ARCHIVE: Budget Offsets Bank
Note (7/14/2022): This analysis is now out of date. We released an updated version of this analysis, available here, which includes updated options estimates and additional options that have been proposed or estimated since the last update.
The federal debt is at a post-war record high, deficits are set to exceed the trillion-dollar mark this year, and new initiatives are being proposed regularly.
In order to help policymakers offset the cost of new spending programs and tax cuts and slow the growth of the national debt, the Committee for a Responsible Federal Budget is publishing a Budget Offsets Bank of options to raise revenue and reduce spending.
Our Budget Offsets Bank shows ranges of potential saving for types of policy changes – readers can contact us to learn more about understanding and designing specific policy changes. These estimates are largely based on those from the Congressional Budget Office and other reputable sources, with adjustments from our staff as needed to account for the passage of time or subsequent legislation.
Our first installment focused on health care policies that reduce the cost of Medicare, Medicaid, or other federal health spending or increase health-related revenue. The second installment focused on infrastructure-related policies that would reduce federal spending on infrastructure or increase revenue related to infrastructure. Our latest installment focuses on income tax options that would roll back the 2017 tax cuts, rates, limit tax expenditures, and reduce tax loopholes, among other reforms.
We will be publishing additional options in the coming weeks and months. Prior options lists are available here or in the list below. View the full Budget Offsets Bank at crfb.org/offsets.
All estimates are rough and cover 2020 to 2029, assuming enactment in early 2020. Savings over the 2021-2030 window will differ. All revenue estimates are also relative to current law, and could raise different levels of revenue if the TCJA is either extended or (partially) repealed.
Health-Related Offset Options
| Health Policy | Ten-Year Savings |
|---|---|
| Medicare Provider Payments | |
| Reduce excessive payments for post-acute care | Up to $85 billion |
| Equalize hospital and physician payments regardless of site of service | $15 to $90 billion |
| Expand use of bundled payments | $10 to $50 billion |
| Reduce Medicare's coverage of bad debt | $10 to $50 billion |
| Reduce and reform payments for Graduate Medical Education | $5 to $50 billion |
| Reduce and reform payments for uncompensated care (DSH) | $5 to $100 billion |
| Replace sequester with rebased Medicare payments | Long-term savings |
| Reduce and reform payments to rural hospitals | $5 to $30 billion |
| Reduce payments growth to hospitals by 1% | $20 billion |
| Reform Medicare hospice payments | $10 billion |
| Expand penalties for preventable readmissions and unnecessary complications | Up to $10 billion |
| Expand competitive bidding for medical equipment and labs | Up to $10 billion |
| Reform and tighten "Stark rule" to limit self-referrals | $5 billion |
| Prescription Drugs | |
| Allow HHS to negotiate Part D drug prices, but not exclude drugs from coverage | Less than $10 billion |
| Require HHS to negotiate Part D drug prices with a cap based on international prices and a large penalty for manufacturers who walk away from negotiations | $350 billion |
| Redesign Medicare Part D benefit, including by adding a catastrophic cap, eliminating the donut hole coverage gap, and reducing government re-insurance for high-cost drugs | $35 to $75 billion |
| Require drug companies to pay “rebates” to reduce costs in Medicare Part D | $50 to $200 billion |
| Restrict drug price increases in excess of inflation in Part B and Part D | $70 billion |
| Tighten Medicaid drug rebates | $5 to $20 billion |
| Allow for drug re-importation | Up to $25 billion |
| Encourage use of generics by low-income Medicare beneficiaries | Up to $20 billion |
| Modify Part B physician administered drug payments that promote high-cost drugs | Up to $10 billion |
| Increase flexibility of the Part D drug formulary | $10 billion |
| Encourage entry of generic drugs and biosimilars | $10 billion |
| Prohibit pharmacy benefit manager spread pricing | $5 billion |
| Medicare Beneficiary Responsibility | |
