July 25, 2014

Many Options for Deficit Reduction

  • The national debt has grown significantly in recent years due to rising annual deficits. A deficit occurs in any year the government spends more...

The Congressional Budget Office (CBO) has released a useful report presenting more than 100 spending and revenue options for deficit reduction.

Of the 38 options discussed for discretionary spending, about a third involve defense. With mandatory programs, the CBO said, policymakers could “modify the automatic indexation of benefits, the populations entitled to benefits, or the federal government’s share of spending for certain programs.”

Revenue options include increasing tax rates, expanding tax bases and implementing new taxes on income, consumption or other activities. The CBO, however, did not recommend specific policies.

This Friday CBO plans to release its preliminary analysis of the President’s proposed budget for the next fiscal year.