My Plan for Fixing our Historic Debt and Deficit: Let the Madness Begin

My fellow Americans, arm yourselves with pitchforks and torches as I unveil a way to close our $1.7 trillion deficit and try to pay down the debt.  

Transcript

A Plan to Fix Our Historically Large Debt and Deficit:  Let the HATE Begin!

September 2025

“A prudent person foresees danger ahead and takes precautions. The simpleton goes blindly on and suffers the consequences.”

Proverbs 27:12

“By failing to prepare, you are preparing to fail.”

Benjamin Franklin

After the advent of the Great Depression, people started writing to President Franklin D Roosevelt in this vein: “Dear Mr. President. I’m 72 years old and have no one to take care of me.” Another letter comes to the White House from Virginia. “I’m a 60-year-old widow greatly in need of medical aid, food, and fuel. I pray that you would have pity on me.” Letters such as these came by the thousands from old folks across the country to the President, to Mrs. Roosevelt, to almost everyone in Washington whose name was familiar to them.

The Social Security program that would eventually be adopted in late 1935 relied on the concept of “social insurance” for its core principles. Social insurance was a respectable and serious intellectual tradition that began in Europe in the 19th century and was an expression of a European social welfare tradition. It was first adopted in Germany in 1889 at the urging of the famous Chancellor, Otto von Bismarck. Indeed, by the time America adopted social insurance in 1935, there were 34 nations already operating some form of social insurance program (about 20 of these were contributory programs like Social Security).

On June 8, 1934, Roosevelt, in a message to Congress, announced his intention to provide a program for Social Security. Subsequently, the President created by Executive Order the Committee on Economic Security, which was composed of five top cabinet-level officials. The committee was instructed to study the entire problem of economic insecurity and to make recommendations that would serve as the basis for legislative consideration by Congress.

The CES assembled a small staff of experts borrowed from other federal agencies and immediately set to work. In November 1934, the CES sponsored the first-ever national town-hall forum on Social Security. 

Our first entitlement began with the signing of the Social Security Act by Roosevelt on August 14, 1935. The original program provided retirement income for workers, along with unemployment insurance and aid to dependent children, blind individuals, and those with disabilities. The first monthly retirement benefits were distributed in January 1940, and the program has since grown to include survivors, disability, and other benefits.  Two notes about 1935: the worker-to-retiree ratio was 16:1, and the average lifespan from birth for a male was 67 years old.  (Today it’s 3:1 and 79 respectively).

As noted, the social insurance concept originated in Germany, not just as a pension program, but also as a healthcare initiative.  Otto von Bismarck introduced the world’s first national health insurance system in Germany in 1883 with the Sickness Insurance Law, creating the modern welfare state. This mandatory, multi-payer system was funded by employer and employee contributions and was intended to provide social protection for workers, counteracting the influence of socialist movements and promoting overall economic efficiency. 

Medicare and Medicaid both started on July 30, 1965, when President Lyndon B. Johnson signed the Social Security Amendments of 1965 into law, establishing the two major government health insurance programs. Medicare provides health coverage for the elderly, while Medicaid provides coverage for people with limited income.  

These programs are very popular.  Alas, there is a catch.  According to the Social Security trustees, “The combined trust funds are estimated to be able to pay all scheduled benefits until 2034, at which point they could only pay about 81% of benefits if Congress takes no action.”  Medicare will not “end,” but its Hospital Insurance (HI) Trust Fund is projected to deplete by 2033, meaning it would only be able to pay about 89% of scheduled benefits after that point. This date is based on the most recent Social Security and Medicare Trustees Reports, which predict insolvency for the trust fund that pays for Medicare Part A. 

Action from Congress would be required to change this projection and ensure the program’s continued ability to pay full benefits. Action from Congress?  If I keep laughing like this, valued listener, I will develop six-pack abs.  

As noted, none of these will disappear, but the benefits will be cut, not through some deliberative process, but simply because the fund at hand will not be available.  If you deposit $100 in a bank and that is the only deposit, the bank will loan out $50.00 in bad loans, leaving you with $50.00.   

Why begin with the history of these entitlement programs?  Four reasons: they account for half of all budget outlays, they will all operate in the red, they are the only federal programs growing, except for one: interest paid on debt, and the debt is increasing due to entitlements. 

The United States recorded a Government Debt to GDP of 124.30 percent of the country's Gross Domestic Product in 2024. Government Debt to GDP in the United States averaged 66.38 percent of GDP from 1940 until 2024, reaching an all time high of 126.30 percent of GDP in 2020 and a record low of 31.80 percent of GDP in 1981.

In a piece published last March entitled “Readying for Surrender: The Lack of Money and Decline of Military Power in History,” I noted in the podcast, “From the time of the Egyptians to the modern-day United States, it is not necessarily about the armies that shape history but rather the ability to support them. A Scot named Adam Ferguson crafted a self-titled law that states, “any great power that spends more on debt service than defense risks ceasing to be great.”  

