budget process is shown in Figure 1. Beginning in 

December, OMB produces a forecast of the U.S. economy used in the preparation of the 

President’s transmittal to Congress of the Budget of the United States Government for the 

forthcoming fiscal year. This forecast is used by the executive branch agencies as the 

basis for estimates for tax receipts and program outlays for the current and five subsequent 

fiscal years. As part of the budget submission, two sets of estimates are presented for 

each fiscal year. The frrst, current services, is defined by the Congressional Budget Act 

of 1974 as: 

,..the estimated budget levels and proposed budget 

authority that would be included in the budget for the 

following year if programs and activities of the United 

States Government were carried on during that year at the 

same level as the current year without a change in 

policy.2 

The purpose of the current services estimates are to provide a benchmark against which 

the effects of the Administration’s proposals can be ~ompared.~ Since any legislation 

enacted in a given year can have implications for the level of tax receipts or required 

govemment outlays, the concepts included in the current services estimate will change from 

year to year. Additionally, changes by OMB in the definition of what constitutes prior-year 

levels, and in the classification of on-budget and off-budget activities, will affect the 

measure of government activity. 

The second set of estimates accompanying the President’s proposals proposed law -- are 

the estimates of outlays and receipts that would be realized if all the President’s budget 

proposals were enacted to the exclusion of any other proposals which would affect the 

budget. Paralleling the work of the Administration, the CBO produces its own set of 

macroeconomic and current service forecasts, as well as an analysis and re-estimation of the 

4

Presidents proposals using its economic assumptions. Receipt and outlay estimates are 

re-evaluated later in the fiscal year as part of the Midsession Review, using updated 

economic and legislative assumptions. 

The budget process was recently modified by the enactment of G-R-H, which established 

special procedures for FY 1986 - 1991 budgets, along with maximum allowable deficit le~els.~ 

If the deficit estimate for the upcoming fiscal year as calculated by CBO and OMB on August 

15 exceed the predetermined maximum for that year, spending reductions must be proposed to 

reduce the level of outlays. 

A general perception, at least in the popular press, is that forecasts produced by the 

6

government are biased. Penner [I9821 has argued that the passage of the Congressional 
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Budget and Impoundment Control Act of 1974, increased the political pressure on budget 7 forecasts. He argues that biases arise because changing the set of economic assumptions

8 affecting a proposal or program is politically more acceptable than changing the policy. 

This compromising of forecasts to accommodate policy would hold true for both congressional 

activity, where economic assumptions are voted upon as part of the process, and for budget 

preparations, where the assumptions could be altered to make the budget proposal more 

attractive. The amount of influence these pressures have had on economic assumptions has 

not been suggested to be large or statistically significant. 

Mitigating this possibility, however, would be the existence of competing bureaucratic 

pressures on any economic assumption, particularly macroeconomic assumptions. What may be a 

favorable revision in economic assumptions for one program could be an unfavorable change 

for another. For example, a decrease in forecast values for inflation and interest rates 

will reduce the cost of carrying any specified amount of government debt, and reduce 

anticipated outlays of programs tied to the CPI (such as social security payments). 

However, the decline in inflation will also reduce the expected level of government 

receipts, and the future incomes of those constituencies who expect cost of living 

increases. Given this possibility of competing interests for any forecast variable, either 

within or outside the government, the pressures may well cancel each other out. 

A number of authors have examined the reliability of government macroeconomic forecasts, 

usually concentrating on three or four variables. Zarnowitz [1986j, as part of his most 

recent study of short-term forecasts and forecasting methodology, included the forecast 

published in the Council of Economic Advisors Economic Report of the President among those 

he studiedg Beginning in 1963, and broken down into thirteen different sub-periods, 

summary measures of errors in annual forecasts were compared for three variables: the 

growth rate of nominal GNP, the growth rate of real GNP, and the rate of inflation in the 

GNP implicit price index. The mean absolute percent errors of the forecast variables for 

the period of his study were 1.2, 1.1, and 1.0 percent, respectively. Of the nine 

sub-periods which included tRe CEA's forecast, the mean absolute percent error of the CEA 

forecast was lower than the mean of the group in four, equal to the mean in three, and 

higher than the mean in two. For all forecasts evaluated, Zarnowitz finds that "the mean 

absolute error measures ... display no systematic upward or downward trends. "' AI1 

forecasts showed large errors associated with changes in the business cycle.' 

Kamlet et. al. 119871 analyzed the accuracy of short- and long-term macroeconomic 

forecasts of OMB and CBO, with particular attention to whether politically motivated or 

explainable biases were present. The government forecasts were compared to the ASAINBER 

series and to simple ARIMA time series models constructed by the authors. Focusing on real 

GNP growth, inflation, and the unemployment rate, they found that "the Executive branch was 

slightly optimistic on average" for the years 1962-84 and the sub-period 1969-84, but the 

"optimism is small in magnitude ... and in no case approaches statistical significance". 

For the sub-period of 1976-84, CBO and OMB were found to be slightly pessimistic.' In 
5 

general, the authors conclude that no evidence exists to support the hypothesis that 

government short-run economic forecasts contain systematic bias.' Their conclusion is 

consistent with Penner's, that "the January forecasts were particularly good for the year in 

which they were made".' 

Turning their attention to long term forecasts (beyond two years) Kamlet et. al. conclude 

that the forecasts of CBO and OMB are generally biased toward optimism. However, in the 

forecast's first two years the optimism of these agencies is less than would exist if the 

authors' ARIMA forecast process were substituted, and more so thereafter. They conclude 

that their results support Reischauer's description of long-range projections "not as 

extended forecasts, but as attainable, non-cyclical paths ... toward the national goals of 

full employment and low inflation."' This is consistent with the Budget's own statement 

that longer-term assumptions are achievable and dependent upon the adoption of all of the 

Administration's programs.' In contrast to Boskin 119821 they conclude that the forecasts 

have not improved over time.' ' 

While the works cited above have examined the accuracy of some of the federal 

government's macroeconomic forecasts, none have examined the accuracy of the forecasts on 

which the G-R-H process focuses so much attention, namely receipts, outlays, and the 

resultant deficit estimate. 

