Reducing the Entitlement Spending

This study analyzes three ways to realize budgetary savings by taxing or reducing benefits from entitlement programs considered as a group, rather than reducing benefits program by program. The Congressional Budget Office CBO prepared the study in response to requests from Members of Congress and others for an elaboration of the analysis presented on this subject in CBOs March 1994 volume Reducing the Deficit Spending and Revenue Options. The study also examines the current distribution among family income groups of benefits from 11 major entitlement programs, in response to a request from Senator Alan K. Simpson and eight other Senators for information on current payments to individuals and families under these entitlements. The specific options considered are taxing all entitlement benefits under the federal individual income tax, reducing benefits provided to middle- and high-income families, and denying benefits to families with the highest incomes. For each option, the study estimates budgetary savings and the distributional impact on families it also discusses issues that would affect the options administration and effectiveness. In accordance with CBOs mandate to provide objective and impartial analysis, this study contains no recommendations.