Budgetary Effects of Selected Policy Alternatives

May 6, 2009

CBO recently transmitted to the Congress a table showing budget projections for policy paths that may serve as useful alternatives to CBOs current-law baseline projections. The new table is very similar to the table of selected policy alternatives that CBO published in January in our Budget Outlook report, reflecting CBOs updated March baseline projections.

As we often remind consumers of CBO reports, the baseline is not a forecast of future outcomes but rather a benchmark that encompasses present laws and policies, which lawmakers and others can use to assess the potential impact of future policy decisions. Actual budgetary outcomes are almost certain to differ from CBOs baseline projections because of future legislative actions, unanticipated changes in conditions affecting the economy and national security, and many other factors that affect federal programs and sources of revenues.

In this analysis, CBO projected the budgetary impact of policy action including alternative troop levels in Iraq, Afghanistan, and elsewhere in support of the war on terrorism; alternative paths for other discretionary spending; and alternative revenue provisions.