The options discussed in this report stem from a variety of sources, such as legislative proposals, the President’s budget, Congressional and CBO staff, other government agencies, and private groups. The options are intended to reflect a range of possibilities rather than a ranking or a comprehensive list. The inclusion or exclusion of a particular policy change does not represent an endorsement or rejection by CBO. In keeping with CBO’s mandate to provide objective and impartial analysis, the report makes no recommendations, and the discussion of each option summarizes the arguments for and against it.
Peter R. Orszag
Director
February 2007
| |
| Spending Options |
| |
| National Defense |
| |
| Forces and Weapons |
| |
| 050-1 |
Cancel the Future Combat System Program |
| 050-2 |
Add Two New Active Army Divisions |
| 050-3 |
Truncate the DDG-1000 Destroyer Program and Buy Fire-Support Ships Instead |
| 050-4 |
Cancel the Maritime Prepositioning Force (Future) Ships |
| 050-5 |
Cancel the F-35 Joint Strike Fighter and Replace with F-16s and F/A-18s |
| 050-6 |
Cancel Navy and Marine Corps Joint Strike Fighters and Replace with F/A-18E/Fs |
| 050-7 |
Terminate the Airborne Laser Program |
| 050-8 |
Terminate Future Satellites of the Space Tracking and Surveillance System Program |
| 050-9 |
Cancel Development of the Ground-Based Midcourse Defense System After Block 2004/2006 |
| 050-10 |
Cancel the Space Radar Program |
| |
| Manpower, Logistics, and Support |
| |
| 050-11 |
Consolidate Military Personnel Costs in a Single Appropriation |
| 050-12 |
Target Pay to Meet Military Requirements |
| 050-13 |
Increase the Use of Warrant Officers and Limit Military Pay Raises |
| 050-14 |
Reduce Military Personnel in Overseas Headquarters Positions |
| 050-15 |
Replace Military Personnel in Some Support Positions with Civilian Employees of the Department of Defense |
| 050-16 |
Substitute Sponsored Reservists for Active-Duty Military |
| 050-17 |
Introduce a "Cafeteria Plan" for the Health Benefits of Family Members of Active-Duty Military Personnel |
| 050-18 |
Introduce More Copayments into TRICARE For Life |
| 050-19 |
Consolidate and Encourage Efficiencies in Military Exchanges |
| 050-20 |
Consolidate the Department of Defense's Retail Activities and Provide a Grocery Allowance to Service Members |
| 050-21 |
Change Depots' Pricing Structure for Repairs |
| 050-22 |
Ease Restrictions on Contracting for Depot Maintenance |
| 050-23 |
Create a Defense Base Act Insurance Pool for Department of Defense Contractors Deployed Overseas |
| |
| International Affairs |
| |
| 150-1 |
Eliminate the Export-Import Bank and the Overseas Private Investment Corporation |
| |
| General Science, Space, and Technology |
| (Also see Revenue Option 36) |
| |
| 250-1 |
Cut National Science Foundation Spending on Elementary and Secondary Education |
| 250-2 |
End the Space Shuttle Program and Additional Assembly of the International Space Station |
| 250-3 |
Delay NASA's Constellation Program by Five Years |
| |
| Energy |
| (Also see Revenue Options 29, 55, and 56) |
| |
| 270-1 |
Eliminate the Department of Energy's Applied Research for Fossil Fuels |
| 270-2 |
Eliminate Funding for the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Research Program |
| 270-3 |
Eliminate the Department of Energy's Applied Research on Renewable Energy Sources |
| 270-4 |
Eliminate Funding for Nuclear Energy Research and Development |
| 270-5 |
Eliminate Funding for the Department of Energy's Nuclear Power 2010 Program |
| 270-6 |
Eliminate Funding for the Hydrogen Fuel Initiative, Including the FreedomCAR and Vehicle Technologies Program |
| 270-7 |
Eliminate the Department of Energy's Applied Research on Energy-Conservation Technologies for Buildings |
| 270-8 |
Eliminate the Department of Energy's State and Community Grants for Energy Conservation |