Receipt and outlay estimates may be better measures of the overall accuracy of government 

forecasts since they incorporate all of the forecast information produced by OMB or CBO. 

While aggregate forecasts may be overly/underly optimistic, receipt and outlay forecasts 

will incorporate other aspects of the forecast which could magnify errors, or, through 

offsetting errors, minimize the effects of inaccuracy in the macroeconomic forecast. While 

relatively simple methods could be used to forecast individual macroeconomic variables, no 

one has suggested an alternative way for OMB or CBO to produce a comprehensive national 

income accounts forecast necessary to the budget process. 

CBO has examined the accuracy of their own and Treasury's estimates. In 1981, a CBO 

staff study evaluated the accuracy of short run Treasury receipts forecasts for the period 

1963 to 1978.' The CBO study found that after adjusting for changes in economic and 

legislative assumptions, receipts estimates "were accurate to within 1 percent of actual 

collections.J 

In June 1984 CBO analyzed the reasons for errors in its budget estimates for FY's 1980 -

1982.2 Errors were divided into four categories: economic, legislative, administrative, 

and technical assumptions. On the revenue side, CBO found economic assumptions to be 

primarily responsible for errors in estimates, along with errors in assumed legislative 

outcomes. Overall, the errors were not found to be large: "less than 2 percent in six of 

seven budget resolutions examined. ''2 Errors in outlay estimates did not arise from a 

single source, but were largely the result of economic, legislative, and technical 

assumptions. 
6 

111. THE ACCURACY OF RECENT BUDGET 

FORECASTS 

To evaluate the accuracy of government budget forecasts we examine four sets of published 

estimates: GNP, and the current service estimates of receipts, outlays, and deficits. We 

focus on estimates made since CBO was formed in 1974, so that a comparison can be made of 

the relative accuracy of CBO and OMB. 

Current service measures were chosen since they reflect the assumption of no change in 

2 2 policy. As mentioned earlier, the current services estimates are volatile because the 

base changes from year to year as new laws are enacted. Using the current services series 

as a basis for evaluating forecasting accuracy has two effects: 1) since even those budget 

proposals which were likely to be adopted were not included in the estimates, the comparison 

will overstate the amount of error in the f0recast.l and 2) it will cause severe 

mis-estimates in years when major unpredicted policy took place, for example, when a new tax 

law was enacted. However, for these same reasons, use of the current sewices forecasts has 

the advantage of making it easier to differentiate sources of the error. 

Estimates were drawn from the budget documents released by OMB (in January) and the CBO 

(usually in February). From each budget, the actual value for the previous year was drawn 

2 4 along with the new forecast for the current and five future fiscal years. None of the 

series have been corrected for subsequent revisions such as the rebenchmarking of the 

National Income and Product Account by the Bureau of Economic Analysis that occurred in 

1975, 1982, and 1986. Since none of these revisions were available at the time of the 

forecasts, and budget estimates are not historically rebenchmarked, we will obtain the best 

picture of accuracy by comparing the estimates to their unrevised realized value. 

We examine only the levels of the variables, rather than the rates of change focused on 

in the macroeconomic evaluations discussed earlier. The nature of the budget process, and 

the G-R-H process, concentrates on the level of the variable. As such, what is important to 

policy makers is the degree of accuracy associated with the forecast levels they must use. 

A. GNP Projections 

We begin our analysis with a comparison of nominal GNP forecasts produced by the OMB and 

CBO. Forecasts of nominal GNP implicitly include forecasts for both inflation and real GNP. 

The top half of Table 1 lists the calendar year GNP forecasts produced by the OMB since 

1976, the time the FY 1977 budget was released, and the errors associated with 

each. The first entry in each row is the actual for the most current year in which data 

had been released at the time the forecast was published. Subsequent entries in the row 

list the forecast for the level of GNP for each future year. Reading down any column gives 

the history of the forecast variable for that year. For example, in Table I, the column 

under 1984 shows that the first OMB forecast for 1984 (published in the FY 1980 budget) was 
year 1982 ........................................ 2414 2627 2928 3312 3718 4156 4611 5081 

1983 ................................................ 2626 2922 3160 3524 3883 4258 4651 

1984 ........................................................ 2938 3058 3262 3566 3890 4232 

1985 ................................................................ 3073 3309 3642 3974 4319 

1986 ........................................................................ 3305 3661 3948 4285 

1987 ................................................................................ 3775 3992 4274 

1988 ........................................................................................ 3998 4218 

actual 1986............. 4235 

porcont orror of forocast 

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

1977 0.00 -1.12 -1.29 0.16 -0.19 -1.57 0.38 -2.08 

1978 ........ 0.00 -0.76 -0.37 -1.69 -3.31 -1.79 -5.24 -3.58 

1979 ................ 0.00 0.16 -1.36 -3.27 -1.49 -2.72 1.95 2.87 

1980 ........................ 0.00 -1.03 -2.94 -2.32 -3.85 0.55 0.94 -6.07 

1981 ................................ 0.00 -1.86 -2.25 -3.27 4.33 9.50 7.34 12.51 

1982 ........................................ 0.00 0.04 -0.34 7.78 12.50 10.09 15.33 19.98 

1983 ................................................ 0.00 -0.54 2.83 6.63 2.86 6.50 9.82 

1984 ........................................................ 0.00 -0.49 -1.30 -5.54 -2.70 -0.07 

1985 ................................................................ 0.00 0.12 -3.52 -0.60 1.98 

1986 ........................................................................ 0.00 -3.02 -1.25 1.18 

1987 ................................................................................ 0.00 -0.15 0.92 

