Options for Reducing the Deficit: 2025 to 2034
Published Friday, December 13, 2024
Tax hikes, limits on deductions, military spending cuts, and a Social Security overhaul are among the top deficit-reducing policy options, Congress’s budget advisers said Thursday, though many of those options aren’t palatable as offsets to Republicans’ major upcoming bills.
The Congressional Budget Office published a list of potential deficit-reducing policies yesterday, a regular report that lawmakers could use as a menu of possible offsets to their major bills on taxes and border security. But some of the biggest items would be politically difficult, if not impossible, for Republicans:
- eliminating or limiting itemized tax deductions could raise up to $3.4 trillion,
- a 5% value-added tax could raise up to $3.4 trillion,
- a new payroll tax could raise up to $2.5 trillion,
- a steady reduction of Defense Department spending could save $959 billion, and
- establishing caps on federal spending on Medicaid could save up to $893 billion
CBO periodically issues a compendium of policy options and their estimated effects on the federal budget. This report presents 76 options for altering spending or revenues to reduce federal budget deficits over the next decade.
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 report, the latest in the series, presents 76 options for altering spending and revenues to reduce federal budget deficits.
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.
To help inform lawmakers about the budgetary implications of various approaches to altering federal policies, CBO periodically issues a volume of policy options (called Options for Reducing the Deficit) covering a broad range of issues as well as separate reports that include options for changing federal tax and spending policies in particular areas. The options, which are accessible from this page, are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO. This search is updated regularly to include only the most recent version of a particular option.
| Title | Latest Estimate |
| 10-Year Savings (Billions) |
|
|---|
| Reduce Social Security Benefits for High Earners | Dec 2024 |
| $48, $117, $197 |
|
| Change the Taxation of Assets Transferred at Death | Dec 2024 |
| $197, $536 |
|
| Limit State Taxes on Health Care Providers | Dec 2024 |
| $48, $241, $612 |
|
| Establish a Uniform Social Security Benefit | Dec 2024 |
| $283, $607 |
|
| Eliminate the Tax Exemption for New Qualified Private Activity Bonds | Dec 2024 |
| $43 |
|
| Reduce Federal Medicaid Matching Rates | Dec 2024 |
| $69, $530, $561 |
|
| Raise the Full Retirement Age for Social Security | Dec 2024 |
| $95 |
|
| Expand the Base of the Net Investment Income Tax to Include the Income of Active Participants in S Corporations and Limited Partnerships | Dec 2024 |
| $420 |
|
| Increase the Premiums Paid for Medicare Part B | Dec 2024 |
| $510 |
|
| Require Social Security Disability Insurance Applicants to Have Worked More in Recent Years | Dec 2024 |
| $60 |
|
| Tax Carried Interest as Ordinary Income | Dec 2024 |
| $13 |
|
| Reduce Medicare Advantage Benchmarks | Dec 2024 |
| $489 |
|
| Introduce Means-Testing for Eligibility for VA’s Disability Compensation | Dec 2024 |
| $384 |
|
| Include VA's Disability Payments in Taxable Income | Dec 2024 |
| $235 |
|
| Adopt a Voucher Plan and Slow the Growth of Federal Contributions for Federal Employees' Health Benefits | Dec 2024 |
| $14, $16 |
|
| End VA’s Individual Unemployability Payments to Disabled Veterans at the Full Retirement Age for Social Security | Dec 2024 |
