Budget Offsets Bank
With the national debt on course to exceed its record as a share of the economy in the next two years, interest payments on the debt surging, and major trust funds approaching insolvency, policymakers will need to enact policies to reduce deficits and/or pay for new spending or tax cuts. To help policymakers achieve deficit reduction, the Committee for a Responsible Federal Budget is publishing a series listing policy options to reduce the deficit or use as offsets.
This page will be updated as the Committee publishes new installments in the coming weeks and months. Readers can also contact us to learn more about specific policy changes.
Find each of our options within the tables below, or check out each piece here.
Note: these options are based on the FY 2026-2035 budget window; savings would likely be 15 percent less over the FY 2025-2034 budget window, varying by option. Savings are estimates based on CBO scoring, are rounded to the nearest $5 billion, and are subject to change based on policy specification.
The tables below are a menu of options and do not represent recommendations from the Committee for a Responsible Federal Budget, its board, or its staff.
Last Updated: March 24, 2025
$700 Billion of Potential Deficit Reduction Options
All numbers rounded to the nearest $5 billion. Most estimates are based on Congressional Budget Office (CBO) scores and figures.
+We are unaware of any estimate of this policy. $50 billion represents a rough guess.
*Versions of this policy appeared in budgets proposed by Presidents Trump and Biden
^Versions of this policy appeared in budgets proposed by Presidents Trump and Obama
Savings from Reversing President Biden's Executive Actions
+The SAVE plan was recently stayed in federal court, which will rule on its legality. The high number assumes SAVE is ruled legal and it is reversed both prospectively and retroactively. The middle number assumes it is ruled legal and reversed only prospectively (so those already enrolled are grandfathered). The low number assumes it is ruled illegal by the courts.
*These rules from the Biden Administration have not been finalized and some may be ruled illegal by the courts. The highest savings figure assumes the rules are finalized and ruled fully legal, the middle savings represents savings if enacted today given the Congressional Budget Office (CBO)’s “50% rule” for preliminary rules, and the $0 represents savings if these changes are withdrawn or struck down by the courts.
‘This is based on estimates from the Department of Education. CRFB estimates costs, and thus savings, would be much larger.
^These options appeared in an earlier CRFB analysis on easy deficit reduction options.
Options for Reducing the Deficit Impact of TCJA Extensions
Sources: Committee for a Responsible Federal Budget and CRFB adjustments of estimates from Congressional Budget Office, Joint Committee on Taxation, Internal Revenue Service, Department of the Treasury, Tax Foundation, Pomerleau-Schneider, Bipartisan Policy Center, Yale Budget Lab, and Penn Wharton Budget Model as well as underlying estimates from Solutions Initiative 2024 plans (using scores from Tax Policy Center) from American Enterprise Institute, Manhattan Institute, Bipartisan Policy Center, and American Action Forum.
* Represents very rough estimates
’ This would involve adjusting the AMT rates to achieve specific revenue collection targets.
Options to Reduce Federal Medicaid Spending
| Policy | 2026-2035 Savings |
|---|---|
| Caps or Block Grants for Medicaid | |
| Block Grant Medicaid Payments, Index to Inflation (CPI-U) | $900 billion* |
| Block Grant Medicaid Payments, Index to Inflation+1% | $550 billion* |
