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 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.
Last Updated: December 17, 2024
$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Budget Office (CBO)’s “50% rule” for preliminary rules, and the $0 represents savings if these changes are withdrawn or struck down by the courts.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
| Policy | Reduction in Deficit Impact of TCJA Extensions (2026 – 2035) |
|---|---|
| Family Parameters | |
| Reduce standard deduction by 5% | $240 billion |
| Eliminate additional standard deduction for elderly | $100 billion |
| Phase out standard deduction above $200k/$400k of income | $100 billion* |
| Phase out Child Tax Credit starting at $150k instead of $400k | $180 billion |
| Require valid child and parent SSN for Child Tax Credit | $20 billion |
| Eliminate Head-of-Household filing status | $280 billion |
| Restrict Head-of-Household status to single parents of kids under 17 | $100 billion |
| Minimum Taxes | |
| Fully restore AMT revenue collection’ | $630 billion |
| Restore AMT revenue collection above $400k’ | $320 billion |
| Restore Pease limitation on itemized deductions | $130 billion |
| SALT Deduction | |
| Repeal SALT deduction in full | $240 billion |
| Eliminate SALT marriage penalty by reducing to $5,000 for single taxpayers | $70 billion |
| Phase out SALT deduction above $400k of income | $50 billion* |
| Apply SALT cap to corporate income taxes | $300 billion |
| Restrict SALT pass-through workaround | $180 billion |
| Disallow business deduction for state and local employer payroll taxes | $40 billion |
| Mortgage Interest Deduction | |
| Repeal full mortgage deduction | $360 billion |
| Reduce $750k cap to $500k on primary residences | $130 billion |
| Replace mortgage deduction with $10,000 first-time homebuyer credit | $200 billion |
| Replace mortgage deduction with 10% credit | $40 billion |
| Other Itemized Deductions | |
| Limit charitable deduction to cash donations | $250 billion |
| Limit ‘double deduction’ for appreciated assets | $150 billion* |
| Set 2% of AGI floor on charitable deduction | $210 billion |
| Repeal deduction for out-of-pocket health costs | $200 billion |
| Broader Itemized Deduction Reforms | |
| Repeal all itemized deductions | $1,200 billion |
| Limit tax benefit of itemized deductions to 15% | $700 billion |
| Limit value of itemized deductions to 24% tax bracket | $250 billion* |
| Limit value of all deductions to 24% tax bracket | $300 billion* |
| Limit value of all deductions and major exclusions to 24% tax bracket | $500 billion* |
| Limit tax benefit of itemized deductions to 28% | $150 billion |
| Pass-Through and Other Business Provisions | |
| Let 199a pass-through deduction expire | $780 billion |
| Phase out 199a above $200k/$400k | $470 billion |
| Reform 199a to finance investment returns (Greenberg reform) | $500 billion |
| In place of 199a, tax 23.7% of pass-through income as capital gains (Holtz-Eakin reform) | $350 billion* |
| Let Opportunity Zones expire | $70 billion |
| Strengthen pass-through loss limit by disallowing conversion to NOLs | $20 billion |
| Estate Tax | |
| Let estate tax cut expire to 2017 level | $190 billion |
| Reset estate tax to 2018 (post-TCJA) parameters w/ $11m exemption and freeze | $80 billion* |
| Close various estate tax loopholes, restrict use of trusts, improve valuations | $50 billion* |
| Adopt carry-over basis for capital gains at death | $200 billion* |
| Tax Rate Schedule | |
| Let tax rate cuts expire | $3,400 billion |
| Set rates halfway between pre- and post-TCJA levels (at post-TCJA brackets) | $1,600 billion |
| Set top rate to 39.6% above $400k | $650 billion |
| Freeze indexation of tax parameters between 2025 and 2027 (two years) | $700 billion* |
| Freeze indexation of tax parameters between 2025 and 2026 (one year) | $400 billion* |
| Reduce bracket thresholds for top three individual income tax rates by 10% | $100 billion |
| Individual Tax Rates | |
| Raise top (37%) bracket | $150 billion/point |
| Raise sixth (35%) bracket | $60 billion/point |
| Raise fifth (32%) bracket | $40 billion/point |
| Raise fourth (24%) bracket | $150 billion/point |
| Raise third (22%) bracket | $270 billion/point |
| Raise second (12%) bracket | $470 billion/point |
| Raise bottom (10%) bracket | $240 billion/point |
Sources: Committee for a Responsible Federal Budget and CRFB adjustments of estimates from Congressional Budget Office, Joint Committee on Taxation, Internal Revenue Service, Tax Foundation, Pomerleau-Schneider, 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 | |
| Restrict State Use of 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 | $2.4 trillion | $2.0 trillion |
| 20% Universal Baseline Tariff | $4.1 trillion | $3.2 trillion |
| 10% Baseline Tariff, Excluding Free Trade Agreement Countries | $1.4 trillion | $1.1 trillion |
| 20% Baseline Tariff, Excluding Free Trade Agreement Countries | $2.4 trillion | $1.9 trillion |
| Chinese Tariffs | ||
| 10% Minimum Tariff on Chinese Imports | $200 billion | $160 billion |
| 10% Additional Tariff on Chinese Imports | $300 billion | $240 billion |
| 60% Import Tariff on Chinese Goods | Revenue Losing | Revenue Losing |
| 60% Import Tariff (Assuming 10% Universal Baseline Tariff) | $150 billion | Revenue Losing |
| Remove De Minimis Exclusion for Chinese Imports | $5 billion | $5 billion |
| Other Tariffs | ||
| Reciprocal Tariffs on Countries that Impose Tariffs on U.S. Exports | $150 billion’* | $110 billion’* |
| Reciprocal Tariffs (Assuming 10% Baseline Tariff) | $80 billion’* | $60 billion’* |
| 50% Tariff on Automobile Imports | $200 billion | $10 billion |
| 100% Tariff on Automobile Imports | Revenue Losing | Revenue Losing |
| Carbon Border Adjustment Tariff | $100 billion* | - |
| 100% tariffs on BRICS countries | Revenue Losing | Revenue Losing |
| 25% Tariff on Goods from Canada and Mexico | $1.5 trillion | $1.2 trillion |
| Remove De Minimis Exclusion for All Imports | $25 billion | $20 billion |
| Rules of Thumb (based on 10%) | ||
| Universal Baseline Tariff | $240 billion per point | - |
| Universal Baseline Tariff, Excluding Free Trade Countries | $140 billion per point | - |
| Chinese Minimum Import Tariff | $20 billion per point | - |
| Chinese Additional Import Tariff | $30 billion per point | - |
| Destination-Based Cash Flow Tax | $250 billion per point | - |
Sources: Committee for a Responsible Federal Budget estimates based on data from the Congressional Budget Office and U.S. Census Bureau.
Notes: Numbers are rough and rounded. 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 an import elasticity of 1.7 and that roughly half the 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 Tax Foundation 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.