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MAINTAINING BUDGETARY DISCIPLINE: SPENDING AND REVENUE OPTIONS
 
 
APRIL 1999
 
 
NOTES

Unless otherwise indicated, all years referred to in this report are fiscal years.

Numbers in the text and tables may not add to totals because of rounding.

ERRATA

In the print version of this report, option 400-03 (Eliminate the Essential Air Service Program) states in the text that eliminating the program would save $4.8 billion from 2000 to 2009. That estimate is incorrect. The correct estimate is $480 million, as shown in the table accompanying the option. This electronic version contains the corrected text for the option.

 
 
Preface

This volume compiles 250 specific policy options for reducing federal spending or increasing revenues in a wide variety of programs. Prepared at the request of the House and Senate Budget Committees, it is intended to help policymakers maintain budgetary discipline and accomplish related policy goals. The report is similar to the compendiums of policy options for reducing the deficit that the Congressional Budget Office (CBO) prepared from 1980 to 1997.

The policy options included in this report come from many sources, and the Congress has considered most of them at some time in the past. In keeping with CBO's mandate to provide objective and impartial analysis, the discussion of each option presents the cases for and against it as fairly as possible. CBO does not endorse the options included, nor does exclusion of any proposal imply a recommendation for or against it.

The report begins with an introductory section that discusses the major rationales for budgetary discipline and explains how to use the information presented in this volume. Part One includes more than 200 options for reducing spending, organized by the functional categories of the budget--national defense; international affairs; general science, space, and technology; and so on. Each functional category is introduced by a page of background data and information on recent spending trends within that function. Part Two presents more than 50 options for generating revenues. The report concludes with an appendix listing the scorekeeping guidelines used to enforce the discretionary spending limits and pay-as-you-go requirement of the Budget Enforcement Act of 1990 (as amended).

All divisions of the Congressional Budget Office contributed to this report, which was coordinated by Sandy Davis, Steve Lieberman, and Barry Anderson. Sandy Davis also prepared the introductory section. The spending options were coordinated by David H. Moore, R. Mark Musell, R. William Thomas, and Bruce Vavrichek. The revenue options were coordinated by Diane Lim Rogers and Roberton Williams. Budget authority and outlay estimates were coordinated by Tom B. Bradley, Paul R. Cullinan, Peter H. Fontaine, and Michael A. Miller. The staff of the Joint Committee on Taxation prepared most of the revenue estimates. The background pages for each function were prepared by David H. Moore and Peter H. Fontaine, with assistance from Keith Mattrick. Laurie Brown designed the interactive version of the report, with technical support from Frank Gibbs. Barry Anderson designed the cover.

Sherry Snyder supervised the editing of the report, and Kathryn Quattrone oversaw production. Major portions were edited by Leah Mazade, Christian Spoor, and Liz Williams. The authors owe thanks to Sharon Corbin-Jallow, Judith A. Cromwell, Denise Jordan, Angela Z. McCollough, Ronald Moore, L. Rae Roy, and Simone Thomas, who typed the early drafts. Kathryn Quattrone prepared the report for publication, and Laurie Brown prepared the electronic versions for CBO's World Wide Web site, both assisted by Martina Wojak-Piotrow.
 

Dan L. Crippen
Director
April 1999
 
 


