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CBO Explains Common Sources of Uncertainty in Cost Estimates for Legislation
CBO prepares a cost estimate for nearly every bill that is approved by a full committee of either the House or Senate.
The estimates specify the legislation’s likely effects on federal outlays and revenues compared with the agency’s projections of what would occur under current law over a 10-year period. Those estimates generally reflect the middle of the distribution of the most likely budgetary outcomes that would result if a piece of legislation was enacted. Though representing the agency’s best assessment of the legislation’s budgetary effects, estimates can be subject to uncertainty arising from various sources. This document describes how CBO addresses the most common sources of uncertainty in its cost estimates.
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