How Killing DOMA Saves the Government Money

Edith Windsor, the defendant-respondent in United States v. Windsor Edith Windsor, the defendant-respondent in United States v. Windsor Richard Drew/AP

In 2004, the Congressional Budget Office took a look at the potential budgetary impact of the federal government recognizing same-sex marriages. With the Supreme Court's decision Wednesday to overturn the Defense of Marriage Act, that potential recognition became a reality. And what they found looks pretty promising: CBO estimated that in 2004, if same-sex marriage were legal in every state and recognized by the federal government, it would improve the federal budget outlook by "less than $1 billion a year" until 2014. It's not a huge budgetary impact, but it certainly doesn't hurt.

Why would legalizing same-sex marriage have a budgetary impact at all? As CBO writes, in 2004 there were 1,138 statutory provisions "in which martial status is a factor in determining or receiving 'benefits, rights, and privileges.' " CBO estimated that, if given the opportunity, 0.6 percent of all adults in the U.S. would enter into same-sex marriages. Based on the U.S. population in 2012, that translates to 1,883,400 people, if same-sex marriage were legal in every state.

CBO calculated that if 0.6 percent of the 2004 population entered same-sex marriages, it would increase federal tax revenues by "less than $400 million a year" from 2005 to 2010, and by $500 million to $700 million from 2011 to 2014. This would've been less than 0.1 percent of total federal revenues. As Josh Barro wrote for Bloomberg earlier this year, that number now would be closer to $400 million a year, as the Bush tax cuts were mostly extended, keeping tax revenues low.

Another component is what same-sex marriage would mean for estate-tax revenues. Right now, there is an unlimited spousal exemption under the estate-tax law, which means a spouse—defined under DOMA as "a person of the opposite sex who is a husband or a wife"—can leave any amount of assets to his or her spouse without worrying about taxes. With DOMA gone, that unlimited exemption is now open to same-sex couples as well. And even though the sum of over $363,000 in estate-tax fines that Edie Windsor went to the Supreme Court over may sound like a lot, CBO found that legalizing and recognizing same-sex marriages would have little effect on estate-tax liabilities.

The impact of same-sex marriage recognition on entitlement spending is also not what you might think. CBO found that recognition would increase federal spending on Social Security but reduce spending for Medicaid and Medicare. Why would this happen? First, recognition would boost Social Security outlays because of how marital status determines benefits in the program. As CBO writes, generally "married people fare better under Social Security than single people do." With DOMA gone, same-sex married couples are now eligible for these benefits, and there will be a slight increase in outlays because of it.

Federally recognized same-sex marriage will reduce government spending in means-tested Medicaid (as well as Supplemental Security Income) because a beneficiary's spouse's income and assets will now count as the beneficiary's, reducing benefit eligibility. The spending decrease in Medicaid is negligible, at an estimated 0.1 percent in 2014 (as estimated in 2004) if same-sex marriage were recognized in every state. Medicare spending would decrease in the prescription-drug benefit's low-income subsidy program for similar reasons.

On the whole, this doesn't come to much. But in a political environment hyper-focused on debt and deficits, the budgetary impact of same-sex marriage may help cool the sting some Republicans are feeling in the wake of the Supreme Court's decision.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.