| Restrict Medigap plans from offering generous wrap-around coverage | $100 billion |
| Restrict TRICARE for life from offering generous wrap-around coverage | $35 billion |
| Restrict employer and other wrap-around coverage | Up to $100 billion1 |
| Reform Medicare benefit design to establish unified Part A and B deductible, co-insurance, and a catastrophic cap | $0 to $70 billion |
| Establish cost sharing for home health | $5 to $20 billion |
| Increase Medicare Part B deductible | $10 to $20 billion |
| Increase base Medicare premiums by 10 percent of costs | $450 billion |
| Increase Medicare premiums for high earners | $50 to $100 billion |
| Increase the Medicare eligibility age | $20 to $30 billion |
| Medicare Advantage and Private Medicare Plans | |
| Allow private plans to compete with Medicare, set subsidy based on average bid | $50 to $350 billion |
| Allow private plans to compete with Medicare, set subsidy based on 2nd lowest bid | $150 to $800 billion |
| Set Medicare Advantage payments using competitive bidding | $30 to $100 billion |
| Modify risk adjustment payments to Medicare Advantage plans | $50 to $80 billion |
| Reduce excessive quality bonus payments to Medicare Advantage plans | $20 to $110 billion |
| Affordable Care Act (ACA) | |
| Reduce Medicaid match in expansion population to match ordinary FMAP | $400 billion |
| Restore Cost Sharing Reduction subsidies | $100 billion2 |
| Phase out ACA exchange subsidies above 300 percent of poverty | Up to $50 billion |
| Recapture excessive premium subsidies | $50 billion |
| Establish a public option for health exchanges | $100 billion |
| Repeal the Prevention Fund | $10 billion |
| Allow states to apply Medicaid asset tests to expansion population | $5 billion |
| Medicaid | |
| Establish Medicaid spending cap and/or block grant Medicaid | $200 to 900 billion |
| Limit states from inflating the federal Medicaid match through “provider taxes” | $5 to $400 billion |
| Reduce the Federal Medical Assistance Percentage (FMAP) floor | Up to $450 billion |
| Reduce federal Medicaid matching rates for base Medicaid program | $50 billion/pp |
| Match all administrative costs at 50% | $65 billion |
| Establish work and “community engagement” requirement in Medicaid | $25 to $100 billion |
| Encourage states to re-determine Medicaid eligibility more frequently | $50 billion |
| Subject Medicaid managed care plans to medical loss ratio rules | $10 billion |
| Require states to deny personal care payments for duplicative/inappropriate services | Up to $10 billion |
| Other Health Savings | |
| Restrict out-of-network “surprise billing” | $20 to $25 billion |
| Reform medical malpractice law | Up to $30 billion |
| Replace the Federal Employees Health Benefits (FEHB) program with a voucher | Up to $35 billion |
| Introduce TRICARE for Life enrollment fee | $15 billion |
| Extend CHIP programs beyond 2027 | $5 billion |
| Health-Related Tax Preferences | |
| Cap the employer sponsored insurance (ESI) income tax exclusion | $100 to $700 billion |
| Cap the ESI payroll tax exclusion (at median to 90th percentile) | $30 to $250 billion |
| Replace the ESI exclusion with a credit or deduction | dialable |
| Eliminate the ESI exclusion for the Medicare payroll tax | $250 billion |
| Limit the ESI exclusion for higher income workers | $50 to $200 billon |
| Repeal Cadillac Tax (subtract from options above if replacing Cadillac Tax) | -$200 billion |
| Eliminate income tax deduction for health-related cafeteria plans contributions | $400 billion |
| Eliminate payroll tax deduction for health-related cafeteria plans contributions | $200 billion |
| Limit or end medical expense deduction | Up to $75 billion |
| Limit or repeal health Flexible Spending Accounts (FSAs) | Up to $50 billion |
| Limit or repeal Health Savings Accounts (HSAs) | Up to $50 billion |
| Limit or repeal private activity bonds for nonprofit hospitals | $10 to $25 billion |
| Eliminate orphan drug tax credit | $20 billion |
| Repeal small business tax credit for offering health benefits | $10 billion |
| Repeal Blue Cross/Blue Shield deduction | $5 billion |
| Health-Related Revenue | |
| Raise Medicare payroll tax rate | $925 billion/point |
| Expand the 3.8% Medicare Tax to all passthrough income | $200 billion |
| Apply Medicare payroll tax to all business income from material participants | $125 billion |