| $14, $61 |
|
| Further Limit Annual Contributions to Retirement Plans | Dec 2024 |
| $187 |
|
| Introduce Enrollment Fees in TRICARE for Life | Dec 2024 |
| $17 |
|
| Reduce VA’s Disability Benefits for Veterans Who Are Older Than the Full Retirement Age for Social Security | Dec 2024 |
| $34 |
|
| Eliminate Certain Tax Preferences for Education Expenses | Dec 2024 |
| $130 |
|
| Introduce Minimum Out-of-Pocket Requirements in TRICARE for Life | Dec 2024 |
| $32 |
|
| Narrow Eligibility for VA's Disability Compensation by Excluding Veterans With Low Disability Ratings | Dec 2024 |
| $11, $59 |
|
| Lower the Investment Income Limit for the Earned Income Tax Credit and Extend That Limit to the Refundable Portion of the Child Tax Credit | Dec 2024 |
| $11 |
|
| Use an Alternative Measure of Inflation to Index Social Security and Other Mandatory Programs | Dec 2024 |
| $278 |
|
| Require People Who Claim the Earned Income Tax Credit and Child Tax Credit to Have a Social Security Number That is Valid for Employment | Dec 2024 |
| $28 |
|
| Reduce the Department of Defense's Annual Budget | Dec 2024 |
| $959 |
|
| Expand Social Security to Include Newly Hired State and Local Government Employees | Dec 2024 |
| $149 |
|
| Impose a Tax on Financial Transactions | Dec 2024 |
| $297 |
|
| Cap Increases in Basic Pay for Military Service Members | Dec 2024 |
| $22 |
|
| Reduce Tax Subsidies for Employment-Based Health Benefits | Dec 2024 |
| $521, $697, $965 |
|
| Increase Certain Fees Charged by Citizenship and Immigration Services and Customs and Border Protection by 20 Percent | Dec 2024 |
| $16 |
|
| Increase Federal Civilian Employees' Contributions to the Federal Employees Retirement System | Dec 2024 |
| $40 |
|
| Replace Some Military Personnel with Civilian Employees | Dec 2024 |
| $17 |
|
| Impose a New Payroll Tax | Dec 2024 |
| $1282, $2540 |
|
| Stop Building Ford Class Aircraft Carriers | Dec 2024 |
| $15 |
|
| Increase the Maximum Taxable Earnings That Are Subject to Social Security Payroll Taxes | Dec 2024 |
| $728, $1427 |
|
| Cancel the Long-Range Standoff Weapon | Dec 2024 |
| $15 |
|
| Increase the Corporate Income Tax Rate by 1 Percentage Point | Dec 2024 |
| $136 |
|
| Cancel the Army’s Future Long-Range Assault Aircraft | Dec 2024 |
| $11 |
|
| Repeal the "Last In, First Out" Approach to Inventory Identification and the "Lower of Cost or Market" and "Subnormal Goods" Methods of Inventory Valuation | Dec 2024 |
| $104 |
|
| Reduce the Size of the Bomber Force by Retiring the B-1B | Dec 2024 |
| $6 |
|
| Require Half of Advertising Expenses to Be Amortized Over 5 or 10 Years | Dec 2024 |
| $83, $177 |
|
| Reduce the Size of the Fighter Force by Retiring the F-22 | Dec 2024 |
| $29 |
|
| Repeal the Low-Income Housing Tax Credit | Dec 2024 |
| $69 |
|
| Reduce the Basic Allowance for Housing to 80 Percent of Average Housing Costs | Dec 2024 |
| $17 |
|
| Tax All Foreign Income of U.S. Corporations at the Full Statutory Corporate Rate | Dec 2024 |
| $340 |
|
| Reduce Funding for International Affairs Programs | Dec 2024 |
| $187 |
|
| Impose a 5 Percent Value-Added Tax | Dec 2024 |
| $2180, $3380 |
|
| Eliminate Federal Funding for National Community Service | Dec 2024 |
| $10 |
|
| Impose a Tax on Emissions of Greenhouse Gases | Dec 2024 |
| $645, $700, $814, $919 |
|
| Tighten Eligibility for Pell Grants | Dec 2024 |
| $22 |
|
| Increase Excise Taxes on Motor Fuels and Index Them for Inflation | Dec 2024 |
| $212 |
|