| Block Grant Medicaid Payments, Index to Gross Domestic Product | $350 billion* |
| Cap State Medicaid Growth, By Category, to Inflation | $950 billion |
| Cap State Medicaid Growth, By Category, to Inflation+1% | $600 billion |
| Cap Per Capita State Medicaid Growth, By Category, to Inflation | $1,100 billion |
| Cap Per Capita State Medicaid Growth, By Category, to Inflation+1% | $750 billion |
| Establish a 'Soft' Medicaid Cap, w/Grace Period & Growth Beyond Inflation Reimbursed at 1/2 Normal Rate | $400 billion* |
| Changes to Federal Medical Assistance Percentage (FMAP) Matching Rate | |
| Remove the 50% FMAP Floor | $600 billion |
| Reduce FMAP Floor to 45% | $350 billion |
| Reduce FMAP for Administrative Costs to 50% | $80 billion |
| Repeal 6% FMAP Bonus for Home- and Community-Based Care ("Community First Choice Option") | $20 billion |
| Reduce Family Planning Services Match from 90% to Normal FMAP | $15 billion^ |
| Reduce FMAP for Case Management Costs to 50% | $5 billion^ |
| Reduce Base FMAPs Across the Board | $100 billion/point' |
| Reduce All FMAPs Across the Board | $115 billion/point' |
| ACA Medicaid Expansion | |
| Reduce Match on Expansion Population from 90% to Normal FMAP | $650 billion |
| Move Expansion Population Above Poverty Line to Exchanges | $100 billion` |
| Adopt a Single "Blended Rate" for Each State's Medicaid Match | $50 billion# |
| Reduce FMAP on Expansion Population | $15 billion/point' |
| Medicaid Provider Taxes | |
| Ban Medicaid Provider Tax Gimmicks | $720 billion |
| Limit Provider Taxes to 2.5% of Provider Revenue (Current Law=6%) | $285 billion |
| Limit Provider Taxes to 5% of Provider Revenue (Current Law=6%) | $55 billion |
| Limit Provider Taxes to 5% of State General Funding | $550 billion* |
| Limit Provider Taxes to 10% of State General Funding | $350 billion* |
| Financing Schemes and Supplemental Payments | |
| Reform Financing Laws to Reduce Supplemental Payments | $500 billion* |
| Reverse Executive Action Expanding State-Directed Payments | $140 billion |
| Make Scheduled Medicaid DSH Cuts Permanent | $65 billion |
| End Medicaid Graduate Medical Education (GME) Reimbursement | $65 billion |
| Restrict State Use of Intergovernmental Transfers (IGTs) | $50 billion^ |
| Benefits and Coverage | |
| Impose Work Requirements for Certain Medicaid Beneficiaries | $140 billion |
| Allow States the Option to Impose Work Requirements | $30 billion |
| Repeal Biden Administration Limits on Medicaid Redeterminations | $75 billion |
| Encourage States to Increase Frequency of Redeterminations | $40 billion |
| Prohibit Federal Payments for Certain School-Based Administrative & Transportation Services | $20 billion |
| Restrict Medicaid Retroactive Coverage | $10 billion |
| Increase Allowable Medicaid Cost-Sharing | $10 billion*^ |
| Strengthen Medicaid Asset Tests | $5 billion |
| Restrict Payments for Unauthorized Immigrants, Prisoners, Lottery Winners | $5 billion |
| Other Medicaid Changes | |
| Rescind Medicaid Nursing Home Minimum Staffing Standards Rule | $25 billion |
| Lower Medicaid Drug Prices through Negotiations and Rebates | $20 billion |
| Reform Medicaid Managed Care Contracts | $5 billion |
| Limit Durable Medical Equipment (DME) Reimbursement | $5 billion |
Sources: Committee for a Responsible Federal Budget, Congressional Budget Office, Centers for Medicare and Medicaid Services, and Paragon Health Institute.
*Rough estimated provided by Committee for a Responsible Federal Budget.
^Based on pre-2010 estimate, actual savings could differ substantially.
#Policy is Fully Scalable.
'Excludes possible effects on coverage.
`Blase and Gonshorowski estimate direct savings of $50 billion, but effects on coverage could increase savings to $150 billion.