I received some kudos for that piece, but I’m still astounded by the complete and utter ignorance of our political class and the people at large regarding our debt problem.  All of the other stuff: immigration, inflation, crime, abortion, tariffs, taxes, entitlements, and foreign policy all pale beside this issue because, simply, if the US is broke, we will not have the means to address any of the other critical issues.  Or more precisely, the way we look at all of this will be grossly warped.  Some predicted the Panic of 1893, the stock market crash of 1929, or the recession of 2008.  However, many of those prognosticators were seeing doom and gloom every year.  A broken clock is right twice per day.  Yet we need not Nostradamus-like powers to foresee a massive financial crisis when, like a game of musical chairs, the music stops.   Talking of economic issues such as taxing, spending, or inflation, and not bringing up the debt and deficit, is akin to worrying about a car’s dashboard and paint job when the oil has not been changed in six years.  The vehicle is not going to conk out; it is just a matter of when.  

Consider inflation, an issue that, unlike entitlements, does not seem directly related to the deficit debate.  Wrong.  There are three ways to address massive debt: spend less, tax more, or print money, which by its nature is inflationary.  Both the Weimar Republic and, more recently, Argentina had very high debt, of which the politicians tried the printing press, leading to hyperinflation.  Or better yet, immigration. How does that relate to debt?  Fewer workers to pay for entitlements and fewer workers to pay taxes will alter the calculus of immigration.    

But in ranking the issues, a recent Gallup poll found the following when selecting the most crucial issue facing the country today.

Under the banner of economics:  

Immigration 14% 

Economy in General – 12%

Gap between rich and poor – 3% 

Unemployment – 3%

Deficit and Debt – 3% 

Non-Economics?

Poor governmental leadership 24%

Immigration 14%

So clearly, there is a lack of knowledge.  Because I am from Wisconsin and not La Mancha, I do not tilt at Windmills but instead at Cow Milking Parlors, as my dragons (yes, they are actually called parlors). Whatever your preferred metaphor for attempting futile gestures, just put this as a placeholder as I try to educate the average American about what solving our debt and deficit actually looks like.  

For starters, let’s try to familiarize you with our situation by breaking down the numbers by family size.  You will later see trillions and billions talk, which is probably a bit opaque for the average American, so let’s look at it this way:  

A family of four earns an income of $100,000 per year, which is slightly above the average family income.  So these guys are doing okay.  

That same family, however, SPENDS $127,000 per year – every year! 

The said family is also in debt to the tune of $755,000.  

The same family spends 14% or $14,000 on interest payments on that debt.  

If you were part of that family, would you feel okay?  Would you be compelled to go down to the local BMW dealership for a new car?  How about joining a country club or planning a lavish vacay?  Now, some families might do those things because many families contain morons.  But for the rest of America, there would be four choices:  take on more jobs to raise greater income, cut the heck out of the spending, sell your kids into servitude to raise funds, or declare bankruptcy.  

But of course, I am not talking about a family but about America.  And since selling people is fortunately prohibited by the 13th Amendment, that leaves America the choice of raising income, cutting spending, or both.  I would note that the fourth one is also possible.  Americans could declare bankruptcy, but they thought that would trigger a panic that would make the Great Depression of the 1930s look like boom times.  

How did I get here?  

Federal INCOME is $4.9 trillion.  The spending is $6.7 trillion, or about a 27% gap.  

Federal debt is $37 trillion, or 7.55 times federal income.  

The federal budget allocates 14% of its spending to interest payments on the debt.

You can connect the dots.  

Even if our spendthrift family can cut their spending by 27%, they are still paying 14% of all income to the debt.  So, they have to do better than just closing the 27%; they also have to allocate funding for paying down the debt.  

Now, let us say our family is not cutting its spending, but actually increasing it.  And the debt continues to rise, meaning that they HAVE to pay more interest.  I imagine most, if not all, of us have seen what happens, not in terms of reading about someone, but knowing them.  We had neighbors from across the street.  They had a pool, loved to travel to Vegas, and drove around in high-line cars like BMWs.  Until one day, the bank took over their home and evicted them. Their fancy cars were gone, and they had to rent cars to move. It was all sad.  Since we don’t see other people’s finances, we had no idea of their fiscal troubles.  We do, however, have absolute transparency into the US’s current and coming fiscal disasters.  We are on a train that has been informed that a bridge, about 30 minutes away, is out. Instead of slowing the train down with this advanced knowledge, we put in more coal.  

The single most significant spend is social security, followed by healthcare in the form of Medicare and Medicaid. Combined, they comprise 48% of all federal spending – and they, unlike defense or other spending, are growing. Well, another expense is growing: the aforementioned interest on debt payments.  As noted, they are at 14%.  So that adds up.  But people pay into Social Security. I hear this all the time, “it is my money!” 

It is not.  It is a Ponzi scheme in which a 40-year-old today pays for current retirees. And current retirees’ grandchildren will pay for today’s 50-year-olds.  It is a transfer scheme, not a lockbox. But the system might survive if the money spent today matches what one pulls out tomorrow. It does not.  