1988 ........................................................................................ 0.00 -0.40 

actual 1986............. 0.00 

CBO forocast 

calendar yoar 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

1977 1407 1476 1685 1889 2128 2378 2640 2915 

1978 ........ 1516 1698 1885 2085 2304 2547 2809 3103 

1979 ................ 1706 1898 2107 2334 2582 2854 3156 3465 

budgot 1980 ........................ 1887 2107 2351 2395 2894 3229 3595 3989 

do“nt 1981 ................................ 2128 2369 2555 2849 3210 3611 4050 4529 

year 1982 ........................................ 2414 2626 2941 3323 3734 4135 4541 4963 

1983 ................................................ 2626 2922 3140 3515 3882 4259 4659 

1984 ........................................................ 2938 3058 3266 3580 3903 4221 

1985 ................................................................ 3073 3310 3651 3995 4339 

1986 ........................................................................ 3305 3661 3927 4238 

1987 ................................................................................3775 3993 4269 

1988 ........................................................................................ 3998 4216 

actual 1986............ 4235 

porcont orror of CBO forocast 

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

1977 0.00 -2.64 -1.23 0.11 -0.02 -1.51 0.53 -0.78 

1978 ........ 0.00 -0.49 -0.13 -2.01 -4.54 -3.01 -4.40 0.96 

1979 ................ 0.00 0.58 -0.99 -3.32 -1.61 -2.86 2.71 4.85 

1980 ........................ 0.00 -0.99 -2.61 -8.80 -1.50 5.08 8.77 5-67 

1981 ................................ 0.00 -1.86 -2.70 -3.03 4.46 9.26 7.28 13.28 

1982 ........................................ 0.00 0.00 0.10 8.14 12.98 9.54 13.58 17.19 

1983 ................................................ 0.00 -0.54 2.18 6.35 2.83 6.53 10.01 

1984 ........................................................ 0.00 -0.49 -1.18 -5.17 -2.38 -0.33 

1985 ................................................................ 0.00 0.15 -3.28 -0.08 2.46 

1986 ........................................................................ 0.00 -3.02 -1.78 0.07 

1987 ................................................................................ 0.00 -0.13 0.80 

1988 ........................................................................................ 0.00 -0.45 

actual 1986..... ....... 0.00 
8 

$3546 billion. In the FY 1981 budget the estimate was revised upward to $4052 billion. The 

FY 1987 budget reports the actual value for 1984 GNP was $3775 billion. 

The second section of Table 1 shows the percent error associated with each OMB forecast 

value. The value of the entry shows the percent error of the forecast made at that time in 

comparison to the final value. Using the same example from the previous paragraph, the FY 

1980 forecast of 1984 GNP was off by -6.07%. In this section of the table, the diagonal 

elements are zero (errors associated with actual values), and the elements to their right 

show the errors associated with that year’s estimate of next years’ value (for the FY 1988 

budget, prepared in the winter of 1986, estimates of 1986 activity). 

The bottom half of Table I presents the same information for the nominal GNP forecasts 

produced by the CBO. 

Although there is considerable fluctuation in the estimates, the general trends in Table 

I show increasing error as the time horizon lengthens. The forecasts in the FY 1982 budget 

(reIeased in January of 1981) show the greatest amount of error. This was due to a number 

of factors outlined by Rivlin [1987]. Largest among them, an erroneous consensus among most 

forecasters that economic growth would be strong in 1981, rather than the realized downtum. 

Table 2 summarizes the forecasting errors of nominal GNP by OMB and CBO. In each 

section, errors are listed by vintage, that is, all of the errors associated with forecasts 

made for the year just ending, (GNP- I ), the current year (GNP,, ), and extending five more 

periods. In the case of OMB short-term forecasts, the average error for the value of 

nominal GNP in the year just ended was -0,756 percent. For the current fiscal year and the 

fiscal year of the budget submission, the average errors were -0.989 and -0.095 percent. 

For the CBO the respective percent errors were -0.822, -0.984, and -0.773. These errors 

compare favorably to the short-run forecast errors reported by Zamowitz. As would be 

expected, longer-run forecasts show increased average percent and average absolute percent 

errors, and appear to be optimistic on average for the years beginning after the date of the 

budget document. The relative accuracy of these longer forecasts is difficult to determine, 

since private forecasters generally do not forecast as far forward. 

The t-statistics for the hypothesis that the mean of the errors were equal to zero is 

presented for each set of forecast errors. Comparing these values with the critical values 

listed at the bottom of the table shows that the hypotheses that the mean error of the 

forecasts were equal to zero cannot be accepted for either CBO or OMB’s prior and current 

year nominal GNP projections at the 95% level. Additionally, for CBO’s t+4 and t+5 

forecasts we cannot accept the hypothesis of a zero mean with either a one- or two-tailed 

test. The hypothesis that the mean error of OMB and CBO was the same for each year cannot 

be rejectede2‘ The results in Table 2 further suggest that we cannot accept the general 

conclusion of Kamlet et. al. that government macroeconomic forecasts are pessimistic in the 

short run (t+ 1 through t+3) based upon the signs of the errors. For all GNP forecasts, the 

test statistics for the hypothesis that the signs on the errors are drawn from a random 

binomial distribution are within a 95 percent confidence region with the exception of the 
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administration’s GNP(0) forecasts, for which the probability of having nine of eleven errors 

of the same sign is 2.69 percent.’ ’ 

One reason for the apparent bias in estimating current year forecasts is the 

rebenchmarking of the National Income accounts on a factor not explicitly accounted for in 

other studies. Normally when a rebenchmarking occurs it is because previously unmeasured or 

understated aspects of the accounts are more fully incorporated into the measure. Thus, 

rebenchmarking will tend to raise the published level of nominal GNP, causing previous 

forecasts to understate future levels, and alter expectations about future economic growth. 

Rebenchmarking of the National Income Accounts does not have an effect on the measurement of 

receipts or outlays of the government. 

B. Current Service Receipts 

Tables 3 and 4 present the same descriptive data for receipts as were presented for 

nominal GNP above. Important to note in these and subsequent tables is that the time period 

covered by the data has been shifted from calendar years to fiscal years. Thus, when the 

budget is released in January, the final values for the previous fiscal year (ending 

September 30) are known, as are actuals for the first (and possibly second) month of the 

2 8 current fiscal year. As discussed earlier, a number of reasons, independent of any 

forecasting process, may cause systematic errors in estimates of current services receipts. 

