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his volume compiles more than 200 specific policy options for increasing federal revenues or reducing spending in a wide variety of programs. It is the 17th such compendium that the Congressional Budget Office (CBO) has prepared as part of its annual report to the House and Senate Committees on the Budget.

In addition to the introductory chapter and the four chapters that present the options, this year's report has two new features. First, instead of providing a series of individual policy options for reducing the growth of spending for Medicare and Medicaid, Chapter 6 presents several integrated packages of options for those two major federal health care programs. The discussion highlights the trade-offs and interactions that must be considered when combining detailed policies into comprehensive proposals. A second new section--Chapter 7--examines the problems of sustaining Social Security and Medicare over the longer run, beyond the normal budgetary window. It analyzes various policy options for containing spending on those programs as the population ages with the retirement of the baby-boom generation.

The report begins with an introductory chapter that provides general background information on CBO's latest medium-term deficit projections and the longer-run budgetary outlook as the result of coming demographic changes. Chapter 1 also explains how to use the options presented in this volume. The second chapter presents more than 40 revenue-generating options. The next three chapters include more than 160 options for reducing spending, organized by broad categories that have become the focus for deficit reduction efforts--defense and international discretionary spending, domestic discretionary spending, and entitlement and other mandatory spending. The report concludes with the two chapters discussed above, an appendix listing the spending options by the budget functions that would be affected, and a glossary of budget and economic terms.

The policy options included in this report come from many sources, and the Congress has considered most of them at some time in the past. In keeping with CBO's mandate to provide objective and impartial analysis, the discussion of each option presents the cases for and against it as fairly as possible. CBO does not endorse the options included, nor does exclusion of any proposal imply a recommendation for or against it.

All divisions of the Congressional Budget Office contributed to this report, which was coordinated by James L. Blum. Edward Davis prepared Chapter 1. The options presented in Chapters 2 through 5 were coordinated by Mark B. Booth, David H. Moore, R. Mark Musell, Constance Rhind, and R. William Thomas. Joseph R. Antos and Linda Bilheimer prepared Chapter 6, and Sandra Christensen and Ralph E. Smith prepared Chapter 7. Budget authority

and outlay estimates were coordinated by Paul R. Cullinan, Peter H. Fontaine, Michael A. Miller, and Murray N. Ross. The staff of the Joint Committee on Taxation prepared most of the revenue estimates. The longer-term Social Security estimates were made by the Social Security Administration, Office of the Actuary. CBO developed the longer-term Medicare estimates using information provided by the Health Care Financing Administration, Office of the Actuary.

Paul L. Houts and Sherry Snyder supervised the editing and production of the report. Major portions were edited by Paul L. Houts, Sherwood D. Kohn, Leah Mazade, and Sherry Snyder. Christian Spoor provided editorial assistance during production. The authors owe thanks to Cynthia Cleveland, Sharon Corbin-Jallow, Denise Jordan, Angela Z. McCollough, Ronald Moore, L. Rae Roy, and Simone Thomas, who typed the many drafts. Kathryn Quattrone and Jill Sands prepared the report for publication.

August 1996

June E. O'Neill


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