Options for Reducing the Deficit: 2015 to 2024

The Congress faces an array of policy choices as it confronts the prospect of large annual budget deficits and further increases in the already-large government debt that are projected to occur in coming decades under current law.


CBO periodically issues a compendium of options—this installment presents 79—to inform lawmakers about the budgetary implications of various ways to reduce spending or increase revenues.


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Growth in DoD's Budget From 2000 to 2014

The Department of Defense's (DoD's) base budget increased by 31 percent (adjusted for inflation) between 2000 and 2014, mainly because of higher costs for military personnel and operation and maintenance.

Adjusted to exclude inflation, funding for military personnel grew by 46 percent despite a 4 percent reduction in the number of service members. During the same period, operation and maintenance costs rose by 34 percent and the acquisition portion of DoD’s budget grew by 25 percent.

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Federal Policies and Innovation

The federal government influences innovation through two broad channels: spending and tax policies, and the legal and regulatory systems. Policymakers could spur additional innovation by increasing funding for federal programs that support research and development, increasing funding on education, providing greater tax incentives for R&D, increasing loans or loan guarantees for firms that produce innovative technologies, or making changes to immigration policies, the patent system, and the regulatory regime.

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The Distribution of Household Income and Federal Taxes, 2011

Because higher-income households receive a much greater share of the nation’s before-tax income and pay higher average federal tax rates on that income, they pay much more in federal taxes than lower-income households do.

In 2011, households in the top quintile received 52 percent of before-tax income and paid 69 percent of federal taxes; households in the bottom quintile received 5 percent of before tax-income and paid 1 percent of federal taxes.

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How CBO Analyzes the Effects of Changes in Federal Fiscal Policies on the Economy

In certain reports and for some major pieces of legislation, CBO analyzes the short-term and longer-term effects on the overall economy of changes in federal fiscal (tax and spending) policies. This report, which is part of the agency’s ongoing effort to make its analyses transparent, explains the methods that CBO uses in such analyses.

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Options for Reducing the Deficit: 2015 to 2024
Growth in DoD's Budget From 2000 to 2014
Federal Policies and Innovation
The Distribution of Household Income and Federal Taxes, 2011
How CBO Analyzes the Effects of Changes in Federal Fiscal Policies on the Economy