| End Enrollment in VA Medical Care for Veterans in Priority Groups 7 and 8 | Dec 2024 |
| $60 |
|
| Increase Excise Taxes on Tobacco Products | Dec 2024 |
| $51 |
|
| Reduce the Annual Across-the-Board Adjustment for Federal Civilian Employees’ Pay | Dec 2024 |
| $77 |
|
| Increase Taxes on Alcoholic Beverages | Dec 2024 |
| $88, $102 |
|
| Reduce Selected Nondefense Discretionary Spending | Dec 2024 |
| $339 |
|
| Reduce Funding for Certain Grants to State and Local Governments | Dec 2024 |
| $67 |
|
| Change the Cost-Sharing Rules for Medicare and Restrict Medigap Insurance | Dec 2024 |
| $20, $116, $129 |
|
| Repeal the Davis-Bacon Act | Dec 2024 |
| $18 |
|
| Reduce Medicare's Coverage of Bad Debt | Dec 2024 |
| $17, $33, $54 |
|
| Increase Individual Income Tax Rates on Ordinary Income | Dec 2024 |
| $570, $1185 |
|
| Consolidate and Reduce Medicare Payments for Graduate Medical Education at Teaching Hospitals | Dec 2024 |
| $94, $103 |
|
| Impose a Surtax on Individuals' Adjusted Gross Income | Dec 2024 |
| $1051, $1440 |
|
| Modify Payments to Medicare Advantage Plans for Health Risk | Dec 2024 |
| $124, $159, $1049 |
|
| Eliminate or Limit Itemized Deductions | Dec 2024 |
| $736, $1621, $1910, $3424 |
|
| Reduce Subsidies in the Crop Insurance Program | Dec 2024 |
| $47 |
|
| Reduce Payments for Hospital Outpatient Departments | Dec 2024 |
| $6, $8, $157 |
|
| Raise the Tax Rates on Long-Term Capital Gains and Qualified Dividends by 2 Percentage Points | Dec 2024 |
| $103 |
|
| Raise Fannie Mae's and Freddie Mac's Guarantee Fees and Decrease Their Eligible Loan Limits | Dec 2024 |
| $7, $10, $15 |
|
| Reduce Payments for Drugs Delivered by 340B Hospitals | Dec 2024 |
| $15, $74 |
|
| Eliminate or Modify Head-of-Household Filing Status | Dec 2024 |
| $76, $209 |
|
| Eliminate the Add-On to Pell Grants, Which Is Funded With Mandatory Spending | Dec 2024 |
| $44 |
|
| Eliminate Subsidies for Certain Meals in the National School Lunch, School Breakfast, and Child and Adult Care Food Programs | Dec 2024 |
| $14 |
|
| Limit the Deduction for Charitable Giving | Dec 2024 |
| $324, $348 |
|
| Establish Caps on Federal Spending for Medicaid | Dec 2024 |
| $459, $588, $742, $893 |
|
| Reduce Spending on Other Mandatory Programs | Dec 2022 |
| $580 |
|
| Eliminate Title I Agriculture Programs | Dec 2022 |
| $49 |
|
| Limit ARC and PLC Payment Acres to 30 Percent of Base Acres | Dec 2022 |
| $24 |
|
| Reduce the Size of the Nuclear Triad | Dec 2022 |
| $12, $18 |
|
| Cancel the Army's Future Vertical Lift Aircraft | Dec 2022 |
| $15 |
|
| Change the Tax Treatment of Capital Gains From Sales of Inherited Assets | Dec 2022 |
| $156 |
|
| Reduce DoD’s Operation and Maintenance Appropriation (Excluding Funding for the Defense Health Program) | Dec 2020 |
| $60, $168 |
|
| Reduce Funding for Naval Ship Construction to Historical Levels | Dec 2020 |
| $51 |
|
| Eliminate Head Start | Dec 2020 |
| $95 |
|
| Limit Enrollment in the Department of Agriculture’s Conservation Programs | Dec 2020 |
| $3, $5, $8 |
|
| Eliminate Supplemental Security Income Benefits for Disabled Children | Dec 2020 |
| $103 |
|
| Link Initial Social Security Benefits to Average Prices Instead of Average Earnings | Dec 2020 |
| $69, $109 |
|
| Make Social Security’s Benefit Structure More Progressive | Dec 2020 |
| $8, $36 |
|
| Eliminate Eligibility for Starting Social Security Disability Benefits at Age 62 or Later | Dec 2020 |
| $21 |
|
| Tax Social Security and Railroad Retirement Benefits in the Same Way That Distributions From Defined Benefit Pensions Are Taxed | Dec 2020 |
