This video shows one scenario to eliminate our $2 trillion annual deficits with a combination of spending and tax reform. This is just one scenario. You can play with the numbers using any AI program and see what you think. Perhaps you want more, or even only, spending cuts like in this previous post/video. Perhaps you want more tax reform like in this previous post/video. Regardless, this scenario shows how hard even coming close to balancing our budget will be. Politicians don’t want to touch this, as ominous as it is for our future. Regular people like us need to get involved and start telling them to do something. See the video below and two charts — one for “tier one” or simpler changes (only about 35% of the goal) and one for “tier two” or more structural changes, which unfortunately is where the real money and hard choices are.
Tier 1: Relatively straightforward choices, although will still be politically challenging.
| Reform | Annual Improvement | What It Means | Cumulative | % of $2T |
|---|---|---|---|---|
| Fraud, improper payments & better administration | $80B | Better verification, audits, data matching and enforcement, net of additional enforcement costs. GAO reports $186B of improper payments in FY2025, but not all are fraud or recoverable. (GAO) | $80B | 4.0% |
| Medicare payment reforms | $140B | Site-neutral payments, Medicare Advantage payment reforms, payment modernization and stronger program integrity, emphasizing provider/insurer incentives rather than benefit cuts. | $220B | 11.0% |
| Medicaid financing reforms | $50B | Tighter financing arrangements, eligibility controls and reimbursement reforms. | $270B | 13.5% |
| Better tax compliance & narrower loopholes | $120B | Collect more legally owed taxes and restrict selected high-end shelters and avoidance strategies. | $390B | 19.5% |
| Moderate high-income, capital & estate tax reforms | $120B | Targeted increases on upper-income households, investment income and large estates. | $510B | 25.5% |
| Civilian government efficiencies | $70B | Attrition, procurement improvements, IT modernization, real-estate savings, contractor restraint and elimination of duplicative administration. | $580B | 29.0% |
| Defense procurement & management efficiencies | $50B | Better contracting, acquisition and logistics. No assumed reduction in military capability. | $630B | 31.5% |
| Veterans Affairs efficiencies | $15B | Administration, procurement and fraud reduction. No reduction in earned veterans’ benefits or healthcare. | $645B | 32.3% |
| Eliminate selected subsidies & corporate welfare | $35B | Reduce lower-priority agricultural, energy and industry-specific subsidies/preferences. | $680B | 34.0% |
| Initial gradual Social Security reforms | $25B | Very gradual retirement-age and benefit-growth changes, weighted toward higher-income beneficiaries. | $705B | 35.3%
|
Tier 2 — Need to fill $1.3 shortfall from above!
| Reform | Annual Improvement | What It Means | Cumulative | % of $2T |
|---|---|---|---|---|
| Broader Social Security reforms | $200B | Gradual retirement-age increases, progressive indexing and slower future benefit growth, protecting lower-income beneficiaries more strongly. | $905B | 45.3% |
| Broader Medicare reforms | $250B | More income-related premiums, stronger payment reform, greater cost discipline and slower expenditure growth. | $1.155T | 57.8% |
| Broader Medicaid & ACA reforms | $125B | Slower spending growth, greater state flexibility and structural financing/benefit reforms. | $1.280T | 64.0% |
| Payroll-tax reform | $175B | Roughly equivalent to about a 1½-percentage-point combined payroll-tax increase, or a smaller rate increase combined with substantially expanding the Social Security wage base. A pure 1% payroll tax is estimated by CBO to raise about $118B in 2026. (Congressional Budget Office) | $1.455T | 72.8% |
| Additional high-income tax reforms | $150B | A second layer of tax increases concentrated on high earners and investment income. Rough illustration: another $5k–15k for many $400k–$1M households and $20k–50k+ for many $1M+ households. | $1.605T | 80.3% |
| Broader tax-base reforms | $175B | Reduce deductions, exclusions and credits rather than relying entirely on higher rates. At this size, some upper-middle and middle-income households would be affected. Average equivalent: roughly $1,200–1,300 per U.S. household, although a progressive design would place more on higher earners. | $1.780T | 89.0% |
| Additional discretionary & other mandatory restraint | $120B | Actual program prioritization and slower benefit/spending growth after efficiencies have been exhausted. Some government services and beneficiaries would feel these changes. | $1.900T | 95.0% |
| Moderate corporate tax reform | $100B | Modestly higher corporate taxation and/or fewer corporate tax preferences, stopping well short of trying to extract several hundred billion dollars from the corporate tax alone. | $2.000T | 100.0% |