Contents

 
INTRODUCTION
 
PART ONE - SPENDING OPTIONS
 
Function 050: National Defense
 
050-01-A Reduce U.S. Forces to START II Levels by 2007
050-01-B Reduce Nuclear Delivery Systems Within Overall Limits of START II
050-02 Terminate Production of D5 Missiles After 1999
050-03 Remove Peacekeeper Missiles Ahead of START II Ratification
050-04 Reduce the Scope of DOE's Stockpile Stewardship Program
050-05 Cancel Development of the Tritium Production Accelerator
050-06 Reduce Procurement of the Virginia Class New Attack Submarine
050-07 Reduce the Number of Aircraft Carriers and Air Wings to 10
050-08 Reduce Procurement of DDG-51 Destroyers
050-09 Reduce Purchases of the Navy's F/A-18E/F
050-10 Defer Purchases of the Marine Corps's V-22 Aircraft
050-11 Reduce Air Force Tactical Forces
050-12 Reduce Purchases of the Air Force's F-22
050-13 Create Common NATO Airlift and Cut U.S. C-17 Costs
050-14 Defer Procurement of Tactical Airlift
050-15 Cancel the Army's Comanche Helicopter Program
050-16 Cancel the Army's Crusader Artillery Program
050-17 Cancel the Army's Tank Upgrade Program
050-18 Restructure Officer Accession Programs
050-19 Revise Cost Sharing for Military Health Benefits
050-20 Downsize the Military Medical System
050-21 Close and Realign Additional Military Bases
050-22 Increase Competition Between DoD and Private-Sector Housing
050-23 Transfer Commissary Operations to a DoD-Wide Exchange System
050-24 Consolidate and Encourage Efficiencies in Military Exchange Activities
050-25 Demolish Obsolete and Excess Structures
050-26 Create Incentives for Military Families to Save Energy
050-27 Allow Federal Agencies to Bargain for Electricity
050-28 Sell Surplus Real Property of the Department of Energy
050-29 Eliminate Cargo Preference
 
Function 150: International Affairs
 
150-01 Eliminate Overseas Broadcasting by the U.S. Government
150-02 Reduce Assistance to Israel and Egypt
150-03 Eliminate the Export-Import Bank, Overseas Private Investment Corporation, and Trade and Development Agency
150-04 Cease Additional Funding of Multilateral Development Banks
 
Function 250: General Science, Space and Technology
 
250-01 Cancel the International Space Station Program
250-02 Eliminate the Experimental Program to Stimulate Competitive Research
250-03 Reduce NSF Funding for Social, Behavioral, and Economic Science Research
 
Function 270: Energy
 
270-01 Eliminate the Department of Energy's Applied Research Programs for Fossil Fuels
270-02 Eliminate the Department of Energy's Applied Research for Energy Conservation
270-03 Eliminate the Department of Energy's Applied Research for Solar and Renewable Energy Resources
270-04 Eliminate Energy Conservation Grant Programs
270-05 Eliminate Electrification and Telephone Credit Subsidies Provided by the Rural Utilities Service
270-06 Restructure the Power Marketing Administrations to Charge Higher Rates
270-07 Sell the Southeastern Power Administration and Related Power Generation Equipment
270-08 Eliminate Federal Funding for the Partnership for New Generation Vehicles
270-09 Sell Oil from the Strategic Petroleum Reserve
270-10 Eliminate the Analysis Function of the Energy Information Administration
 
Function 300: Natural Resources and Environment
 
300-01 Increase Net Receipts from National Timber Sales
300-02 Impose a Five-Year Moratorium on Land Purchases by the Departments of Agriculture and the Interior
300-03 Eliminate Federal Grants for Water Infrastructure
300-04 Spend the Remaining Balance of the Superfund Trust Fund and Terminate the Program
300-05 Charge Market Rates for Information Provided by the National Weather Service
300-06 Eliminate the NOAA Weather Radio Network
300-07 Change the Revenue-Sharing Formula from a Gross-Receipt to a Net-Receipt Basis for Commercial Activities on Federal Lands
300-08 Charge Royalties and Holding Fees for Hardrock Mining on Federal Lands
300-09 Raise Grazing Fees on Public Lands
300-10 Recover Costs Associated with Administering the U.S. Army Corps of Engineers Permitting Programs
300-11 Impose User Fees on the Inland Waterway System
300-12 Open the Coastal Plain of the Arctic National Wildlife Refuge to Leasing
300-13 Impose a New Harbor Maintenance Fee
300-14 Terminate Economic Support Fund Payments Under the South Pacific Fisheries Treaty
 