Table 3 shows that as with the GNP forecasts, the largest errors for any particular 

budget document were associated with the FY 1982 submission. In this case the reasons for 

the errors were two-fold, and were the result of changes not incorporated into the budget 

assumptions. First was the unpredicted economic downturn of 1981. Second, and even more 

important were the changes in the tax law brought about by the Economic Recovery Tax Act of 

1981 (ERTA), signed into law on August 31, 1981. At the time of its passage, ERTA was 

estimated to reduce total receipts from forecast levels by $1.6 billion in FY 1981, 

increasing to -$267.7 billion in FY 1986.’ 

In addition to the FY 1982 estimates, substantial errors occurred in all submissions 

prior to FY 1984. These errors also appear to be primarily due to newly enacted 

legislation. Between the enactment of ERTA in August, 1981, and the Tax Reform Act of 1986 

(TRA86), in October, 1986, eleven major pieces of legislation with revenue consequences were 

3 0 signed into law. Those with the most significant revenue effects were the Tax Equity and 

Fiscal Responsibility Act of 1982 (TEFRA), the Social Security Amendments of 1983, and the 

Deficit Reduction Act of 1984 (DEFRA). 

Table 4 presents the summary analysis of receipt forecasting errors. The errors in the 

forecasts made by CBO and OMB were within one percentage point of each other throughout the 

forecast horizon. The average error of the current year forecast made by OMB and CBO was 

less than 0.3%. For the following year, that of the budget submission, the error increases 

to more than 2 percent for both CBO and OMB. In contrast to the error pattern in the GNP 
1979 ................ 357 401 472 540 620 701 

5 

budgot 1980 ........................ 402 456 505 571 647 715 778 

docrnrnt 1981 ................................ 466 524 600 691 799 921 1061 

yoar 1982 ........................................ 520 608 712 809 922 1053 1189 

1983 ................................................ 599 627 666 723 797 861 

1984 ........................................................ 618 598 649 713 781 

1985 ................................................................ 600 667 737 803 

1906 .................................................................. ....... 667 737 794 

1987 .................................................................. ............... 734 771 

1988 ............................................................................. , ....... 769 

porcont orror of W foruast 

fiscal yur 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

1977 0.00 -0.83 -1.57 1.17 -0.13 0.60 -2.32 

1978 ........ 0.00 1.12 1.39 -0.19 1.23 -2.45 2.75 

1979 ................ 0.00 -0.32 1.35 3.77 3.42 13.42 29.07 

1980 ........................ 0.00 -2.12 -2.96 -4.67 4.66 19.16 16.70 

1981 ................................ 0.00 0.73 0.12 11.86 33.07 38.11 44.56 

1982 ........................................ 0.00 1.37 15.22 34.80 38.38 43.39 54.53 

1983 ................................................ 0.00 1.46 10.96 8.48 8.51 11.95 

1984 ........................................................ 0.00 -0.38 -2.63 -2.87 1.55 

1985 ......................................................... ....... 0.00 0.02 0.44 4.46 

1986 ........................................................................ 0.00 0.38 3.28 

1987 ......................................................................... ....... 0.00 0.96 

1988 ......................................................................... ....... ....... 0.00 

CBO foruart 

fiscal yoar 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

1977 281 301 372 423 479 537 601 

1978 ........ 299 363 407 464 . 526 594 668 

1979 ................ 357 397 457 519 590 668 751 

1980 ........................ 402 453 502 574 661 749 849 

1981 ................................ 466 516 582 670 781 905 1053 

1982 ........................................ 520 612 709 810 920 1033 1159 

1983 ................................................ 599 631 652 701 763 818 

1984 ........................................................ 618 606 653 715 768 

1985 ................................................................ 601 663 733 795 

1986 ................................................................... ..... 667 735 788 

1987 ................................................................................ 734 778 

1988 .................................................................................. ...... 769 

porcont orror of CBO foruast 

fiscal yoar l9f5 1976 1977 1978 1979 1980 1982 1982 1983 1984 1985 1986 

1977 0.00 0.53 4.13 5.22 2.70 3.27 0.33 

1978 ........ 0.00 1.57 1.24 -0.41 1.15 -0.83 8.13 

1979 ................ 0.00 -1.24 -1.91 -0.19 -1.50 8.13 24.96 

1980 ........................ 0.00 -2.70 -3.46 -4.17 6.99 24.63 21.38 

1981 ................................ 0.00 -0.77 -2.84 9.74 29.95 35.78 43.44 

1982 ........................................ 0.00 2.15 14.78 34.81 37.97 40.74 50.61 

1983 ................................................ 0.00 2.14 8.49 5.18 3.94 6.36 

1984 ................................................. ....... 0.00 0.83 -2.03 -2.60 -0.14 

1985 ................................................................ 0.00 -0.53 -0.15 3.37 

1986 .................................................................. ....... 0.00 0.12 2.46 

1987 ......................................................................... ........ 0.00 1.16 

1988 ......................................................................... ................ 0.00 
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forecasts, both OMB and CBO were overly optimistic in seven of the eleven sample years. An 

examination of the test statistics show that the mean errors of the short-run receipt 

estimates are not statistically different from zero. However, the test statistics for 

longer-term �orecasts, beginning with vintage t+3, suggests that we cannot accept the null 

hypothesis that the mean errors were equal to zero compared to the altemative that the 

average errors exceeded zero. In other words, for both CBO and OMB, the tests indicate an 

optimistic bias for the three most distant vintage forecast years during the period of 

study. The tests further indicate that for the period 1974 through 1986, the mean errors in 

CBO’sand OMB’s forecasts were not statistically different. 

The likely reason for the bias in these out-year forecasts was the result of enacted 

legislation over the period, With the passage of ERTA, all receipts forecasts made prior to 

the FY 1983 budget were made obsolete. How well the forecasters incorporated the effects of 

the many changes in tax law during this period into GNP and receipts forecasts raises the 

additional question of how accurately the revenue consequences of tax proposah are 

estimated. 

