Options for Reducing the Deficit, 2023 to 2032--Volume II: Smaller Reductions

December 7, 2022

Report

CBO issues a volume that contains short descriptions of 59 policy options that would each reduce the federal budget deficit by less than $300 billion over the next 10 years.

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There are two volumes to this budget options report—this volume and Volume I: Larger Reductions. Other editions of this report are also available.

Summary

At the request of the House and Senate Committees on the Budget, the Congressional Budget Office periodically issues a compendium of budget options to help inform federal lawmakers about the implications of possible policy choices that would reduce the deficit. This year, the report is presented in two volumes. This volume, Options for Reducing the Deficit, 2023 to 2032—Volume II: Smaller Reductions, contains short descriptions of 59 options that would each reduce the deficit by less than $300 billion over the next 10 years. Options for Reducing the Deficit, 2023 to 2032—Volume I: Larger Reductions contains detailed descriptions of 17 options that would each reduce the deficit by more than $300 billion over that 10-year period or, in the case of Social Security options, would have a comparably large effect in later decades.

The options come from a variety of sources, including legislative proposals, budget proposals from various Administrations, Congressional staff, federal agencies, and private groups. The options are intended to reflect a range of possibilities rather than to rank priorities or present a comprehensive list. The inclusion or exclusion of a particular option does not represent an endorsement or a rejection by CBO. In keeping with CBO’s mandate to provide objective, impartial analysis, this report makes no recommendations.

Summary Table of Options

Mandatory Spending
Title	Savings, 2023–2032 (Billions of Dollars)
Eliminate Title I Agriculture Programs	49
Reduce Subsidies in the Crop Insurance Program	28
Limit ARC and PLC Payment Acres to 30 Percent of Base Acres	24
Raise Fannie Mae’s and Freddie Mac’s Guarantee Fees and Decrease Their Eligible Loan Limits	7 to 16
Eliminate the Add-On to Pell Grants, Which Is Funded With Mandatory Spending	51^a
Adopt a Voucher Plan and Slow the Growth of Federal Contributions for Federal Employees' Health Benefits	16 to 18^a
Introduce Enrollment Fees in TRICARE for Life	16
Introduce Minimum Out-of-Pocket Requirements in TRICARE for Life	33
Change the Cost-Sharing Rules for Medicare and Restrict Medigap Insurance	27 to 122
Reduce Medicare’s Coverage of Bad Debt	23 to 74
Consolidate and Reduce Federal Payments for Graduate Medical Education at Teaching Hospitals	68 to 81
Eliminate Subsidies for Certain Meals in the National School Lunch, School Breakfast, and Child and Adult Care Food Programs	11
Raise the Full Retirement Age for Social Security	121
Require Social Security Disability Insurance Applicants to Have Worked More in Recent Years	57
End VA’s Individual Unemployability Payments to Disabled Veterans at the Full Retirement Age for Social Security	9 to 47
Reduce VA’s Disability Benefits for Veterans Who Are Older Than the Full Retirement Age for Social Security	15
Narrow Eligibility for VA’s Disability Compensation by Excluding Veterans With Low Disability Ratings	7 to 48
Use an Alternative Measure of Inflation to Index Social Security and Other Mandatory Programs	257

Discretionary Spending
Title	Savings, 2023–2032 (Billions of Dollars)
Cap Increases in Basic Pay for Military Service Members	22^a
Replace Some Military Personnel With Civilian Employees	19^a
Stop Building Ford Class Aircraft Carriers	7
Reduce the Size of the Nuclear Triad	12 to 18
Cancel the Long-Range Standoff Weapon	16
Cancel the Army's Future Vertical Lift Aircraft	15
Defer Development of the B-21 Bomber	34
Reduce the Size of the Bomber Force by Retiring the B-1B	8
Reduce the Size of the Fighter Force by Retiring the F-22	27
Reduce the Basic Allowance for Housing to 80 Percent of Average Housing Costs	15^a
Reduce Funding for International Affairs Programs	148
Eliminate Federal Funding for National Community Service	10
Tighten Eligibility for Pell Grants	14 to 30^a
Increase Prescription Drug Copayments for All Veterans	27
End Enrollment in VA Medical Care for Veterans in Priority Groups 7 and 8	122^a
Reduce the Annual Across-the-Board Adjustment for Federal Civilian Employees’ Pay	73^a
Reduce Funding for Certain Grants to State and Local Governments	66
Repeal the Davis-Bacon Act	17^a

Revenues
Title	Savings, 2023–2032 (Billions of Dollars)
Raise the Tax Rates on Long-Term Capital Gains and Qualified Dividends by 2 Percentage Points	102
Eliminate or Modify Head-of-Household Filing Status	71 to 192
Limit the Deduction for Charitable Giving	257 to 272
Change the Tax Treatment of Capital Gains From Sales of Inherited Assets	156
Eliminate the Tax Exemption for New Qualified Private Activity Bonds	35
Expand the Base of the Net Investment Income Tax to Include the Income of Active Participants in S Corporations and Limited Partnerships	249
Tax Carried Interest as Ordinary Income	12
Include VA's Disability Payments in Taxable Income	161
Further Limit Annual Contributions to Retirement Plans	152
Eliminate Certain Tax Preferences for Education Expenses	128
Lower the Investment Income Limit for the Earned Income Tax Credit and Extend That Limit to the Refundable Portion of the Child Tax Credit	12
Require People Who Claim the Earned Income Tax Credit and Child Tax Credit to Have a Social Security Number That Is Valid for Employment	25
Expand Social Security to Include Newly Hired State and Local Government Employees	132
Increase the Corporate Income Tax Rate by 1 Percentage Point	129
Repeal the “Last In, First Out” Approach to Inventory Identification and the “Lower of Cost or Market” and “Subnormal Goods” Methods of Inventory Valuation	90
Require Half of Advertising Expenses to Be Amortized Over 5 or 10 Years	76 to 154
Repeal the Low-Income Housing Tax Credit	77
Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon and Index Them for Inflation	92 to 114
Increase Excise Taxes on Tobacco Products	42
Increase Excise Taxes on Motor Fuels and Index Them for Inflation	240
Impose a Tax on Financial Transactions	264
Increase Certain Fees Charged by U.S. Citizenship and Immigration Services and Customs and Border Protection by 20 Percent	5 to 11
Increase Federal Civilian Employees’ Contributions to the Federal Employees Retirement System	44

Data and Supplemental Information

Tables Showing Estimated Budgetary Effects