| $459 |
|
| Increase the Payroll Tax Rate for Medicare Hospital Insurance | Dec 2020 |
| $878, $1736 |
|
| Increase the Payroll Tax Rate for Social Security | Dec 2020 |
| $712, $1406 |
|
| Impose an Excise Tax on Overland Freight Transport | Dec 2020 |
| $351 |
|
| Tax Gains from Derivatives as Ordinary Income on a Mark-to-Market Basis | Dec 2018 |
| $19 |
|
| Divest Two Agencies of Their Electric Transmission Assets | Dec 2018 |
| $2 |
|
| Change the National Flood Insurance Program | Dec 2018 |
| $1 |
|
| Tighten Eligibility for the Supplemental Nutrition Assistance Program | Dec 2018 |
| $8 |
|
| Reduce Pension Benefits for New Federal Retirees | Dec 2018 |
| $3 |
|
| Eliminate the Special Retirement Supplement for New Federal Retirees | Dec 2018 |
| $5 |
|
| Eliminate Certain Forest Service Programs | Dec 2018 |
| $6 |
|
| Limit the Number of Cities Receiving Urban Areas Security Initiative Grants | Dec 2018 |
| $1 |
|
| Eliminate the International Trade Administration's Trade-Promotion Activities | Dec 2018 |
| $3 |
|
| Raise the Age of Eligibility for Medicare to 67 | Dec 2018 |
| $15, $22 |
|
| Convert the Home Equity Conversion Mortgage Program Into a Direct Loan Program | Dec 2018 |
| $3 |
|
| Reduce Quality Bonus Payments to Medicare Advantage Plans | Dec 2018 |
| $18, $94 |
|
| Convert Multiple Assistance Programs for Lower-Income People Into Smaller Block Grants to States | Dec 2018 |
| $88, $160, $247 |
|
| Reduce TANF’s State Family Assistance Grant by 10 Percent | Dec 2018 |
| $13 |
|
| Narrow Eligibility for Veterans’ Disability Compensation by Excluding Certain Disabilities Unrelated to Military Duties | Dec 2018 |
| $4, $33 |
|
| Cancel Plans to Purchase Additional F-35 Joint Strike Fighters and Instead Purchase F-16s and F/A-18s | Dec 2018 |
| $13 |
|
| Modify TRICARE Enrollment Fees and Cost Sharing for Working-Age Military Retirees | Dec 2018 |
| $11 |
|
| Cancel the Ground-Based Midcourse Defense System | Dec 2018 |
| $18 |
|
| Cancel Development and Production of the New Missile in the Ground-Based Strategic Deterrent Program | Dec 2018 |
| $24 |
|
| Reduce Appropriations for Global Health to Their Level in 2000 | Dec 2018 |
| $57 |
|
| Eliminate Human Space Exploration Programs | Dec 2018 |
| $89 |
|
| Reduce Department of Energy Funding for Energy Technology Development | Dec 2018 |
| $3, $5, $8, $16 |
|
| Limit Highway and Transit Funding to Expected Revenues | Dec 2018 |
| $116 |
|
| Eliminate the Federal Transit Administration | Dec 2018 |
| $87 |
|
| Increase the Passenger Fee for Aviation Security | Dec 2018 |
| $21 |
|
| Increase Payments by Tenants in Federally Assisted Housing | Dec 2018 |
| $21 |
|
| Reduce Funding for the Housing Choice Voucher Program or Eliminate the Program | Dec 2018 |
| $9, $125 |
|
| Include Employer-Paid Premiums for Income Replacement Insurance in Employees’ Taxable Income | Dec 2018 |
| $342 |
|
| Tax All Pass-Through Business Owners Under SECA and Impose a Material Participation Standard | Dec 2018 |
| $163 |
|
| Increase Taxes That Finance the Federal Share of the Unemployment Insurance System | Dec 2018 |
| $18 |
|
| Repeal Certain Tax Preferences for Energy and Natural Resource–Based Industries | Dec 2018 |
| $2, $6, $8 |
|
| Impose Fees to Cover the Costs of Government Regulations and Charge for Services Provided to the Private Sector | Dec 2018 |
| $0, $1, $2, $9, $14 |
|
| Impose a Fee on Large Financial Institutions | Dec 2018 |
| $90, $103 |
|
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