Function 350: Agriculture
 
350-01 Reduce Federal Support for Agricultural Research and Extension Activities
350-02 Reduce Department of Agriculture Spending for Export Marketing and International Activities
350-03 Reinstate Assessments on Growers, Buyers, and Importers of Tobacco
350-04 Eliminate Mandatory Spending for the Agricultural Research Activities of the Fund for Rural America and the Initiative for Future Agriculture and Food Systems
350-05 Limit Future Enrollment of Land in the Department of Agriculture's Conservation Reserve Program
350-06 Eliminate Attaché Positions in the Foreign Agricultural Service
350-07 Reduce the Reimbursement Rate Paid to Private Insurance Companies in the Department of Agriculture's Crop Insurance Program
350-08 Eliminate Public Law 480 Title I Sales and Title III Grants and Limit the Secretary of Agriculture's Authority
350-09 Eliminate the Market Access Program
 
Function 370: Commerce and Housing Credit
 
370-01 End the Credit Subsidy for Major Small Business Administration Business Loan Guarantee Programs
370-02 Reduce Costs of the ITA by Eliminating Trade Promotion Activities or Charging the Beneficiaries
370-03 Eliminate the Advanced Technology Program
370-04 Eliminate the Manufacturing Extension Partnership and the National Quality Program
370-05 Eliminate the Minority Business Development Agency
370-06 Eliminate New Funding for the Rural Rental Housing Assistance Program
370-07 Charge a User Fee on Commodity Futures and Options Contract Transactions
370-08 Eliminate FHA Mortgage Insurance Rebates
370-09 Increase the Ginnie Mae Guarantee Fee
370-10 Require all GSEs to Register with the SEC
370-11 Impose a Lease Fee on Analog Television Licenses
 
Function 400: Transportation
 
400-01 Eliminate Federal Subsidies for Amtrak
400-02 Eliminate Grants to Large and Medium-Sized Hub Airports
400-03 Eliminate the Essential Air Service Program
400-04 Eliminate NASA's Support for Producers and Users of Commercial Airliners
400-05 Establish Charges for Airport Takeoff and Landing Slots
400-06 Increase User Fees for FAA Certificates and Registrations
400-07 Establish Marginal Cost-Based Fees for Air Traffic Control Services
400-08 Discontinue Funding from the General Fund for Highway Projects
400-09 Impose a User Fee to Cover the Cost of the Federal Railroad Administration's Rail Safety Activities
 
Function 450: Community and Regional Development
 
450-01 Convert the Rural Community Advancement Program to State Revolving Loan Funds
450-02 Eliminate the Economic Development Administration
450-03 Eliminate the Appalachian Regional Commission
450-04 Drop Wealthier Communities from the Community Development Block Grant Program
450-05 Eliminate the Neighborhood Reinvestment Corporation
450-06 Eliminate Funding for New Empowerment Zones and Enterprise Communities
450-07 Drop Flood Insurance for Certain Repeatedly Flooded Properties
450-08 Eliminate the Flood Insurance Subsidy on Pre-FIRM Structures
450-09 Eliminate Federal Support for Tennessee Valley Authority Activities
 
Function 500: Education, Training, Employment, and Social Services
 
500-01 Reduce Funding for Title I, Education for the Disadvantaged
500-02 Eliminate Funding for Bilingual and Immigrant Education
500-03 Reduce Funding to School Districts for Impact Aid
500-04 Limit Federal Funding for State Education Reform
500-05 Eliminate Funding for Federal Initiatives to Reduce Class Size
500-06 Consolidate and Reduce Funding for Several Elementary and Secondary Education Programs
500-07-A Restrict Interest Subsidies on Loans to Undergraduates
500-07-B Increase Origination Fees for Unsubsidized Loans to Students and Parents
500-07-C Restrict Eligibility for Subsidized Student Loans by Including Home Equity in the Determination of Financial Need
500-08 Reduce Special Allowance Payments to Lenders in the Student Loan Program
500-09 Eliminate Administrative Fees Paid to Schools in the Campus-Based Student Aid and Pell Grant Programs
500-10 Eliminate the Leveraging Educational Assistance Partnership Program
500-11 End New Funding for Perkins Loans
500-12 Reduce Funding for the Arts and Humanities
500-13 Eliminate Funding for the Senior Community Service Employment Program
500-14 Eliminate Funding for the National and Community Service Act
500-15 Reduce Funding for Head Start
500-16 Reduce the 50 Percent Floor on the Federal Share of Foster Care and Adoption Assistance Payments
500-17 Reduce the Federal Matching Rate for Administrative and Training Costs in the Foster Care and Adoption Assistance Programs
 
