CBO Releases Latest Budget Options Report

Today, the Congressional Budget Office (CBO) released its "Options for Reducing the Deficit, 2019-2028" report, featuring 121 policy options and their ten-year budgetary effects. The report updates the last set of budget options that was released in 2016. Each option is covered in detail, with a full description of each and information on how the policy fits into the budget. The report also contains arguments for and against implementation of each option, an explanation of how the change could affect beneficiaries, and other detailed analyses.

With so many budget options, we’ve highlighted several in each category to show the savings available for lawmakers to consider. Many options are updated versions of long-standing ones in important areas like health care and Social Security, but the report also includes several new options, particularly for revenue after the enactment of the Tax Cuts and Jobs Act.

Policy Option Ten-Year Savings
Health Care
Increase Medicare Part B and D premiums $40-418 billion
Restrict state Medicaid provider taxes $15-344 billion
Reform Medicare cost-sharing rules and Medigap plans $44-116 billion
Extend Medicaid drug rebates from manufacturers to Medicare Part D drugs $154 billion
Modify Medicare Advantage risk adjustment $47-67 billion
Social Security
Make Social Security's benefit formula more progressive $7-36 billion
Use price-indexing for initial benefits instead of wage-indexing $77-121 billion
Increase the maximum taxable earnings for Social Security payroll taxes $785-$1,223 billion
Expand Social Security to new state and local government employees $80 billion
Other Mandatory
Reduce crop insurance subsidies $4-21 billion
Narrow eligibility for veterans' disability compensation $4-33 billion
Eliminate the mandatory portion of Pell Grants $62 billion
Limit forgiveness of graduate student loans $12-32 billion
Eliminate categorical eligibility for the Supplemental Nutrition Assistance Program $8 billion
Limit highway and transit funding to expected revenues $116 billion
Reduce the size of the federal workforce by 10 percent through attrition $35 billion
Cancel additional F-35 Joint Strike Fighters $13 billion
Reduce funding for naval ship construction to its 30-year average $50 billion
Tax Expenditures
Eliminate itemized deductions $1,312 billion
Eliminate higher education tax preferences (AOTC, LLC, and student loan interest deductibility) $188 billion
Eliminate "step-up basis" for capital gains after inheritance $105 billion
Limit the deduction for charitable donations to those above 2 percent of adjusted gross income $176 billion
Additional Revenue
Increase the corporate income tax by 1 percentage point $96 billion
Require half of advertising expenses to be amortized over ten years $132 billion
Enact a $25 per metric ton carbon tax $1,099 billion
Utilize chained CPI for federal spending programs (already in effect for revenue) $202 billion

Source: Congressional Budget Office

Alongside the report, CBO has also updated its interactive tool that displays the options contained in this report as well as other options CBO has analyzed in other reports. The tool allows users to search by budget area and topic as well as the date the options were produced.

At a time when debt is projected to nearly double over the next 30 years, deficit reduction is needed more than ever. CBO's budget options provide numerous options for lawmakers to pick from to put our debt on a sustainable path. The report itself also contains a plethora of other information and is a must read for anyone interested in the budget.