| 270-9 |
Index the Nuclear Waste Fund Fee to Inflation |
| 270-10 |
Restructure the Power Marketing Administrations to Charge Higher Rates |
| 270-11 |
Sell the Southeastern Power Administration and Related Power-Generating Assets |
| 270-12 |
Sell a Portion of the Tennesee Valley Authority's Electric Power Assets |
| 270-13 |
Reduce the Size of the Strategic Petroleum Reserve |
| |
| Natural Resources and Environment |
| (Also see Revenue Options 28, 51, 52, 53, 54, and 58) |
| |
| 300-1 |
Increase Fees for Permits Issued by the Army Corps of Engineers |
| 300-2 |
Eliminate Federal Funding for Beach-Replenishment Projects |
| 300-3 |
Revise and Reauthorize the Bureau of Land Management's Land Sales Process |
| 300-4 |
Reduce Funding for Timber Sales That Lose Money |
| 300-5 |
Reauthorize Maintenance and Location Fees and Charge Royalties for Hardrock Mining on Federal Lands |
| 300-6 |
Use State Formulas to Set Grazing Fees for Federal Lands |
| 300-7 |
Open the Coastal Plain of the Arctic National Wildlife Refuge to Leasing |
| 300-8 |
Reassign Reimbursable Costs for Water Projects Not Serving All Planned Beneficiaries |
| 300-9 |
Eliminate Federal Grants for Wastewater and Drinking Water Infrastructure |
| 300-10 |
Eliminate the Environmental Protection Agency's Energy Star Program |
| 300-11 |
Eliminate the Environmental Protection Agency's Science to Achieve Results Grant Program |
| 300-12 |
Scale Back the Department of Agriculture's Conservation Security Program |
| 300-13 |
Limit Future Enrollment of Land in the Department of Agriculture's Conservation Reserve Program |
| 300-14 |
Eliminate the National Park Service's Local Funding for Heritage Area Grants and Statutory Aid |
| |
| Agriculture |
| |
| 350-1 |
Eliminate the Research Initiative for Future Agriculture and Food Systems |
| 350-2 |
Impose New Limits on Payments to Producers of Certain Agricultural Commodities |
| 350-3 |
Reduce Payment Acreage by 1 Percentage Point |
| 350-4 |
Reduce the Reimbursement Rate Paid to Private Insurance Companies in the Crop Insurance Program |
| 350-5 |
Eliminate the Foreign Market Development Program |
| 350-6 |
Reduce Funding for the Market Access Program |
| 350-7 |
Limit the Repayment Period for Export Credit Guarantees |
| |
| Commerce and Housing Credit |
| (Also see Revenue Options 7, 27, 31, 37, 50, 59, 60, and 65) |
| |
| 370-1 |
Eliminate the International Trade Administration's Trade Promotion Activities or Charge the Beneficiaries |
| 370-2 |
Eliminate the Hollings Manufacturing Extension Partnership and the Baldrige National Quality Program |
| 370-3 |
Permanently Extend the Federal Communications Commission's Authority to Auction Licenses for Use of the Radio Spectrum |
| 370-4 |
End Small-Bidder Preferences in Auctions Conducted by the Federal Communications Commission for Wireless Spectum Licenses |
| 370-5 |
End Support for the Telecommunications Development Fund |
| 370-6 |
Restrict Universal Service Fund Support to a Single Connection per Household |
| 370-7 |
Charge Government-Sponsored Enterprises Fees for Registering with the Securities and Exchange Commission |
| 370-8 |
Increase Fees for the Federal Housing Administration's Home Equity Conversion Mortgage Insurance |
| 370-9 |
Impose Fees on the Small Business Administration's Secondary Market Guarantees |
| |
| Transportation |
| (Also see Revenue Options 48, 49, 57, 61, and 62) |
| |
| 400-1 |
Reduce Federal Aid for Highways |
| 400-2 |
Eliminate the "New Starts" Transit Program |
| 400-3 |
Reduce the Federal Subsidy for Amtrak |
| 400-4 |
Eliminate Grants to Large and Medium-Sized Hub Airports |
| 400-5 |
Eliminate the Essential Air Service Program |
| 400-6 |
Increase Fees for Aviation Security |
| 400-7 |
Impose Fees on Users of the St. Lawrence Seaway |