The two main sources of revenue estimates for proposed legislation are Congress’s Joint 

Committee on Taxation (JCT), and the Department of the Treasury’s Office of Tax Analysis 

(OTA). During the congressional deliberations on the TRA86, a number of articles suggested 

that the behavioral and economic assumptions employed by these groups were in~orrect.~ 

While it is beyond the scope of this paper to separately analyze the accuracy of revenue 

estimating procedures, we can make some inference about their aggregate accuracy. To the 

extent that the estimates of the effects of newly enacted legislation over the period were 

substantially incorrect, receipts forecasts which rely on those estimates would show 

substantial error as well.3 

Tables 3 and 4 show that this was clearly not the case. After enacted legislation 

estimates were incorporated into the assumptions, the error of the estimates was greatly 

reduced. With respect to ERTA, Figure 2 shows OMB’s receipt forecast based on September, 

1981 assumptions both including and excluding the effect of ERTA. After the inclusion of 

the revenue consequences of ERTA, the error for FY 1982 receipts was 1.17%, and 1.95% for FY 

1983. The forecasts understate receipts for FY 1983 onward due to the subsequent passage of 

TEFRA and DEFRA, Later adjustments for these tax bills are reflected in the sharp decline 

in errors for post-1983 budget submissions. CBO’s errors for FY 1985 receipts projections 

declined from 40.74% to 3.94% between the FY 1982 and FY 1983budget projections. The error 

then dropped to -2.60% for the’FY 1984 budget submission, which was made prior to the tax 

increases called for in DEFRA. Afterwards, errors were less than two-tenths of one percent. 

For the OMB projections, the decline in error was equally dramatic. 
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C. Current Service Outlays 

As with the receipts estimates, the use of current services outlays forecasts will be 

biased to the extent that changes in legislation or national needs affecting the desired 

level government spending occurred after the estimates were made. Penner has highlighted 

may reasons for changes in outlays during a given period; natural disasters may cause a 

sudden increase in necessary expenditures, or agencies may find that their spending plans 

are not f~lfilled.~. Table 5 shows the OMB and CBO’s forecasts and errors for current service outlays. 

Comparing the summary data from each, in Table 6, we immediately notice two things. First, 

as with receipts, the size of the errors made by OMB and CBO were very close, differing by 

less than one percent, and not statistically different. Second, outlay estimates were more 

accurate than receipt forecasts, particularly as the time horizon lengthened. This may well 

be clue to the period chosen for our analysis, and a result of the changes in tax law 

outlined above. While major changes were taking place in the laws governing tax receipts, 

government spending remained on a more stable path. 

As for the accuracy of the forecasts, the t-tests again suggest that we cannot reject the 

null hypothesis that the mean error of OMB or CBO outlay estimates were different than zero 

in the short-run. Beginning with CBO’s t+2 forecast, and OMB’s t+3 forecast, the errors 

show a statistically significant negative bias in their estimates of outlay levels. 

D. Deficits 

Finally, we tum our attention to the deficit estimates made in each budget document. 

Deficit projections are not forecasts in and of themselves, but rather the calculated 

difference between projected receipt and outlay levels. In addition, the deficit forecast 

used in the G-R-H process is not the January current service estimate (which we examine 

here), but the fall current law forecast, which includes newly enacted legislation and the 

lapsing of expiring legislation. Given its timing, we would expect the G-R-H forecast to be 

less accurate than the current year’s deficit forecast (D(O)), made approximately four 

months later), and more accurate than next year’s estimate (D(+ I)), made a proximately eight 

months earlier). Table 7 shows the OMB and CBO forecasts for the deficit.P, 

By its nature of being a residual, we expect the mean error of the deficit forecast to be 

larger than those for either receipts or outiays for three reasons. First, statistically, 

the variance of the difference of two random variables will exceed the variance of either 

variable, so long as the covariance between the variables is not negative and greater than 

half of either’s variance (in absolute ~alue).~ If receipt and outlay estimates were 

independent, the variance of the deficit forecast would be the sum of the variance of 

receipts and outlay forecasts. Second, and closely related, a small percentage error in 

either receipt or outlay estimates will cause a large percentage change in the residual, 
Y-r 1982 ........................................ 580 661 736 817 890 968 1050 

1983 ................................................ 675 728 799 869 946 1019 

1984 ........................................................ 728 806 880 966 1052 

1985 ................................................................ 796 854 945 1019 

1986 ........................................................................ 852 960 1025 

1987 ................................................................................ 946 982 

1988 ........................................................................................ 990 

1977 0.00 1.96 -2.49 4.74 -10.51 -19.77 -27.52 

1978 ........ 0.00 2.31 -2.40 -5.61 -14.32 -21.91 -23.30 

1979 ................ 0.00 2.37 1.20 -6.66 -15.68 -17.05 -19.41 

1980 ........................ 0.00 -0.49 -7.51 -14.39 -16.17 -19.57 -21.68 

1981 ................................ 0.00 -2-81 6.76 -5.78 -2.73 -1.51 -4.62 

1982 ........................................ 0.00 -2.13 1.07 2.68 4.52 2.28 6.11 

1983 ................................................ 0.00 -0.10 0.38 1.97 0.00 2.92 

1984 ........................................................ 0.00 1.27 3.35 2.12 6.25 

1985 ................................................................ 0.00 0.26 -0.15 2.97 

1986 ........................................................................ 0.00 1.49 3.51 

1987 ................................................................................ 0.00 -0.79 

1988 ................................................................................. ....... 0.00 

QY) roreast 

fiscal yoar 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

1977 325 375 422 456 488 524 562 

1978 ........ 365 413 445 467 491 516 542 

1979 ................ 402 458 495 529 565 606 655 

1980 ........................ 451 494. 551 604 655 706 755 

1981 ................................ 494 560 603 648 685 722 763 

1982 ........................................ 580 660 739 192 843 895 950 

1983 ................................................ 675 740 809 889 971 1052 

1984 ................................................. ....... 728 800 850 929 999 