| Equalize and increase alcohol taxes | Up to $100 billion |
| Increase cigarette taxes | $40 to $100 billion |
| Expand cigarette taxes to include vaping | $10 billion |
| Impose tax on sugary drinks | $50 to $200 billion |
| Double employer mandate penalty | $50 billion |
| Establish a food safety user fee | $10 billion |
1 No official estimate is available for this option, and savings would vary substantially based on design.
2 CBO scores restoring CSRs with no savings due to technical reasons, however they would reduce deficits by about $10 billion per year relative to CBO’s baseline.
Infrastructure-Related Offset Options
| Policy | Ten-Year Savings |
|---|---|
| Highway Trust Fund Revenue Sources | |
| Increase the gas and diesel fuel tax | ~$14 billion per cent |
| Increase fuel taxes by 15 cents and index to inflation | $235 billion |
| Increase fuel taxes by 35 cents and index to inflation | $515 billion |
| Raise gas tax to match diesel tax rate | $65 billion |
| Index gas and diesel fuel taxes for inflation | $30 billion |
| Increase truck and trailer tax from 12% to 20% | $30 billion |
| Repeal special gas and diesel tax rates on certain fuels | $20 billion |
| Double heavy vehicle use tax | $15 billion |
| Eliminate exemptions from gas tax | $15 billion |
| New Revenue Sources | |
| Impose a Vehicle Miles Traveled (VMT) tax on all vehicles | ~$35 billion per 0.1 cent |
| Impose a VMT tax on commercial trucks | $25 billion per cent |
| Impose a freight tax of 30 cents/mile for trucks and 12 cents/mile for rail | $360 billion |
| Impose a light-duty vehicle sales tax | $40 billion per 1% |
| Impose a per-barrel oil tax | ~$30 billion per dollar |
| Impose a vehicle registration fee of $10 on light vehicles and $20 on trucks | $40 billion |
| Impose a $10 driver's license surcharge | $25 billion |
| Impose a $10 tire tax | $25 billion |
| Impose a $20 fee on containers at U.S. ports | $10 billion |
| Establish new rail safety and inland waterways fees | $10 billion |
| Other Revenue Changes | |
| Repeal LIFO and LCM inventory accounting | $60 billion |
| Terminate new Private Activity Bonds | $35 billion |
| End Section 179 “SUV loophole” | $10 billion |
| Allow greater use of bridge and highway tolls | varies |
| Highway Trust Fund Spending | |
| Reduce all surface transportation spending | $45 billion per 10% reduction |
| Limit federal highway spending to Highway Trust Fund revenue (require states to cover difference) | $140 billion |
| Eliminate all spending in transit account | $105 billion |
| Eliminate one year of commitments | $55 billion |
| Freeze all surface transportation spending for ten years | $35 billion |
| Freeze all surface transportation spending for three years | $15 billion |
| Reduce funding to Highway Safety Improvement Program | $10 billion |
| Terminate funding for the Transportation Alternatives Program | $10 billion |
| Other Spending | |
| Eliminate the Community Development Block Grant | $25 billion |
| Eliminate Capital Investment Grants | $25 billion |
| End funding for Amtrak and Essential Air Service | $20 billion |
| Repeal Davis-Bacon Act | $15 billion |
| Sell various electricity transmission assets | $10 billion |
| Reform the National Flood Insurance Program | $10 billion |
| Eliminate grants to large and medium-sized airports | $10 billion |
Income Tax Offset Options
| Policy | Ten-Year Savings |
|---|---|
| Repeal or Reform the Tax Cuts and Jobs Act (TCJA) | |
| Repeal the entire TCJA | $1.1 trillion |
| Reverse the TCJA estate tax cuts | $60 billion |
| Repeal TCJA individual rate cuts | $950 billion |
| Repeal TCJA individual rate cuts for those making above $200,000-$250,000 | $200 billion |
| Revert the top rate individual from 37% to 39.6% | $120 billion |
| Repeal or reform the 20% “pass-through deduction” | Up to $500 billion |