Function 550: Health
 
550-01 Reduce Funding for the National Health Service Corps
550-02 Reduce the Floor on the Federal Matching Rate in Medicaid
550-03 Reduce the Enhanced Federal Matching Rates for Certain Administrative Functions in Medicaid
550-04-A Restrict the Allocation of Common Administrative Costs to Medicaid
550-04-B Reduce Spending for Medicaid Administration
550-05 Convert Medicaid and Medicare DSH Payments into a Block Grant
550-06 Reduce Subsidies for Health Professions Education
550-07 Combine and Reduce Public Health Service Block Grants
550-08 Adopt a Voucher Plan for the FEHB Program
550-09 Base Retiree Health Benefits on Length of Service
550-10 Establish New User Fees for Medical Devices Regulated by the FDA
 
Function 570: Medicare
 
570-01 Reduce Medicare's Payments for the Indirect Costs of Patient Care That Are Related to Hospitals' Teaching Programs
570-02 Reduce Medicare's Direct Payments for Medical Education
570-03 Eliminate Additional Capital-Related Payments for Hospitals with Residency Programs
570-04 Convert Medicare Payments for Graduate Medical Education to a Block Grant and Slow Their Rate of Growth
570-05 Eliminate Medicare's Additional Payments to Sole Community Hospitals
570-06 Institute a Single Global Payment for Hospitals' and Physicians' Services Provided During an Inpatient Stay
570-07 Increase and Extend the Reductions in the Medicare PPS Market Basket
570-08 Reduce Medicare's Payments for Hospitals' Inpatient Capital-Related Costs
570-09 Eliminate Medicare's Payments to Hospitals for Enrollees' Bad Debts
570-10 Eliminate Medicare's Payments to Nonhospital Providers for Enrollees' Bad Debts
570-11 Reduce Medicare Expenditures for Prescription Drugs
570-12 Index Medicare's Deductible for Physicians' Services
570-13-A Simplify and Limit Medicare's Cost-Sharing Requirements
570-13-B Restrict Medigap Coverage
570-14 Collect Deductible and Coinsurance Amounts on Clinical Laboratory Services Under Medicare
570-15 Impose a Copayment Requirement on Home Health Visits Under Medicare
570-16 Prohibit First-Dollar Coverage Under Medigap Policies
570-17 Increase the Premium for Physicians' Services Under Medicare to 30 Percent of Program Costs
570-18 Tie the Premium for Physicians' Services Under Medicare to Enrollees' Income
570-19-A Increase Medicare's Age of Eligibility to Match Social Security's Normal Retirement Age
570-19-B Permit Early Buy-In to Medicare Along with an Increase in the Normal Age of Eligibility
 
Function 600: Income Security
 
600-01 End Trade Adjustment Assistance
600-02 End the Expansion of Programs for Building New Housing Units for Elderly and Disabled People
600-03 Increase Payments by Tenants in Federally Assisted Housing
600-04 Reduce Rent Subsidies to Certain One-Person Households
600-05 Stop Expansion of the Number of Rental Assistance Commitments
600-06 Reduce Funding for Employment and Training in the Food Stamp Program
600-07 Reduce the Exemptions from Employment and Training Requirements for Food Stamp Recipients
600-08 Reduce the $20 Unearned Income Exclusion Under the Supplemental Security Income Program
600-09 Create a Sliding Scale for Children's SSI Benefits Based on the Number of Recipients in a Family
600-10 Reduce the Federal Matching Rate for Administrative Costs in the Child Support Enforcement Program
600-11 Repeal the Hold-Harmless Provision for State Collections in the Child Support Enforcement Program
600-12 Reduce TANF Block Grants to States
600-13 Reduce Funding for the Low Income Home Energy Assistance Program
600-14-A Defer Cost-of-Living Adjustments for CSRS Annuitants
600-14-B Limit Some COLAs for Federal Retirees
600-14-C Reduce COLAs for Middle- and High-Income Federal Retirees
600-15 Modify the Salary Used to Set Federal Pensions
600-16 Restrict the Government's Matching Contributions to the Thrift Savings Plan
600-17 Increase Employee Contributions for Federal Pensions
 