Let’s say a guy makes, on average, $75,000 over 40 years, multiplied by 12.5% (Social Security tax), or $375,000. He then takes out $24,500 at 65, or about 15 years to age 80.  If our guy dies at age 80, then the system works.  

However, America has 14 million people over the age of 80, 2 million over 90, and 100,000 over 100.  All of these millions are now taking out more than they put in. And we are assuming that everyone works for 40 years at the aforementioned salary.  

According to the Social Security Administration, the program is currently paying out $3.5 billion monthly, or $42 billion annually, more than it receives.  And the program is not just for retirees.  There are 57.8 million Americans over 65, but 69 million are collecting Social Security.  Wait, this is supposed to be for retirement?  Disability benefits or a survivor benefit from a deceased spouse, whether the spouse worked or not, comprise the rest.  

Why do criminals rob banks?  Medicaid is an insurance program for low-income Americans, with the government estimating 36 million beneficiaries.  Yet there are 68 million Medicaid recipients. Medicare is the health insurance program for the elderly, with 61 million Americans aged 65 or older, and 68.8 million are enrolled in this program.  And whatever payment went in?  We all have the tale of the 89-year-old getting free heart surgery or the 85-year-old smoker getting free oxygen tanks.  Neither is long for this world, but the seniors suck up a massively disproportionate amount of care because they are (shocking, I know) old.  A  2020 analysis found that individuals aged 65 and older made up roughly 17% of the population but were responsible for approximately 40% of all healthcare spending.  No, I am not proposing pushing granny off the cliff, ala the 2011 Democratic ad (going high as opposed to low, indeed), but something must change.

So here is my plan.  I once called it the AD Tippet plan, but I do not want AARP types storming my house, so we will call it Plan A. 

All numbers are annual.

1. Reinstate the recent Trump 2017/2025 tax cuts, which are about $400 billion per year.
2. Raise Medicare and Social Security eligibility to 70, with no exceptions. Medicare savings? $140 billion, SS, $240 billion
3. Cut SS and Medicare payouts by 20% - $480 billion.
4. Cut 50% of all Medicare recipients off, anyone not meeting a clear designation of poor - $500 billion.
5. The means test for SS and Medicare excludes households with a $5 million net worth, totaling $120 billion. 

And this gets us to around $1.8 trillion.  That is the number, and every single proposition will be fought over, demagogued by the loudest voices.  Any Congressman who votes for this in 2026 or 2028 will be primaried, as well as drawn and quartered, and beaten with a wet noodle by anyone over the age of 55—and a number under that as well.  

With all of that, we have closed the deficit and have $100 billion to try to pay down the $37.3 trillion in debt. If we paid $100 billion towards the debt for 10 years, it would reduce our debt by a WHOPPING 2.8% - Woo Hoo! 

If that does not illustrate our predicament, I do not know what will.  None of my proposals would pass today. Despite all the madness, we would have reduced our debt by less than 3% in ten years.  

You will quickly notice that I have not proposed any cuts from general funds, such as defense, or cuts of State Department employees.  And any waste, fraud, and abuse will be inherent in the reductions mentioned above.  For those like DOGE who believe they can use non-entitlement spending to achieve solvency, the waste is in spending time thinking this approach will resolve our looming debacle.  

Here is a spending breakdown: 

14% on interest payments on the $37.3 trillion debt, and this is non-negotiable

22% on social security

14% on Medicare and another 13% on Medicaid.  So, between interest and entitlements, over 63% of the budget is gone

10% on Welfare programs such as SNAP

13% on National Defense

The remaining 14% on all the stuff that is usually targeted: veterans’ expenses, education, and general costs 

But what about defense, say all of those isolationists and peaceniks? Defense is now around 13% of federal spending.  In 2000, even with the so-called “peace dividend” after the Cold War, it accounted for 16% of total federal spending.  In 1990, it was 24% of all federal spending. In 1980, before the Reagan buildup, it was 23%.  

Defense is currently at a post-WWII low.  And this is with China, Iran, Russia, and North Korea either presently engaged in shooting wars or contemplating them.  With Middle East terrorism and socialism, 90 miles from Miami, it’s still a thing.  And you could reduce defense to 6% and still not significantly impact the budget.  

In 2023, the US government spent approximately $848.2 billion on Medicare, while the program’s revenue came from various sources, including payroll taxes (34%), general federal revenues (46%), and premiums from beneficiaries (15%). The total amount collected in these revenues falls short of the total spending, meaning general federal funds cover a significant portion of Medicare’s costs. 

But let’s be real.  Not ONE of these would get through Congress today nor be signed by ANY president. We are screwed, folks - well, I should say our children and grandchildren are screwed. At some point, the markets will not fund the debt. Then what? 

There are only two choices in this deal: fix this now when we still have few albeit very nasty options, or fix it later when it will be the equivalent of our family deciding whether the bank takes the house, or all of the cars and the last of the 401Ks.  That will be America.