| Begin Child Tax Credit (CTC) phase-out at $110,000 instead of $400,000 as under pre-TCJA law | $200 billion |
| Make deduction and family reforms permanent | $25 billion |
| Extend the SALT deduction cap to businesses | $250 billion |
| Restore corporate rate to 35% | $1.6 trillion |
| Repeal the Foreign-Derived Intangible Income Deduction | $65 billion |
| Restore the Alternative Minimum Tax (AMT) to pre-TCJA parameters | $425 billion |
| Increase Tax Rates | |
| Raise all individual tax rates | $950 billion/point |
| Raise top four individual rates | $250 billion/point |
| Raise top two rates individual rates | $150 billion/point |
| Raise individual rates on income above $1 million | $50 billion/point |
| Raise corporate tax rate | $100 billion/point |
| Limit Tax Expenditures | |
| Eliminate all itemized deductions | $1.5 trillion |
| Eliminate all itemized deduction, assuming extension of TCJA | $900 billion |
| Impose broad limit on the value of tax expenditures | Up to $500 billion |
| Phase out mortgage deduction | $100 to $300 billion |
| Reduce the mortgage interest deduction cap from $750,000 to $500,000 | ~$25 billion |
| Set 2% floor on charitable deduction | $200 billion |
| Limit charitable deduction to cash contributions | $150 billion |
| End the double-deduction for donation of stock and appreciated assets | $100 billion |
| Freeze or reduce retirement account contribution limits | $50 to $100 billion |
| Eliminate education tax expenditures | Up to $200 billion |
| Require companies to amortize advertising | $50 to $150 billion |
| Repeal deduction for foreign income and exclusion for federal employees abroad | $100 billion |
| Repeal last in, first out (LIFO) accounting rules | $50 billion |
| Repeal Low-Income Housing Tax Credit | $50 billion |
| Eliminate tax preference for new private activity bonds | $35 billion |
| Repeal certain fossil fuel tax preferences | Up to $20 billion |
| Reduce Tax Loopholes | |
| Count small business owner earned income as wages (Gingrich-Edwards Loopholes) | $10 to $200 billion |
| Apply Net Investment Income Tax (NIIT) to all business income | $200 billion |
| Adopt the two policies above together | $300 billion |
| Repeal or restrict head of household filing status | $70 to $170 billion |
| Reform treatment of derivatives, life insurance, and “like-kind” exchanges in real estate | Up to $50 billion |
| Eliminate corporate deduction of dividends paid to employees with stock options | $15 billion |
| Close carried interest loophole | $10 to $20 billion |
| Increase funding to the IRS for audits and tax enforcement | ~$50 billion |
| Increase certainty with respect to worker classification | $10 billion |
| Enact other minor “tax gap” reduction measures | Up to $10 billion |
| Raise Capital Gains and Dividends Rates | |
| Raise capital gains and dividends rates by 2% | $70 to $80 billion |
| Raise top capital gains and dividends rate to 30% | $100 billion |
| Tax all capital gains and dividends as ordinary income, up to revenue-maximizing rates | $350 billion |
| End “step-up basis,” require basis of assets be “carried over” after death | $100 billion |
| End “step-up basis,” taxing capital gains at death | $200 to $250 billion |
| Tax capital gains at death as ordinary income, up to the top rate to 37% | $500 billion |
| Tax capital gains annually on a mark-to-market basis | $1 to $2 trillion |
Previously Published Offset Options
- Offsets Proposed by Both President Trump and President Obama
- Other Policies With Potential Bipartisan Support
- Highway Trust Fund and Infrastructure Offsets
- Disaster Relief Offsets
- Pension Rescue and PGBC Offsets
- Options to meet House FY 2018 Budget's Reconciliation Instructions
- Options to Offset Veterans Administration Cap Adjustment
- Health, Revenue, and Other Mandatory Spending Options (2015 list)