Function 700: Veterans Benefits
 
700-01 Suspend Funding for Major Construction Projects in the Veterans' Health Care System
700-02 End Future Veterans' Compensation Payments for Certain Veterans With Low-Rated Disabilities
700-03 End Future Awards of Veterans' Disability or Death Compensation when a Disability is Unrelated to Military Duties
700-04 Eliminate "Sunset" Dates on Certain Provisions for Veterans in the Balanced Budget Act of 1997
700-05 Extend and Increase Copayments for Outpatient Prescriptions Filled at VA Pharmacies
700-06 Increase Beneficiaries' Cost Sharing for Care at VA-Operated Nursing Facilities
700-07 Revise the Montgomery GI Bill Program
 
Function 750: Administration of Justice
 
750-01 Reduce Funding for Law Enforcement Efforts to Control Illegal Drugs
750-02 Reduce Funding for Justice Assistance and Certain Justice-Related Activities
 
Function 800: General Government
 
800-01 Restrict Public-Purpose Transfers of Real Property by GSA
800-02 Eliminate General Fiscal Assistance to the District of Columbia
800-03 Eliminate Mandatory Grants to U.S. Territories
800-04 Require the IRS to Deposit Fees from Installment Agreements in the Treasury as Miscellaneous Receipts
800-05 Eliminate Federal Antidrug Advertising
 
Function 920: Allowances
 
920-01 Eliminate Requirements That Agencies Purchase Alternative-Fuel Vehicles
920-02 Reduce the Number of Political Appointees
920-03 Charge Federal Employees Commercial Rates for Parking
920-04 Impose a Fee on GSE Investment Portfolios
920-05 Repeal the Service Contract Act
920-06-A Repeal the Davis-Bacon Act
920-06-B Raise the Threshold for Coverage Under the Davis-Bacon Act
 
PART TWO - REVENUE OPTIONS
 
Restrict Itemized Deductions and Credits Under the Income Tax
 
REV-01 Limit Mortgage Principal Eligible for Interest Deduction to $300,000
REV-02 Limit the Mortgage Interest Deduction for Second Homes
REV-03 Limit Deductions of State and Local Taxes to the Excess Over 2 Percent of Adjusted Gross Income
REV-04 Limit Deductions for Charitable Gifts of Appreciated Property to Tax Basis
REV-05 Limit Deductions for Charitable Giving to the Amount Exceeding 2 Percent of Adjusted Gross Income
REV-06 Phase Out the Child and Dependent Care Credit
REV-07 Include Social Security Benefits in the Phaseout of the Earned Income Tax Credit
REV-08 Limit the Tax Benefit of Itemized Deductions to 15 Percent
 
Restrict the Tax-Favored Treatment of Nonretirement Fringe Benefits
 
REV-09 Impose an Excise Tax on Nonretirement Fringe Benefits
REV-10 Limit the Tax Exemption of Employer-Paid Health Insurance
REV-11 Include Employer-Paid Life Insurance in Taxable Income
REV-12 Eliminate the Employer Exclusion for Dependent Care
 