1985 ................................................................ 796 853 928 1012 

1986 ................................................................... ..... 852 949 1003 

1987 ........................................................................... ..... 946 986 

1988 ........................................................................... ............. 990 

1984 1985 1986 ~~~~~ ~~ ~~~~ ~ 

tgn 0.00 2.77 5.10 1.15 -1.26 -9.59 -16.80 

1978 ........ 0.00 2.79 -1.29 -5.41 -15.29 -23.54 -25.59 

1979 ................ 0.00 1-65 0.26 -8.73 -16.28 -16.80 -17.71 

1980 ........................ 0. 00 0.02 -4.93 -10.51 -10.08 -11.31 -11.38 

1981 ................................ 0.00 -3.38 -10.65 -11.04 -13.94 -15.26 -19.37 

1981 ........................................ 0.00 -2.24 1.41 -0.50 -1.02 -5.43 -4.03 

1983 ................................................ 0.00 1.59 1.63 4.34 2.61 6.28 

1984 ........................................................ 0.00 0.50 -0.23 -1.83 0.93 

1985 ................................................................ 0.00 0.12 -1.93 2.24 

1986 ........................................................................ 0.00 0.29 1.33 

1987 ........................................................................ ........ 0.00 -0.38 

1988 ................................................................................ ........ 0.00 
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1982 ........................................ -60 -55 -28 -8 32 85 138 

1983 ................................................ -74 -99 -92 -83 -72 -66 

1984 ......................................................... -111 -208 -189 -194 -148 

1985 ................................................................ -195 -184 -180 -177 

1986 ........................................................................ -185 -224 -230 

1987 ................................................................................ -212 -206 

1988 ................................................................................ ....... -221 

porcont orror of Cm torocaat 

fiscal yoar 1975 1976 1977 1978 1979 1980 1982 1982 1983 1984 1985 1986 

JM 1986 1977 0.00 14.29 -4.44 -53.28 -134.66 -168.12 -202.14 

1978 ........ 0.00 11.78 -22.54 -72.20 -140.77 -171.70 -163.29 

1979 ................ 0.00 26.64 118.77 -37.08 -111.63 -140.87 -139.00 

1980 ........................ 0.00 35.02 -51.34 -98.38 -134.18 -137.21 -157.47 

1981 ................................ 0.00 -33.22 -78.62 -104.34 -112.54 -144.04 -174.71 

1982 ........................................ 0.00 -25.32 -75.14 -95.91 -117.27 -139.90 -162.62 

1983 ................................................ 0.00 -10.85 -53.17 -55.26 -66.13 -70.10 

1984 ........................................................ 0.00 6.29 1.89 -8.53 -33.08 

1985 ................................................................ 0.00 -0.86 -15.03 -19.76 

1986 ........................................................................ 0.00 5.32 4.35 

1987 ................................................................................ 0.00 -6.84 

1988 ........................................................................................ 0.00 

CBO torocart 

fircal yoar 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 

19 '7 -44 -74 -51 -33 -9 13 40 

19 '8 ........ -66 -51 -38 -3 35 78 126 

19 '9 ................ -45 -61 -67 -61 -49 -39 -19 

19 IO ........................ -49 -41 -49 -40 -10 13 34 

19 I1 ................................ -28 . -44 -21 -20 0 0 5 

19 12 ........................................ -60 -48 -30 18 76 138 209 

19 I3 ................................................ -74 -109 -157 -188 -208 -234 

19 14 ........................................................ -111 -194 -197 -214 -231 

19 I5 ................................................................ -195 -190 -195 -217 

19 I6 ........................................................................ -185 -214 -215 

19 I7 ................................................................................ -212 -208 

19 I8 ........................................................................................ -221 

porcont orror of CBO forocast 

fiscal yur 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 ~~~ ~~~~~~ ~~ 

1977 0.00 12.96 12.78 -32.38 -67.51 -120.97 -153.44 

1978 ........ 0.00 12.44 -22.13 -89.17 -158.72 -205.53 -213.92 

1979 ................ 0.00 25.51 141.88 2.35 -33.71 -64.74 -90.28 

1980 ........................ 0.00 46.21 -17.79 -45.88 -91.41 -106.40 -118.08 

1981 ................................ 0.00 -26.17 -71.59 -81.92 -100.00 -100.00 -102.36 

1982 ........................................ 0.00 -35.06 -72.88 -109.21 -141.01 -165.00 -194.70 

1983 ................................................ 0.00 -1.45 -19.65 1.46 -2.03 6.03 

1984 ........................................................ 0.00 -0.92 6.31 0.80 4.67 

1985 ........................................................ ........ 0.00 2.54 -8.15 -1.68 

1986 ........................................................................ 0.00 0.80 -2.58 

1987 ............................................................................... . 0.00 -5.75 

1988 ............................................................................... ......... 0.00 
19 

especially, as has been the case until recently, if the residual is a relatively small 

number. Suppose, for example, receipts were forecast to be 999, and outlays 1000, the 

estimate of the deficit would be -1. If actual outlays were 1002, (an error of .2%), the 

deficit amount would be -3 (yielding a forecast error of 200%). Finally, factors which 

affect receipts often affect outlays in a way that exacerbates the deficit. An economic 

downturn, for example, reduces revenues and increases government outlays. 

In looking at Table 8, the comparison of the estimating errors, two things become 

apparent. First, as expected, the errors for the deficit forecast were much larger than 

either the receipt or outlay errors. For the current year forecast, the error in the 

deficit estimate was at least 6.6 times greater than the larger of the receipt or outlay 

forecast error. Second, the accuracy of the forecast deteriorated rapidly as the forecast 

period extended, and appears to contain a systematic bias. For both CBO and OMB, the 

hypothesis that the mean errors were equal to zero cannot be accepted in the case of a 

forecast beyond the budget year for which it was estimated. 

