Congressional Budget Office
March 2011

This volume — one of several reports that CBO produces regularly for the House and Senate Committees on the Budget — presents more than 100 options for altering federal spending and revenues.

The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees.

http://www.cbo.gov/ftpdocs/120xx/doc12085/03-10-ReducingTheDeficit.pdf

Comment: 

By Don McCanne, MD

You do not have to read this entire 254 page report to have a good idea of some of the options to be considered to reduce our federal budget deficit. Pages viii-xiv of the Table of Contents lists the options for reducing mandatory spending, reducing discretionary spending, and increasing revenues. You can then proceed to read about any of the specific options that you my find intriguing to see what impact they might have on the deficit.

This is important. Right now measures are being advanced that would reduce discretionary spending, partially or completely defunding highly valued programs. Yet there seems to be a consensus that we must proceed next with reductions in mandatory spending, which includes Medicare, Medicaid and Social Security, since these programs constitute a larger and growing component of our federal spending.

As you review the list of options for health spending, it becomes obvious that these proposals are aimed at reducing government spending, but would do so by shifting more costs to patients, especially Medicare beneficiaries who already often bear excessive costs of their health care. We need better coverage for Medicare beneficiaries, not worse.

What almost no one is talking about, but should be our primary consideration for deficit reduction is improving revenues. Quoting from the report:

“Relative to the size of the economy, federal revenues are currently at their lowest level in 60 years. In both 2009 and 2010, revenues equaled 14.9 percent of gross domestic product (GDP). By comparison, they averaged about 18 percent of GDP between 1971 and 2010, peaking at 20.6 percent of GDP in 2000.”

That places us near the bottom of all industrialized nations in tax revenues. Yet we are cutting funding of programs at the same time that we are reducing taxes even further (e.g., failure to end the temporary tax cuts for the rich, or to restore reasonable estate taxes). We don’t have a spending problem; we have a revenue problem!

That said, there is one glaring deficiency in this report, and that is that there is no mention of the efficiencies that are characteristic of a single payer system. Single payer tools would slow future growth in health care spending to sustainable levels, and hasn’t that been what all of the Sturm und Drang has been about?

Reducing the Deficit: Spending and Revenue Options

Congressional Budget Office
March 2011

This volume — one of several reports that CBO produces regularly for the House and Senate Committees on the Budget — presents more than 100 options for altering federal spending and revenues.

The report begins with an introductory chapter that describes the current budgetary picture and the uses and limitations of this volume. Chapters 2 and 3 present options that would reduce mandatory and discretionary spending, respectively. Chapter 4 contains options that would increase revenues from various kinds of taxes and fees.

http://www.cbo.gov/ftpdocs/120xx/doc12085/03-10-ReducingTheDeficit.pdf

You do not have to read this entire 254 page report to have a good idea of some of the options to be considered to reduce our federal budget deficit. Pages viii-xiv of the Table of Contents lists the options for reducing mandatory spending, reducing discretionary spending, and increasing revenues. You can then proceed to read about any of the specific options that you my find intriguing to see what impact they might have on the deficit.

This is important. Right now measures are being advanced that would reduce discretionary spending, partially or completely defunding highly valued programs. Yet there seems to be a consensus that we must proceed next with reductions in mandatory spending, which includes Medicare, Medicaid and Social Security, since these programs constitute a larger and growing component of our federal spending.

As you review the list of options for health spending, it becomes obvious that these proposals are aimed at reducing government spending, but would do so by shifting more costs to patients, especially Medicare beneficiaries who already often bear excessive costs of their health care. We need better coverage for Medicare beneficiaries, not worse.

What almost no one is talking about, but should be our primary consideration for deficit reduction is improving revenues. Quoting from the report:

“Relative to the size of the economy, federal revenues are currently at their lowest level in 60 years. In both 2009 and 2010, revenues equaled 14.9 percent of gross domestic product (GDP). By comparison, they averaged about 18 percent of GDP between 1971 and 2010, peaking at 20.6 percent of GDP in 2000.”

That places us near the bottom of all industrialized nations in tax revenues. Yet we are cutting funding of programs at the same time that we are reducing taxes even further (e.g., failure to end the temporary tax cuts for the rich, or to restore reasonable estate taxes). We don’t have a spending problem; we have a revenue problem!

That said, there is one glaring deficiency in this report, and that is that there is no mention of the efficiencies that are characteristic of a single payer system. Single payer tools would slow future growth in health care spending to sustainable levels, and hasn’t that been what all of the Sturm und Drang has been about?