Tariff Scenarios and Their Net Impact on Revenue
| Policy | Conventional Impact (2026-2035) |
Dynamic Impact, with Retaliation (2026-2035) |
|---|---|---|
| Universal Baseline Tariffs | ||
| 10% Universal Baseline Tariff | $1.8 trillion | $1.6 trillion |
| 20% Universal Baseline Tariff | $3.3 trillion | $2.9 trillion |
| 10% Baseline Tariff, Excluding Free Trade Agreement Countries | $1.0 trillion | $900 billion |
| 20% Baseline Tariff, Excluding Free Trade Agreement Countries | $1.9 trillion | $1.7 trillion |
| Chinese Tariffs | ||
| 10% Minimum Tariff on Chinese Imports | $150 billion | $125 billion |
| 10% Additional Tariff on Chinese Imports | $200 billion | $150 billion |
| 60% Import Tariff on Chinese Goods | $650 billion | $550 billion |
| 60% Import Tariff (Assuming 10% Universal Baseline Tariff) | $575 billion | $500 billion |
| Remove De Minimis Exclusion for Chinese Imports | $5 billion | $5 billion |
| 20% Additional Tariff on Chapter 99 Chinese Imports | $95 billion | $70 billion |
| Other Tariffs | ||
| Reciprocal Tariffs (Assuming 10% Baseline Tariff) | $90 billion’* | $80 billion’* |
| 50% Tariff on Automobile Imports | $500 billion | $450 billion |
| 100% Tariff on Automobile Imports | $600 billion | $550 billion |
| Carbon Border Adjustment Tariff | $100 billion* | - |
| 100% tariffs on BRICS countries | $1.1 trillion | $950 billion |
| 25% Tariff on Goods from Canada and Mexico | $1.3 trillion | $1.2 trillion |
| Remove De Minimis Exclusion for All Imports | $25 billion | $20 billion |
| Rules of Thumb (based on 10%) | ||
| Universal Baseline Tariff | $180 billion per point | - |
| Universal Baseline Tariff, Excluding Free Trade Countries | $100 billion per point | - |
| Chinese Minimum Import Tariff | $15 billion per point | - |
| Chinese Additional Import Tariff | $20 billion per point | - |
| Destination-Based Cash Flow Tax | $250 billion per point^ | - |
Sources: Committee for a Responsible Federal Budget estimates mainly based on data from the Congressional Budget Office (CBO) and U.S. Census Bureau.
Notes: Numbers are rough and rounded. Conventional estimates reflect the average of scenarios where lost trade is and isn’t diverted to other trading partners. Conventional estimates assume tariffs would reduce import levels consistent with elasticities derived from research and that all gained tariff revenue would be subject to income and payroll tax revenue offsets. For diversion estimates, diverted imports are subject to elasticities to the degree that tariffs on imports from other countries have also risen. Impacts on the economy are roughly created using CBO estimates as a reference, and the resulting revenue impacts assume GDP losses are due to productivity losses.
* Represents very rough estimates
' Based on 2021 sector-level data from the World Integrated Trade Solution (WITS) using a sample of ten U.S. trading partners
^ Based on calculations by Ernie Tedeschi
Other Mandatory Savings Options to Reduce the Deficit
All numbers rounded to the nearest $5 billion. Most estimates are based on Congressional Budget Office (CBO) scores and figures.
*Funding for the Pell grant program has discretionary and mandatory components. Restricting eligibility for Pell Grants would lower mandatory spending by $10 billion and lower discretionary spending by $25 billion between 2025-2034.
Options for Medicare Savings and to Close the HI Shortfall
Source: Committee for a Responsible Federal Budget estimates based on CBO projections.
*Assumes all net savings would go directly into the Medicare Hospital Insurance trust fund.
Options to Reduce Discretionary Spending
Source: Committee for a Responsible Federal Budget projection based on Congressional Budget Office data
*Estimate includes impacts on mandatory budget outlays.
^Estimate assumes personnel positions are eliminated. Savings will be lower if these positions are reassigned.