This large amount of error is itself due to two factors. First, in the early part of the 

sample period, deficits were small relative to the overall size of the budget (15.7% of 

receipts in FY 1975 compared to 28.7% in FY 1986). Thus, even small errors in the level of 

receipts or outlays would have been magnified into large errors in the deficit. Second, the 

large increase in the level of the deficit over the period (from -$44 billion in FY 1975 to 

-$221 billion in FY 1986), particularly the $122 billion increase between FY 1981 and FY 

1983, resulted in very large errors in the longer term deficit forecasts published in 

earlier budgets. 

Regardless of the difficulties in longer term forecasts, the ability of both CBO and OMB 

to predict the level of the deficit for the current year, measured by the percent error of 

the forecast, has improved. Following substantial misestimates prior to FY 1982, the 

amount of error in the deficit forecast declined sharply, though it remained much larger 

than receipt and outlay estimates.’ ti 

While it is encouraging that the government’s deficit forecast has improved, it is not 

clear that reliance on this estimate will yield the best results for the budget process. 

G-R-H requires a reduction in planned spending if the deficit forecast exceeds the 

legislated target by more than $10 billion. Unfortunately, given even a 10% average 

absolute percent error for the current year deficit forecast, the deficit must be $100 

billion or less for the $10 billion range of error allowed for in G-R-H to approximate the 

range of uncertainty found in past estimates. 

IV. SUMMARY 

Since the mid-l970’s, there has been an increased reliance on the government’s ability to 

produce accurate economic, budget, and tax policy forecasts. In recent years this has 
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become most apparent in the passage of the G-R-H Deficit Control Act, and in the 

"revenue-neutral" ground-rules adopted for the consideration of the Tax Reform Act of 1986. 

Overall, the evidence suggests that the government performs well as a forecaster of 

aggregate economic activity, particularly in the short-run, the period most critical in the 

making of policy decisions. No evidence of a systematic bias in forecasting was found in 

any of the budget variables examined for the current year or for the year of the budget 

submission. 

Receipt and outlay forecasts, which rely on a more disaggregated forecast consistent with 

GNP projections, performed very well over the period of study. Receipt forecasts published 

by CBO and OMB for the current year averaged less than .3% error, with the average for 

outlay forecasts slightly higher. Looking one year further, the average error for outlay 

estimates rose to approximately 1%. Receipt forecast errors rose more quickly as the 

horizon of the forecast lengthened, primarily due to the many changes made in the tax code 

since 1980. 

The receipts forecasts also suggest that, on the whole, estimates made of the revenue 

consequences of proposed tax law changes accurately anticipated the realized effects. 

Errors in receipt forecasts declined sharply after the existence of the new law was 

incorporated into the assumptions. 

Finally, in examining deficit projections, the historical pattern of errors is quite 

large and shows a significant under-prediction bias beginning two years from the time of the 

budget submission, As with receipt estimates, however, much of the error during this period 

was due to changes in the deficit resulting from tax law changes. The apparent difficulty 

of obtaining accurate estimates of the deficit, and the inherent amount of variance in the 

forecast, suggest that the deficit forecast may be an inappropriate variable upon which to 

predicate fiscal policy. 
22 

FOOTNOTES 

1 P.L. 99-177. 

As quoted in Special Analysis A, p. A-1. 

3 For a detailed explanation see Executive Office of the President, Office of Management and Budget, Special 

Analyses, Budget of the United Stares Government,Fiscal Year 1988, Special Analysis A. 

4 For FY 1988 the relevant CBO publications are The Economic and Budget Outlook: Fiscal Years 

1988-1992, January 1987; Reducing the Deficit: Spending and Revenue Options,.January 1987; An Analysis 

os the President 's Budgetary Proposalsfor Fiscal Year 1988, February 1987. 

5 On September 29, 1987, President Reagan signed "The Balanced Budget and Emergency Deficit 

Reaffirmation Act of 1987," (H.J.Res.324) which amended G-R-H in a number of ways. Among 

the changes included in the legislation was a revised timetable of deficit reductions which 

moved the year for achieving a balanced budget from FY 1991 to FY 1993. The specific targets, as amended, 

are -$171.9 billion in FY 1986, -$144.0 billion in FY 1987, -$144.0 billion in FY 1988, -$136 billion 

in FY 1989, -$lo0 billion in FY 1990, -$64billion in FY 1991, -$28 billion in FY 1992, and $0 in FY 1993. 

See U.S. Senate, Committee on the Budget, "Gramm-Rudman-Hollings and the Congressional Budget 

Process: An Explanation", S. Prt. 99-119, December 1985, p. 3, and Conference Report (H.Rept. 100-313) 

on House Joint Resolution 324. 

6 See, for example, Rauch, [1987].

7 The act requires the Congress, in preparation of a budget resolution, to agree on a set of underlying economic 

assumption, set up a budget timetable, and created the CBO. 

8 Penner, p. 98. 

9 The sixother forecasts included in his samplewere thoseofJoseph Livingston, theNew YorkForecasters Club, 

the ASA/NBER survey, the research Seminar in Quantitative Economics of the University of Michigan, Wharton 

Econometrics, and the mean end-of-year forecasts ofa separate groupof seven mostly private forecasts. The number 

of forecasts compared ranged from four to six in the samples including the CEA. See Zarnowitz [19861.Table 1 and 

notes. 

Ibid, page 5. 

11 Ibid, page 8. 

12 Kamlet, et. al. [1987], page 369. 

Ibid, page 375. 

Penner [19821, page 103. ' Reischauer, page 41.

16 

' Budget supplement, page 3a-8. 

Boskin, page 128. 

18 See CBO, Feb. 1981. The Treasury's Office of Tax Analysis (OTA) is responsible for producing the 

Administration's estimates of tax receipts and estimating the effects of proposed and enacted tax legislation.

19 Ibid, page 17. 

20 An Analysis of Congressional Budget Estimates for Fiscal Years 1980-1982. 

21 Ibid, p. 32. 

22 The alternative measure of receipts is proposed law, but it would be a less consistent target since it assumes 

all of the President's budget proposals are adopted to the exclusion of all others. The potential change in 

receipts levels due to proposals have varied from +1.22% to -1.90% for the fiscal year in which the budget is 
23 

transmitted, and from +3.50% to -6.90% for the budget year submission. 

