In responding to questions raised by Congressional staff and outside analysts, we have found some errors in one section of our report The Long-Term Budget Outlook, which was released on June 30, 2010 and discussed in a previous blog entry. To correct those errors, we issued a revised version of the report today along with a letter explaining the changes.
The errors did not affect CBO’s primary findings—the long-term budget projections under the extended-baseline scenario and the alternative fiscal scenario—as discussed in the summary of the report, nor did they affect numbers presented in any of the tables. Rather, the errors were limited to the analysis of how the projected growth of debt would reduce, or crowd out, private investment and thereby lower gross domestic product (GDP) in the United States. The corrected estimates of the effects of crowding out on GDP are smaller than those shown in the original report. Also, the effects of crowding out on gross national product (which equals GDP plus income received from other countries minus income sent abroad) are now shown; those effects were discussed in last year’s Long-Term Budget Outlook (released in June 2009) but were not included in the original publication this year.
A discussion of the original and revised projections of the crowding-out effects is included in the letter. The changes affect Figures 1-5 and 1-6 and related text, and appear on pages 19 through 22 of the revised report.