The WasteWatcher: The Staff Blog of Citizens Against Government Waste

CBO Releases "Options for Reducing the Deficit 2014-2023"

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The Congressional Budget Office released “Options for Reducing the Deficit 2014-2023” last week.  The CBO periodically writes a report that provides a list of policy options of where Congress can take action to reduce annual budget deficits that add to the debt and provides the budgetary effects of those actions.  This year’s list of policy options provides 103 ways to decrease federal spending over the next ten years.  The options cover all government spending therefore includes ideas for reducing both discretionary and mandatory spending.  That means the CBO has looked at the Department of Agriculture to the Veterans Administration, which receive funding via yearly appropriations, and at mandatory programs such as crop insurance, federal pensions, Medicare, and Social Security.

One must take caution in accepting some of these budget options and the real value they will provide in reducing the debt.  Many of the options are based on legislation that introduces the heavy-hand of government to theoretically reduce the debt, as opposed to eliminating duplicative and wasteful programs.

One example that would be unwise to accept would be introducing a Public Plan within Obamacare’s Health Insurance Exchanges. This would be putting a single-payer plan, like Britain’s National Health Insurance or something similar such as fee-for-service Medicare, a program that is going bankrupt and must be reformed, into the mix of private plans.  Because the government is already heavily regulating the private plans in the exchanges, introducing a public option would unfairly allow the government to compete with them.  No doubt the public option would eventually use price controls to drive down costs that would lead to rationing and poor care.  (To be clear, we hope Obamacare is repealed.)

Another example of using the heavy hand of government would be introducing price controls into Medicare Part D by utilizing Medicaid-style rebates.  The Part D voluntary drug benefit program for Medicare beneficiaries has been surprisingly effective for a government-created program and is well-liked by seniors.  The competition between private pharmacy benefit managers (PBMs) has enabled Part D to cost 45 percent less than what was projected by the CBO.  Getting the government involved in direct negotiations between drugs companies and the PBMs would eventually lead to Congress making political changes.  Introducing price controls into Part D would only make a successful program into a poor quality one and likely drive up the cost of drugs for everyone.

Other policy options we would disagree with are raising taxes; such as increasing taxes on individuals, increasing excise taxes on motor fuels, or imposing a tax on greenhouse gas emissions.

In spite of some policy options similar to the examples listed above that should be avoided, we think the CBO provides a very good list of ways to cut government spending that would help decrease the nation’s debt.

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