Today the Congressional Budget Office released the latest two volumes in a series that provides information to lawmakers as they confront the budgetary challenges facing the nation.
- Options for Reducing the Deficit, 2023 to 2032—Volume I: Larger Reductions contains estimates and detailed discussions for 17 large options. Each of those options would either reduce the deficit from 2023 to 2032 by more than $300 billion or, in the case of Social Security options, have a comparably large effect in later decades.
- Options for Reducing the Deficit, 2023 to 2032—Volume II: Smaller Reductions provides estimates of the budgetary savings from 59 options that would decrease federal spending or increase federal revenues over the next decade by a smaller amount. Most of those options would save $10 billion or more over the next decade.
In CBO’s May 2022 baseline projections, which reflect the assumption that current laws governing taxes and spending generally remain unchanged, federal debt held by the public rises from 98 percent of gross domestic product (GDP) in 2022 to 110 percent of GDP in 2032 and 185 percent of GDP by 2052. The cost of interest on the debt doubles as a share of GDP over the next 10 years and continues to increase thereafter.
To put the federal budget on a sustainable long-term path, lawmakers would need to make significant policy changes—taking actions to cause revenues to rise more than they would under current law, reducing spending to amounts below those currently projected, or adopting some combination of those approaches. The nation has time to implement such changes, and these volumes indicate the potential magnitude of effects from a broad range of actions.
In recognition of the daunting fiscal outlook, the first volume of this year’s report focuses on options with larger deficit effects. As a collection, the options in that volume reflect a range of possible choices that policymakers could make for significant deficit reduction, and they provide information about the varying budgetary, distributional, and economic effects of those options. Because primary deficits (that is, deficits minus net interest outlays) are projected to total $7.7 trillion over the 2023–2032 period, though, even the largest of those options would not be sufficient by itself to eliminate the projected deficits.
The second volume of this year’s report focuses on options with smaller deficit effects. Each option in that volume includes brief background information, a description of the option, and estimates of how much it would save.
These volumes are meant to help inform federal lawmakers about the budgetary implications of a variety of policy changes, but the options included do not constitute an exhaustive list. They originally come from various sources: Some originated in proposed legislation or budget proposals of various Administrations, and others come from Congressional offices or from entities in the federal government or the private sector. Moreover, the options are not recommendations by CBO, nor does the inclusion or exclusion of an option imply that CBO endorses it or opposes it. Rather, the options are intended to reflect a range of possibilities, and they include changes in revenues and spending for discretionary and mandatory programs. CBO’s website includes a search tool that allows users to filter options from this report as well as options from other publications by savings amounts, major budget category, budget function, topic, and date.
The estimates in the report could differ from cost estimates for similar proposals that CBO or the staff of the Joint Committee on Taxation might produce later. In some cases, combining various spending or revenue options would produce budgetary effects that would differ from the sums of the estimates in the volumes because some options would overlap or interact in ways that would change their budgetary impact.
The two volumes are the result of work by more than 100 people at CBO, led by Molly Saunders-Scott and Sarah Sajewski, and by the staff of the Joint Committee on Taxation. I am grateful to everyone who contributed and hopeful that these volumes of options to reduce the federal budget deficit will be useful to policymakers.
Phillip L. Swagel is CBO’s Director.