| |
| Community and Regional Development |
| |
| 450-1 |
Drop Wealthier Communities from the Community Development Block Grant Program |
| 450-2 |
Eliminate the Neighborhood Reinvestment Corporation |
| 450-3 |
Eliminate the Community Development Financial Institutions Fund |
| 450-4 |
Convert the Rural Community Advancement Program to State Revolving Funds |
| 450-5 |
Eliminate Region-Specific Development Agencies |
| 450-6 |
Restrict First-Responder Grants to High-Risk Communities |
| 450-7 |
Impose a Time Limit on the Subsidy on Disaster Loans from the Small Business Administration |
| 450-8 |
Eliminate or Reduce the Flood Insurance Subsidy on Certain Older Structures |
| 450-9 |
Reduce the Expense Allowance Retained by Private Insurance Companies in the National Flood Insurance Program |
| |
| Education, Training, Employment, and Social Services |
| (Also see Revenue Option 22) |
| |
| 500-1 |
Reduce Funding to School Districts for Impact Aid |
| 500-2 |
Eliminate Grants to the States for Safe and Drug-Free Schools and Communities |
| 500-3 |
Fund the Federal Goal of Paying 40 Percent of the Added Cost of Educating a Disabled Child |
| 500-4 |
Increase Funding for the Education of Disadvantaged Children |
| 500-5 |
Eliminate the Even Start Program and Redirect Some Funds to Other Education Programs |
| 500-6 |
Increase the Maximum Pell Grant |
| 500-7 |
Verify the Income Amount That Pell Grant Awardees Report on Their Student Aid Applications |
| 500-8 |
Standardize the Interest Rates Charged on PLUS Loans |
| 500-9 |
Eliminate Subsidized Loans to Graduate Students |
| 500-10 |
Reduce Lenders' Yields on PLUS Loans |
| 500-11 |
Reduce Fees for Collection-Related Services Paid to Guaranty Agencies Under the Federal Family Education Loan Program |
| 500-12 |
Eliminate Administrative Fees Paid to Schools in the Campus-Based Student Aid and Pell Grant Programs |
| 500-13 |
Eliminate the Leveraging Educational Assistance Partnership Program |
| 500-14 |
Reduce Funding for the Arts and Humanities |
| 500-15 |
Eliminate the Senior Community Service Employment Program |
| 500-16 |
Eliminate Funding for the National and Community Service Act |
| |
| Health |
| (Also see Revenue Options 15, 63, and 64) |
| |
| 550-1 |
Equalize Federal Matching Rates for Administrative Functions in Medicaid |
| 550-2 |
Restrict the Allocation of Common Administrative Costs to Medicaid |
| 550-3 |
Reduce Spending for Medicaid's Administrative Costs |
| 550-4 |
Increase the Flat Rebate Paid by Drug Manufacturers for Medicaid Prescription Drugs |
| 550-5 |
Convert Medicaid's Payments for Acute Care Services into a Block Grant |
| 550-6 |
Convert Medicaid's Disproportionate Share Hospital Payments into a Block Grant |
| 550-7 |
Reduce the Taxes That States Are Allowed to Levy on Medicaid Providers |
| 550-8 |
Expand Medicaid Eligibility to Low-Income Parents |
| 550-9 |
Expand Medicaid Eligibility to Young Adults |
| 550-10 |
Adjust Funding for the State Children's Health Insurance Program to Reflect Increases in Health Care Spending and Population Growth |
| 550-11 |
Create a Voucher Program to Expand Health Insurance Coverage |
| 550-12 |
Adopt a Voucher Plan for the Federal Employees Health Benefits Program |
| 550-13 |
Base Federal Retirees' Health Benefits on Length of Service |
| 550-14 |
Reduce Subsidies for the Education of Health Professionals |
| |
| Medicare |
| (Also see Revenue Option 38) |
| |
| 570-1 |
Raise the Eligibility Age for Medicare |
| 570-2 |
Set the Benchmark for Private Plans in Medicare Equal to Local per Capita Fee-for-Service Spending |
| 570-3 |
Remove Medicare's Payments for Indirect Medical Education from the Benchmarks for Private Plans |
| 570-4 |
Eliminate the Stabilization Fund for Medicare's Regional PPO Program |
| 570-5 |
