Understanding Congressional Budget Office: Outlays and Obligations

The Congressional Budget Office (CBO) plays a crucial role in estimating outlays for the federal government. Outlays, also known as expenditures, occur when a federal agency issues checks, disburses cash, or makes electronic transfers to liquidate an obligation. In other words, it is the payment made by the government to fulfill its financial commitments.

According to the CBO's Waterfall Model for Projecting Discretionary Spending, March 2021, outlays can occur in various situations, such as when a federal agency deposits grant funds into recipients' accounts or the Social Security Administration disburses payments to beneficiaries. For instance, the Department of Defense incurs an obligation when it enters into a contract to purchase equipment.

Once budget authority has been provided for a given purpose, an agency can incur an obligation-a legally binding commitment. Budget authority is the amount of money available to a federal agency for a specific purpose and is provided by law. In some cases, the amount of budget authority provided can be specific, such as when Congress provides a set amount for a program or activity.

The CBO's Glossary defines budget authority, obligations, and outlays as related terms that describe the funds provided, committed, and used for a program or activity. Budget authority is often referred to as funding, which is the amount of money available to a federal agency for a specific purpose.

In summary, understanding Congressional Budget Office: outlays and obligations requires grasping the concepts of budget authority, obligations, and outlays. These terms describe the funds provided, committed, and used by government agencies for various programs and activities.

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