If the direction of change from proposals is random, the mean error of the forecast will not be affected, but 

the variance will be larger. 

24 Actuals for all items but GNP are available in time for the January release. Final GNP data is usually 

not published until March. For early years, CBO reported high- and low-growth paths for "current policy": 

the average of these two series was taken as the baseline case. 

The 1976 transition quarter has been omitted from the analysis. 

26 The test statistic we use throughout for the one- and two-tailed test is: 

z = (Z- uo )/(u/S;iS, A where x'is the mean error, uo = 0 (the value of X in the null hypothesis), u is the standard deviation of the 

population, and n is the number of observations. The variance used is the population variance of the sample. 

Since we are restricting our analysis to the post-1974 period, we are encompassing the entire population. For 

2 2 the test of the equality of two means, we assume that u1 = u2 = u2 , yielding the test statistic: 

t = (xl - X, )/J [(l/n + t/m)02 , 

where n and m are the size of the populations of X, and X, . See Morris and Rolph [1981], page 146. 

21 The probabilities were drawn from Beyer [1971]. For the GNP(-1) vintage, CBO shows eight, and 

OMB nine, of the twelve errors to be negative. The probability of this occurring in a random draw is .1208 

and .0537, respectively. 

28 Monthly receipt and outlay data are published in the Monthfy Treasury Sratemenr, released approximately 

four weeks after the end of each month. 

29 General Explanation of the Economic Recovery Tar Act of 1981, prepared by the staff of the Joint 

Committee on Taxation, page 391. 

Budget supplement, p. 4-5. 

31 See Nester [1987] for a listing.

32 CBO and OTA both use measures of the effects of recently enacted legislation in their receipts estimating 

process, although to different degrees, see Nester, 1987. Enacted legislation tables are updated and published 

each year as a part of the President's budget submission. 

33 Penner, pages 96 - 97. 

34 In some cases, the deficit reported by CBO did not equal the value of receipts minus outlays due to 

assumed fiscal policy responses. See CBO, Five-Year Budget Projections: Fiscal Years 1981 - 1985, p. 12. 

35 Let D = R - 0. E(D) = E(R - 0) = E(R) - E(O), and var(D) = var(R) + var(0) - 2cov(R,O). See 

the textbook by Freund [1971], chapter 6. 

36 An OLS regression of the absolute percent error of the current year deficit forecast on a constant and 

a time trend yields (standard errors in parentheses): 

for OMB: y = 28.05 - 2.00t, for CBO: y = 29.07 - 1.97t. 

(6.77) (1.00) (8.79) (1.30) 

All coefficients are significant at at least the 90% level. 
----- 

24 

REFERENCES 

Beyer, W.H., ed., Basic Sfatistical rubles, (Cleveland, Chemical Rubber, 1971). 

Boskin, M.J., "Macroeconomic versus Microeconomic Issues in the Federal Budget, I'in Boskin and Wildavsky, 

eds. pp. 111-131. 

-----,and A. Wildavsky, eds. ,TheFederal Budget: EconomicsandPolilics,(New Brunswick, TransactionsBooks, 

1982). 

Freund, J.E., Marhenlatical Staristics, 2nd edition, (Englewood Cliffs, Prentice-Hall, 1971). 

Kamlet, M.S., D.C. Mowery, and T.T. Su, "Whom Do You Trust? An Analysis of Executive and Congressional 

Economic Forecasts," Journal of Policy Ailalysis and Management, vol. 6, No. 3, Spring 1987, 

pp. 365 - 384. 

Morris, C.N., and J.E. Rolph, Introduction to Data Analysis and Statistical Xttference, (Englewood Cliffs, 

Prentice-Hall, 1981). 

Nester, H. W.,"A Guide to Interpreting the Dynamic Elements of Revenue Estimates," niimeo, April, 1987, 

forthcoming in OTA Compendium of Tax Research. 

Penner, R. G., "Forecasting Budget Totals: Why Can't We Get It Right," in Boskin and Wildavsky, 

pp. 89 - 110. 

Rauch, J.. "CBO's Wishful Thinking," National Journal, March 7, 1987, pp. 550-554. 

Reischauer, R. D., "Getting, Using, and Misusing Economic Information," in Schick, ed., pp. 38 - 68. 

Rivlin, A.M., "Economics and the Political Process," American Economic Review, March 1987, Vol. 77, 

NO. 1, pp. 1 - 10. 

Schick, A., ed., Making Economic Policy in Congress, (Washington, D.C., American Enterprise Institute, 

1983). 

U.S.Congressional Budget Office, An Analysis of Congressional Budget Estimates for Fiscal Years 1980-1982, 

June 1984. 

-----, Baseline Budget Projectiorrs, selected years. 

, The Ecoriomic and Budget Ourlook, selected years. 

-----,Five-Year Budger Projections, selected years. 

-----, Five-Year Budget Projections: Technical Background, selected years. 

-----, ''A Review of the Accuracy of Treasury Revenue Forecasts, 1963-1978," Staff Working Paper, 

February 1981. 

U.S.Office of Management and Budget, Budget of the United States Govemmenr, selected years. 

-----, Special Analyses, Budget of the United States Government, selected years. 

U .S.House of Representatives, "Conference Report on Resolution Increasing Debt Limit and Amending 

Gramm-Rudnian Deficit-Reduction Law," (HRept 100-313), filed September 21, 1987. 

U.S.Senate, Committee on the Budget, "Congressional Budget and Impoundment Control Act of 1974, as 

Amended," S. Prt. 99-117, December 1985. 

_____ , "Gramm-Rudman-Hollings and the Congressional Budget Process: An Explanation," S. Prt. 99-1 19, 

December 1985, 

Zarnowitz, V.,"The Record and Improvability of Economic Forecasting," NBER Working Paper No. 2099, 

December, 1986.