After walking through what drives U.S. deficits and debt, the obvious question is what actually works. To move past slogans, we asked AI to model a set of realistic paths forward built from policies that have been proposed, scored, or implemented before. We imposed a rule that the analysis includes only policy changes that can be specified and estimated with some confidence. It does not assume unusually strong economic growth will close the gap, it does not rely on inflation to shrink the debt, and it does not treat “waste, fraud, and abuse” as a substitute for structural reform.
The results fall into two parts. The first asks what policymakers could plausibly enact with limited political blowback. Here, we asked the AI to get us to a deficit of about 3 percent of GDP as a stabilization point. With an economy of roughly $28–30 trillion, that means a deficit of about $850–900 billion per year. At that level, according to many analysts and economists, if the economy grows at a normal pace, the debt can stabilize relative to the size of the economy rather than continuing to rise indefinitely.
The second answers a much harder question: what it would take to actually balance the budget?
Note: Our goal at Long Term America is to mobilize voters and politicians to agree that we need to make the hard trade offs required to keep our country strong. This means looking honestly at our debt and deficit and making choices based on reality. Right now we don’t have a point of view about the best way to regain fiscal responsibility. Here we are only presenting what AI has come up with, to see the options without agreeing or disagreeing. What do you think when you read AI’s response?
Start with the Low-Hanging Fruit
Any credible approach begins by tightening how current dollars are used. That includes reducing improper payments in major programs, strengthening eligibility verification, consolidating duplicative efforts, improving procurement, and eliminating subsidies that no longer serve a clear purpose. There is real money here, but it is often overstated. A reasonable assumption is about $50 billion per year in sustained savings (Government Accountability Office; Office of Management and Budget improper payment reports). That contribution matters and should be pursued regardless of broader reforms, but it does not come close to closing deficits measured in the trillions.
Part A: What We Could Do Politically to Stabilize the Debt
This scenario reflects what policymakers could plausibly enact without triggering broad political backlash. It does not attempt to balance the budget. Its goal is to reduce deficits enough to stabilize the debt relative to the economy—roughly the 3 percent of GDP range, or about $850–900 billion per year. Given current deficits of roughly $1.5 to over $2 trillion annually, reaching that range requires approximately $600–800 billion per year in real deficit reduction.
On the spending side, policymakers could phase in gradual adjustments to Social Security, including a higher retirement age over time and slower benefit growth for higher earners (~$100–150 billion per year, Congressional Budget Office analyses of Social Security options). They could also implement targeted healthcare reforms that have already been debated and scored, including site-neutral payments and expanded drug pricing provisions (~$100–200 billion per year, Congressional Budget Office; Centers for Medicare & Medicaid Services).
Discretionary spending contributes less than many assume once defense is treated realistically. Some proposals have suggested increasing defense spending substantially—potentially toward $1.5 trillion annually. If spending moves in that direction, it would add to deficits rather than reduce them. As a result, discretionary spending outside the largest programs contributes only modestly through targeted reductions and program eliminations (~$50–75 billion per year, Congressional Budget Office budget options and Government Accountability Office duplication reports).
On the revenue side, tax policy becomes essential. Higher taxes on upper-income households can generate meaningful revenue without broadening the tax base too far (~$100–150 billion per year, Tax Policy Center; Joint Committee on Taxation). Adjustments to payroll taxes—such as raising or partially lifting the Social Security wage cap—provide another significant lever (~$100–150 billion per year, Social Security Administration actuarial estimates). Changes to corporate and capital income taxation can add additional revenue, though at a smaller scale than often assumed (~$75–125 billion per year, Congressional Budget Office; Joint Committee on Taxation). Limiting tax expenditures—deductions, exclusions, and credits—broadens the base and raises revenue (~$100–150 billion per year, Congressional Budget Office; Treasury).
Adding these components together, along with the baseline cleanup described earlier (~$50 billion per year), produces total deficit reduction of approximately $600-$800 billion per year. That level of improvement would bring deficits closer to the 3 percent of GDP range, which can stabilize debt relative to the size of the economy. It would slow the growth of the debt and reduce fiscal pressure over time. It would not balance the budget, and it would not reduce the debt in absolute terms, but many economists and politicians believe that this might be the most feasible practical approach.
Stabilizing the Debt Is Not the Same as Solving the Problem
A deficit near 3 percent of GDP can keep the debt from rising faster than the economy, but it still adds to the total debt each year. Under that approach, the country continues to borrow, just at a slower and more controlled pace. A balanced budget or surplus follows a different objective. It stops the accumulation and, over time, reduces the debt in absolute terms. The difference between those outcomes defines the gap between what is politically achievable and what the math ultimately requires. We have done it before, and while harder with today’s numbers, we could do it again if we have the proper discipline and desire.
