What if we balanced our $2 trillion U.S. Government deficit just by cutting programs? The chart below shows that the “easy” fixes only get us to about a quarter of the goal. Then we have no choice but to look at the biggest programs, including defense, programs for our veterans, Medicaid, Medicare, and Social Security. If you believe, as many do, that we should not touch veterans benefits and should only improve efficiency in defense (if not raise it), then we need to cut another $200-$250 billion dollars from Medicaid, Medicare, and Social Security. The chart below is not a policy recommendation but gives a sense of the numbers. Other posts show what the numbers look like if we only raise taxes, and then what a combination of spending cuts and revenue increases might look like. No matter what, the numbers are daunting. We have to reach out to our elected leaders to take our deficit and debt seriously, as expected from leaders of any business, non-profit organization, or household. Printing money will only increase inflation and reduce trust in the US dollar and our standing in the world.
| Step | Proposed Cut | Annual Savings | Cumulative Savings | % of $2T Goal |
|---|---|---|---|---|
| 1 | Reduce improper payments & fraud (net) | $50B | $50B | 2.5% |
| 2 | Reduce federal administration & workforce | $50B | $100B | 5.0% |
| 3 | Eliminate selected subsidies & corporate welfare | $50B | $150B | 7.5% |
| 4 | Reduce non-defense discretionary spending | $200B | $350B | 17.5% |
| 5 | Reduce federal civilian retirement | $50B | $400B | 20.0% |
| 6 | Reduce other mandatory programs | $125B | $525B | 26.3% |
| 7 | Reduce national defense | $250B | $775B | 38.8% |
| 8 | Veterans Affairs efficiencies only | $15B | $790B | 39.5% |
| 9 | Reduce Medicaid & ACA | $260B | $1.050T | 52.5% |
| 10 | Reduce Medicare | $450B | $1.500T | 75.0% |
| 11 | Reduce Social Security | $500B | $2.000T | 100.0% |
Note: We are assuming a static spending picture in the above. In reality, more and more people are joining Medicare and Social Security, and living longer, which will naturally add $200-$300 billion to our spending over time. We assume here that reasonable growth and inflation will offset these changes, just to keep things simpler.