Options to Raise Revenue Through the Tax System
| Policy | 2026-2035 Savings |
|---|---|
| Rate Increases | |
| Impose Surtax on Income Above $20k/$40k Married | $1.5 trillion/point |
| Impose Surtax on Income Above $100k/$200k Married | $560 billion/pt |
| Increase All Income Tax Brackets | $1.2 trillion/point |
| Increase Top 4 Income Tax Brackets | $300 billion/pt |
| Impose New Payroll Tax (No Earnings Cap) | $1.3 trillion/point |
| Capital Taxation | |
| Raise Rates by 2 Points on Long-Term Capital Gains and Qualified Dividends | $110 billion |
| Realize Capital Gains on Assets at Death | $570 billion |
| Enact “Carryover Basis” for Assets Held at Death | $230 billion |
| Expand Net Investment Income Tax to Cover Exempt Passthrough Business Income | $440 billion |
| Tax Carried Interest as Ordinary Income | $15 billion |
| Itemized Deductions | |
| Eliminate Itemized Deductions | $3.7 trillion |
| Limit Itemized Deductions Value to 15% | $2.0 trillion |
| Limit Overall Value of Deductions to 4% of Income | $800 billion |
| Limit Charitable Deduction to Cash Gifts | $340 billion |
| Subject Charitable Deduction to a 2% of Income Floor | $350 billion |
| Taxing Exempt Income | |
| Eliminate Exemption for VA Disability Payments | $255 billion |
| Eliminate Exemption for Income from New Qualified Private Activity Bonds | $45 billion |
| Other Individual Tax changes | |
| Eliminate Head of Household Filing Status | $215 billion |
| Limit Head of Household Status to Unmarried Parents with a Qualifying Child | $80 billion |
| Limit Employer-Based Health Insurance Exemption to 50th Percentile of Premiums Starting in 2028 | $1.2 trillion |
| Limit to the 75th Percentile of Premiums | $630 billion |
| Limit to the 50th Percentile of Premiums Only for Income Tax (not payroll taxes) | $835 billion |
| Reduce Max. 401(k) Contributions from $23k to $20k & Further Limit contributions to IRAs, Limit IRA-to-Roth Conversions | $195 billion |
| Eliminate Tax Credits for Higher Education Expenses | $130 billion |
| Lower the Investment Income Limit for EITC and CTC Claimants | $10 billion |
| Require EITC and CTC Claimants have a Social Security Number Valid for Employment | $30 billion |
| Corporate Income Tax | |
| Raise Corporate Income Tax Rate | $140 billion/pt |
| Tax Foreign Income at the Full Corporate Income Tax Rate | $345 billion |
| Repeal “LIFO,” “Lower of Cost or Market,” and “Subnormal Goods” Valuations | $105 billion |
| Require Half of Advertising Costs to be Amortized over 10 years | $180 billion |
| Require Half of Advertising Costs to be Amortized over 5 years | $85 billion |
| Repeal the Low-Income Housing Tax Credit (LIHTC) | $70 billion |
| Excise Tax Changes | |
| Increase and Standardize Alcohol Taxes and Index for Inflation | $105 billion |
| Increase Taxes on Tobacco Products | $50 billion |
| Increase Motor Fuel Taxes and Index for Inflation | $215 billion |
| New Taxes | |
| Impose a 5% Value-Added Tax on a Broad Base | $3.5 trillion |
| Impose a 5% Value-Added Tax on a Narrow Base | $2.3 trillion |
| Impose a 0.01% Tax on Financial Transactions | $340 billion |
| Apply a $25 per ton Carbon Tax and Increase by 5% annually | $960 billion |
| Apply a $25 per ton Carbon Tax, Increase by 5% annually, and Exempt Gasoline | $730 billion |
| Apply a $15 per ton Carbon Tax and Increase by 8% Annually | $850 billion |
| Apply a $25 per ton Carbon Tax and Increase by 2% Annually | $730 billion |
Sources: Committee for a Responsible Federal Budget calculations, Congressional Budget Office. Note: All scores are relative to a current law baseline
Options for Student Loan Savings
Sources: Committee for a Responsible Federal Budget, Congressional Budget Office, Office of Management and Budget, Department of Education, Institute for Education Sciences.
* Rough estimate provided by Committee for a Responsible Federal Budget.
1) We previously estimated a higher level of savings for repealing SAVE. We believe that due to changes in the baseline involving further debt cancelled by the Biden administration as well as changes in economic and behavioral assumptions, the score is now lower.
2) Although many scores in this table are interactive, this score is especially dependent on whether there are any other modifications to loan limits.
3) Income Driven Repayment (IDR) refers to all federal student loan repayment plans offered by the government based on income. Income-Based Repayment (IBR) is the only statutory Income-Driven Repayment (IDR) and would be the default (and only) plan available to borrowers if courts rule that administrative IDR plans are illegal. For baseline purposes, in any path moving forward legislatively we assume there would only be one IDR plan.
4) Eligibility of borrowers earning under 200 percent of the federal poverty line would be determined annually. Forgiveness would occur after 20 years of eligible payments.
5) Existing borrowers would still qualify for PSLF.
Options for Improving Social Security Trust Fund Solvency
Source: Committee for a Responsible Federal Budget estimates based on CBO projections.
*Not estimated.