Part B: What It Would Take to Actually Balance the Budget
The United States last ran a budget surplus in 2001. Balancing the budget today requires closing a gap on the order of $1.5 to $2 trillion per year. Reaching that level requires broader and more difficult changes than those in Part A.
On the spending side, Social Security reforms would need to extend beyond targeted adjustments to include broader changes in benefits and eligibility (~$200–300 billion per year, Congressional Budget Office long-term options). Healthcare reforms would also need to go further, including slower growth in provider payments and expanded cost controls that have already been debated or partially implemented (~$200–400 billion per year, Congressional Budget Office; Centers for Medicare & Medicaid Services).
Defense spending becomes a central variable in this scenario. If defense spending were to increase significantly—potentially toward $1.5 trillion annually, as some proposals suggest—it would materially raise the size of the deficit and require even larger offsets elsewhere. Under that path, balancing the budget would require compensating not only for the existing deficit but also for the additional spending increase. If, instead, policymakers chose to reduce defense spending in real terms through changes in force structure, procurement, or global commitments, the budget could see meaningful savings (~$150–250 billion per year, Congressional Budget Office alternatives). The direction of defense policy therefore has a direct and substantial impact on whether a balanced budget is achievable and how large the required tradeoffs must be.
Other mandatory programs would also need to contribute (~$50–100 billion per year, Congressional Budget Office budget options), along with the same baseline cleanup assumed earlier (~$50 billion per year).
On the revenue side, higher taxes on high earners would remain part of the mix but would need to be larger in scale (~$200–300 billion per year, Tax Policy Center; Joint Committee on Taxation). Payroll taxes would likely need to be expanded more substantially (~$200–300 billion per year, Social Security Administration). Corporate and capital income taxes could add additional revenue (~$100–200 billion per year, Congressional Budget Office; Joint Committee on Taxation). A more comprehensive reduction in tax expenditures would be required (~$200–300 billion per year, Congressional Budget Office; Treasury). At this scale, many analyses also point to a broad consumption tax, such as a value-added tax, as one of the few tools capable of generating several hundred billion dollars annually (~$300–600 billion per year, Congressional Budget Office; Congressional Research Service).
Using conservative estimates, a package of this kind can reach roughly $1.7 trillion per year, which is in the range required to balance the budget or move into a modest surplus. If defense spending increases significantly, the required total would rise accordingly.
Balancing the budget is not a matter of finding a single policy change. It requires a combination of spending reductions and revenue increases large enough that most Americans would feel them. Any plan that claims to achieve balance without touching major entitlement programs, broad tax bases, or defense spending does not match the scale of the problem. While making changes now instead of later will reduce the amount of pain we feel, unfortunately there is no avoiding some pain.
Why Growth Is Not Included as a Solution
Economic growth improves fiscal outcomes by raising incomes, increasing tax revenue, and reducing the debt burden relative to GDP. Policies that support growth—such as improving permitting, increasing housing supply, strengthening the workforce, and encouraging investment—are important. However, this analysis does not include growth as a primary solution because its effects are uncertain and difficult to quantify reliably in advance. Historical experience shows that growth can help stabilize fiscal conditions, but it has not eliminated large structural deficits on its own. Relying on it would risk understating the scale of the required policy changes. Also, we want to hold politicians to a higher standard than making unsubstantiated assertions that their policies will lead to the levels of growth needed to solve our fiscal challenges; we haven’t seen this work in practice regardless of the party in power.
Why Inflation Is Also Not Treated as a Solution
Inflation can reduce the real value of existing debt, but it also raises interest costs, increases borrowing rates, and erodes purchasing power. Higher inflation can offset its own benefits by increasing the government’s cost of servicing debt and creating economic instability. For that reason, this analysis does not treat inflation as a viable strategy for addressing the deficit. It shifts costs rather than resolving the underlying imbalance.
The Bottom Line
There are two clear answers to the question of what to do. The first is that policymakers can enact a set of politically realistic changes that reduce deficits by several hundred billion dollars per year and bring them closer to about 3 percent of GDP. That would stabilize the debt relative to the economy and make the situation more manageable. The second is that if the goal is to stop adding to the debt and begin reducing it, the required changes are far larger—on the order of $1.5 to $2 trillion per year—and would involve tradeoffs that affect most Americans.
These are different goals. Stabilizing the debt limits the pace of the problem. Balancing the budget addresses it directly. The central question is not whether action is needed, but which of those outcomes the country is prepared to pursue. Choosing neither—continuing on the current path—means accepting persistently large deficits, rising interest costs, and a growing share of the budget devoted to past decisions rather than future priorities.Top of Form