Reduce Medicare's Payments for the Direct Costs of Medical Education |
| 570-6 |
Reduce Medicare's Payments for the Indirect Costs of Patient Care Related to Hospitals' Teaching Programs |
| 570-7 |
Equalize Medicare's Capital-Related Payments for Teaching and Nonteaching Hospitals |
| 570-8 |
Convert Medicare's Disporportionate Share Hospital Payments into a Block Grant |
| 570-9 |
Reduce the Update Factor for Hospitals' Inpatient Operating Costs Under Medicare |
| 570-10 |
Reduce Medicare's Payments for Hospitals' Inpatient Capital-Related Costs |
| 570-11 |
Reduce Medicare's Payments for Home Health Care |
| 570-12 |
Reduce the Payment Update Factors for Providers of Post-Acute Care Under Medicare |
| 570-13 |
Modify the Sustainable Growth Rate Formula for Setting Medicare's Physician Payment Rates |
| 570-14 |
Limit General-Revenue Medicare Funding to 45 Percent |
| 570-15 |
Increase the Basic Premium for Supplementary Medical Insurance to 30 Percent of the Program's Costs |
| 570-16 |
Increase the Fraction of Medicare Beneficiaries Who Pay an Income-Related Premium for Supplementary Medical Insurance |
| 570-17 |
Increase Premiums Under Medicare's Drug Benefit for Higher-Income Enrollees |
| 570-18 |
Apply a Hold-Harmless Provision to Increases in Medicare's Part D Premium |
| 570-19 |
Modify Medicare's Cost-Sharing Requirements |
| 570-20 |
Restrict Medigap Coverage of Medicare's Cost Sharing |
| 570-21 |
Combine Changes to Medicare's Cost Sharing with Medigap Restrictions |
| 570-22 |
Require a Copayment for Home Health Episodes Covered by Medicare |
| 570-23 |
Impose Cost Sharing for the First 20 Days of a Stay in a Skilled Nursing Facility Under Medicare |
| 570-24 |
Impose a Deductible and Coinsurance Amounts for Clinical Laboratory Services Under Medicare |
| 570-25 |
Shorten the Rental Period for Oxygen Equipment Under Medicare |
| 570-26 |
Extend Medicare's Secondary-Payer Status for ESRD from 30 Months to 60 Months |
| |
| Income Security |
| (Also see Revenue Options 13, 20, and 41) |
| |
| 600-1 |
Modify the Assessment Base and Increase the Federal Insurance Premium for Private Pension Plans |
| 600-2 |
Modify the Formula Used to Set Federal Pensions |
| 600-3 |
Base Cost-of-Living Adjustments for Federal and Military Pensions and Veterans' Benefits on an Alternative Measure of Inflation |
| 600-4 |
Restructure the Government's Matching Contributions to the Thrift Savings Plan |
| 600-5 |
End the Trade Adjustment Assistance Program |
| 600-6 |
Increase Payments by Tenants in Federally Assisted Housing |
| 600-7 |
Reduce Rent Subsidies for Certain One-Person Households |
| 600-8 |
Eliminate Small Food Stamp Benefits |
| 600-9 |
Target the Subsidy for Certain Meals in Child Nutrition Programs |
| 600-10 |
Reduce the Exclusion for Unearned Income Under the Supplemental Security Income Program |
| 600-11 |
Create a Sliding Scale for Children's Supplemental Security Income Benefits Based on the Number of Recipients in a Family |
| 600-12 |
Remove the Ceiling on the Collection of Overpayments from the Supplemental Security Income Program |
| 600-13 |
Increase Funding for Child Care |
| |
| Social Security |
| (Also see Revenue Options 18 and 39) |
| |
| 650-1 |
Base Social Security Cost-of-Living Adjustments on an Alternative Measure of Inflation |
| 650-2 |
Lengthen the Computation Period for Social Security Benefits by Three Years |
| 650-3 |
Eliminate Social Security Benefits for Children of Early Retirees |
| 650-4 |
Require Children Under Age 18 to Attend School Full Time as a Condition of Eligibility for Social Security Benefits |
| 650-5 |
Raise the Normal Retirement Age in Social Security |
| 650-6 |
Constrain the Increase in Initial Social Security Benefits |
| 650-7 |
Require State and Local Pension Plans to Share Data with the Social Security Administration |
| 650-8 |