Restrict the Tax-Favored Treatment of Certain Household Income
 
REV-13 Include the Income-Replacement Portion of Workers' Compensation and Black Lung Benefits in Taxable Income
REV-14-A Include 85 Percent of Social Security and Railroad Retirement Benefits in Taxable Income for all Recipients
REV-14-B Include 85 Percent of Social Security and Railroad Retirement Benefits in Taxable Income for Higher-Income Recipients and Include 50 Percent for all Other Recipients
REV-14-C Include 85 Percent of Social Security and Railroad Retirement Benefits in Taxable Income for Higher-Income Recipients
REV-15 Include Investment Income from Life Insurance and Annuities in Taxable Income
REV-16 Include an Income-Related Portion of the Insurance Value of Medicare Benefits in Taxable Income
REV-17 Raise the Age Limit for the Kiddie Tax from 14 to 18 for Taxing Investment Income
 
Increase Taxes Dedicated to Social Insurance Trust Funds
 
REV-18 Expand Medicare Coverage to Include State and Local Government Employees Not Now Covered
REV-19 Make Calculation of Taxable Wages for Self-Employed People Equivalent to Calculation for Other Workers
 
Increase Taxes on Income of Multinational Firms
 
REV-20 Eliminate the Source Rules Exception for Inventory Sales
REV-21 Treat Foreign Sales Corporations Like Other Foreign Subsidiaries
REV-22 Make Foreign Subnational Taxes Deductible Rather Than Creditable
 
Broaden Taxes on Wealth and Capital Gains
 
REV-23-A Include Accrued Capital Gains in the Last Income Tax Return of the Deceased
REV-23-B Enact Carryover Basis for Capital Gains Held Until Death
REV-24 Eliminate Like-Kind Exchanges
REV-25 Convert the Credit for State Death Taxes to a Deduction
REV-26 Include Life Insurance Proceeds in the Base for Estate Taxes
REV-27 Eliminate Nonbusiness Valuation Discounts Under the Estate Tax
 
Curtail Income Tax Preferences for Businesses
 
REV-28 Reduce Tax Credits for Rehabilitating Buildings
REV-29 Repeal the Low-Income Housing Credit
REV-30-A Tax Credit Unions Like Other Thrift Institutions
REV-30-B Tax Credit Unions with More than $10 Million in Assets Like Other Thrift Institutions
REV-31 Repeal the Expensing of Exploration and Development Costs for Extractive Industries
REV-32 Repeal the Percentage Depletion for Extractive Industries
REV-33 Repeal the Tax Credit for Enhanced Oil Recovery Costs and Expensing of Tertiary Injectants
REV-34 Repeal the Partial Exemption for Alcohol Fuels from Excise Taxes on Motor Fuels
REV-35 Capitalize the Costs of Producing Timber
REV-36 Replace Corporate Credit with a Deduction for Employer FICA on Certain Tip Income
REV-37 Repeal the "Lower of Cost or Market" Inventory Valuation Method
REV-38 Tighten Rules on Interest Deductions for Corporate-Owned Life Insurance
REV-39 Repeal Tax-Free Conversions of Large C Corporations to S Corporations
REV-40 Repeal the Expensing of Certain Agricultural Costs
REV-41 Eliminate Exemption for Income for Cooperatively Owned Electric and Telephone Utilities
 
Impose Taxes on Activities Harmful to the Environment
 
REV-42 Increase the Excise Tax on Cigarettes by 50 Cents per Pack
REV-43 Increase all Alcoholic Beverage Taxes to $16 per Proof Gallon
REV-44 Index Tobacco and Alcohol Tax Rates for Inflation
REV-45 Increase Motor Fuel Excise Taxes by 12 Cents per Gallon
REV-46-A Tax Water Pollutants on the Basis of Biological Oxygen Demand
REV-46-B Impose an Excise Tax on Toxic Water Pollutants
REV-47-A Impose a Tax on Sulfur Dioxide Emissions
REV-47-B Impose a Tax on Nitrogen Oxide Emissions
REV-47-C Impose a Tax on Particulate Matter
REV-47-D Impose a Tax on Volatile Organic Compounds
REV-48 Impose a One-Time Tax on Emissions from New Automobiles and Light Trucks
 
APPENDIX - SCOREKEEPING GUIDELINES


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