CBO Releases 2014 Budget Options

With the national debt at record highs and projected to increase, lawmakers need to find ways to reduce the long-term budget deficit. Fortunately, CBO has just released an updated book of options to do just that in advance of lame duck legislation and the new Congress being sworn in.

The report updates 79 options from last year's report, providing a selection of ways to either increase revenue or decrease spending. Since all of the options are very similar to those presented last year, the report simply updates the budget estimate, so readers will want to look at the previous report for the pros and cons of each option.

With so many options, we have highlighted just a few in each budget category to illustrate the savings options available to consider. See the report for more options.

Policy Option 10-Year Savings (billions)
Health Care
Change the Cost-Sharing Rules for Medicare and Restrict Medigap Insurance $111
Require Manufacturers to Pay a Rebate for Part D Drugs for Low-Income Beneficiaries $103
Introduce Minimum Out-of-Pocket Requirements Under TRICARE for Life $28
Limit Medical Malpractice Torts $70
Social Security
Link the Growth of Initial Social Security Benefits to Average Prices Instead of Average Earnings $87
Raise the Full Retirement Age for Social Security to 70 by 2039 $35
Eliminate Eligibility for Starting Social Security Disability Benefits at Age 62 or Later $11
Require Social Security Disability Insurance Applicants to Have Worked at Least Four of the Past Six Years $32
Other Mandatory
Reduce Crop Insurance Subsidies $20
Reduce Subsidies to Fannie Mae and Freddie Mac $8
Eliminate In-School Interest Subsidy for Student Loans $39
Reduce Federal Pensions $6
Replace the Joint Strike Fighter Program With F-16s and F/A-18s $31
Reduce the Number of Ballistic Missile Submarines $15
Eliminate Federal Funding for Community Service Programs $12
Eliminate Subsidies for Amtrak $14
Tax Expenditures
Convert the Mortgage Interest Deduction to a 15 Percent Tax Credit After 2019 $113
Eliminate the Deduction for State and Local Taxes $1,088
Limit the Deduction for Charitable Giving to Contributions in Excess of 2 Percent of Income $213
Eliminate the American Opportunity Tax Credit and the Lifetime Learning Credit $150
Additional Revenue
Increase Excise Taxes on Motor Fuels by 35 Cents and Index for Inflation $469
Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon $66
Increase the Taxable Maximum for the Social Security Payroll Tax $672
Increase Corporate Income Tax Rates by 1 Percentage Point $102
Chained CPI
Apply Chained CPI to the Tax Code Starting in 2014 $150
Apply Chained CPI to Social Security Starting in 2015 $116
Apply Chained CPI  to Other Mandatory Spending Programs Starting in 2015 $65

Click here to see all of the options.