Eliminate the Social Security Lump-Sum Death Benefit |
| 650-9 |
Reduce the Spousal Benefit in Social Security from 50 Percent to 33 Percent |
| 650-10 |
Increase the Social Security Benefit Paid to Surviving Spouses |
| 650-11 |
Increase Social Security Benefits for Workers Who Have Low Earnings Over a Long Working Lifetime |
| |
| Veterans Benefits and Services |
| |
| 700-1 |
Require Copayments for All Non-Service-Connected VA Medical Care |
| 700-2 |
Close Enrollment in VA Medical Care for Priority 7 and 8 Veterans |
| 700-3 |
Increase Beneficiaries' Cost Sharing for Care at VA Nursing Facilities |
| 700-4 |
Narrow the Eligibility for Veterans' Disability Compensation to Include Only Veterans with High-Rated Disabilities |
| 700-5 |
Narrow the Eligibility for Veterans' Disability Compensation to Veterans Whose Disabilities Are Related to Their Military Duties |
| 700-6 |
Reduce Veterans' Disability Compensation to Account for Social Security Disability Insurance Payments |
| 700-7 |
Increase and Index Withholding for the Montgomery GI Bill |
| |
| Administration of Justice |
| |
| 750-1 |
Reduce Funding for Certain Department of Justice Grants |
| 750-2 |
Eliminate the Legal Services Corporation |
| |
| General Government |
| |
| 800-1 |
Eliminate General Fiscal Assistance to the District of Columbia |
| 800-2 |
Require the IRS to Deposit Fees for Its Services in the Treasury as Miscellaneous Receipts |
| 800-3 |
Eliminate the Presidential Election Campaign Fund |
| 800-4 |
Eliminate the National Youth Anti-Drug Media Campaign |
| |
| Allowances |
| |
| 920-1 |
Raise the Threshold for Coverage Under the Davis-Bacon Act |
| 920-2 |
Reduce Benefits Under the Federal Employees' Compensation Act |
| 920-3 |
Eliminate Cargo Preference |
| |
| |
| Revenue Options |
| |
| Marginal Income Tax Rates |
| |
| Option 1 |
Increase Individual Income Tax Rates |
| Option 2 |
Permanently Extend the Individual Income Tax Provisions of EGTRRA |
| Option 3 |
Permanently Extend the Zero and 15 Percent Tax Rates for Capital Gains and Dividends |
| Option 4 |
Replace Multiple Tax Rates on Long-Term Capital Gains with a Deduction of 45 Percent of Net Realized Gains |
| Option 5 |
Provide Relief from the Individual Alternative Minimum Tax |
| |
| The Individual Income Tax Base |
| |
| Option 6 |
Use an Alternative Measure of Inflation to Index Tax Parameters |
| Option 7 |
Reduce the Mortgage Interest Deduction or Replace It with a Tax Credit |
| Option 8 |
Eliminate or Limit the Deduction of State and Local Taxes |
| Option 9 |
Limit the Tax Benefit of Itemized Deductions to 15 Percent |
| Option 10 |
Limit Deductions for Charitable Giving to the Amount Exceeding 2 Percent of Adjusted Gross Income |
| Option 11 |
Create an Above-the-Line Deduction for Charitable Giving |
| Option 12 |
Eliminate Tax Subsidies for Child and Dependent Care |
| Option 13 |
Include Employer-Paid Premiums for Income-Replacement Insurance in Employees' Taxable Income |
| Option 14 |
Eliminate the Tax Exclusion for Employer-Paid Life Insurance |
| Option 15 |
Reduce the Tax Exclusion for Employer-Paid Health Insurance |
| Option 16 |
Include Investment Income from Life Insurance and Annuities in Taxable Income |
| Option 17 |
Include All Income Earned Abroad by U.S. Citizens in Taxable Income |
| Option 18 |
Tax Social Security and Railroad Retirement Benefits Like Defined-Benefit Pensions |
| Option 19 |
End the Preferential Treatment of Dividends Paid on Stock Held in Employee Stock Ownership Plans |
| |
| Individual Income Tax Credits |
| |
| Option 20 |
Include Social Security Benefits in Calculating the Phaseout of the Earned Income Tax Credit |
| Option 21 |
Replace the Tax Exclusion for Interest Income on State and Local Bonds with a Tax Credit |
| Option 22 |
Consolidate Tax Credits and Deductions for Education Expenses |
| Option 23 |
Eliminate or Limit Eligibility for the Child Tax Credit |
| |
| The Taxation of Income from Businesses and Other Entities |
| |
| Option 24 |
Set the Corporate Tax Rate at 35 Percent for All Corporations |
| Option 25 |
Integrate Corporate and Individual Income Taxes Using the Dividend-Exclusion Method |
| Option 26 |
Repeal the "Lower of Cost or Market" Inventory Valuation Method |
| Option 27 |
Tax Large Credit Unions in the Same Way as Other Thrift Institutions |
| Option 28 |
Repeal the Expensing of Exploration and Development Costs for Extractive Industries |
| Option 29 |
Tax the Income Earned by Public Electric Power Utilities |
| Option 30 |
Repeal Tax-Free Conversions of Large C Corporations to S Corporations |
| Option 31 |
Repeal the Low-Income Housing Credit |
| Option 32 |
Extend the Period for Recovering the Cost of Equipment Purchases |
| Option 33 |
Eliminate or Limit Tax-Exempt Private-Activity Bonds |
| Option 34 |
Cap Nonprofit Organizations' Outstanding Stock of Tax-Exempt Bonds |
| Option 35 |
Repeal the Deduction for Domestic Production Activities |
| Option 36 |
Permanently Extend the Research and Experimentation Tax Credit |
| Option 37 |
Tax the Federal Home Loan Banks Under the Corporate Income Tax |
| |
| The Taxation of Payroll Income |
| |
| Option 38 |
Expand the Medicare Payroll Tax to Include All State and Local Government Employees |
| Option 39 |
Increase the Maximum Taxable Earnings for the Social Security Payroll Tax |
| Option 40 |
Calculate Taxable Wages in the Same Way for Self-Employed People and Employees |
| Option 41 |
Increase Federal Employees' Contributions to Pension Plans |
| |
| The Taxation of Wealth |
| |
| Option 42 |
Modify the Estate and Gift Tax Provisions of EGTRRA |
| |
| Tax Rules for Income from Worldwide Activity |
| |
| Option 43 |
Eliminate the Source-Rules Exception for Exports |
| Option 44 |
Tax the Worldwide Income of U.S. Corporations as It Is Earned |
| Option 45 |
Exempt Active Foreign Dividends from U.S. Taxation |
| |
| Existing Excise Taxes |
| |
| Option 46 |
Increase the Excise Tax on Cigarettes by 50 Cents per Pack |
| Option 47 |
Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon |
| Option 48 |
Increase Excise Taxes on Motor Fuels by 50 Cents per Gallon |
| Option 49 |
Repeal the Partial Exemption for Alcohol Fuels from Excise Taxes |
| Option 50 |
Eliminate the Federal Communications Excise Tax and Universal Service Fund Fees |
| |
| Taxes That Affect the Environment |
| |
| Option 51 |
Impose a Tax on Sulfur Dioxide Emissions |
| Option 52 |
Impose a Tax on Nitrogen Oxide Emissions |
| Option 53 |
Impose an “Upstream“ Tax on Carbon Emissions |
| Option 54 |
Reinstate the Superfund Taxes |
| Option 55 |
Extend the Gas-Guzzler Tax to Vehicles with a Gross Weight of 6,000 to 10,000 Pounds |
| Option 56 |
Eliminate Tax Credits for Producing Unconventional Fuels and Generating Electricity from Renewable Energy Resources |
| |
| Miscellaneous Fees |
| |
| Option 57 |
Impose Fees on Users of the Inland Waterway System |
| Option 58 |
Impose Fees That Recover the Environmental Protection Agency's Costs Related to Pesticides and New Chemicals |
| Option 59 |
Charge for Examinations of State-Chartered Banks |
| Option 60 |
Fund the Commodity Futures Trading Commission Through Fees |
| Option 61 |
Impose Fees to Help Fund the Federal Railroad Administration's Rail-Safety Activities |
| Option 62 |
Increase Fees for Certificates and Registrations Issued by the Federal Aviation Administration |
| Option 63 |
Finance the Food Safety and Inspection Service Solely Through Fees |
| Option 64 |
Establish New Fees for the Food and Drug Administration |
| Option 65 |
Impose Fees on the Investment Portfolios of Government-Sponsored Enterprises |
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