Hearing Rebuttal Brief

1. The Revenue Side of the Ledger

The claim that "we have a spending problem, not a revenue problem" is a framing choice as much as an accounting fact. It is the foundational frame of the prepared statements. Once revenue is put on equal footing, the rest of the argument looks very different.

The Real Picture

The United States federal government raises about 17.5% of GDP in revenue. Total US tax revenue (federal + state + local) is about 27% of GDP. The OECD average is 34%. France, Germany, Denmark, and the Nordics all raise 40%+. Every comparable advanced economy has an aging population. None of them are in fiscal crisis. The thing that is exceptional about the United States is not the spending — it is how little we tax.

Where the deficit actually came from since 2001

The Congressional Budget Office in January 2001 projected that, under then-current law, the federal government would run cumulative surpluses of $5.6 trillion over 2002–2011 — large enough to retire the entire publicly held federal debt. Every dollar of debt accumulated since then is the result of deliberate policy choices. CRFB's decomposition of the deviation from that path attributes the lion's share to the 2001 and 2003 Bush tax cuts and their extensions, two wars, the Great Recession (and its automatic stabilizers), the 2017 TCJA, COVID, and the 2025 OBBBA extension of TCJA.

Sources: CRFB, CBO Cost Estimates, JCT, Watson Institute (Costs of War project). Figures are approximate cumulative.

Two of the largest three contributors are tax cuts. The third — wars — was deficit-financed by political choice. None of these are central to the diagnosis offered in the prepared statements.

A revenue package that would stabilize debt-to-GDP without cutting benefits

The Tax Policy Center, CBO, and CBPP have all scored equivalent packages. A representative "stabilize debt-to-GDP without cutting Social Security, Medicare, or Medicaid" package:

This raises more revenue than the entire OBBBA tax extension cost, falls almost entirely on the top 1–2%, and would stabilize debt-to-GDP without a single dollar of benefit cuts.

2. "Mandatory Spending" Is Two Different Stories

The prepared statements largely treat Social Security and Medicare together as "entitlements." The two programs have different cost dynamics, different fixes, and different politics. Separating them clarifies the policy menu.

Social Security: a demographic problem with a simple fix

Social Security spending grows because the over-65 population is growing — that's it. Per-beneficiary benefits are indexed to wages, not to runaway costs. The 75-year actuarial shortfall is about 1.3% of GDP. That's a defined, well-known, fixable hole. The 2025 Trustees Report projects that even with zero changes, benefits would be paid at ~77% of scheduled levels after 2034 — not "bankruptcy," not a crisis.

The literature on solvency options is enormous. The Social Security Administration's Office of the Chief Actuary maintains a public menu of every credible reform proposal with its long-term solvency effect. A representative set:

The progressive case: Lift the cap, restore solvency, expand benefits modestly for the lowest earners. Social Security replaces ~40% of pre-retirement earnings for the median worker — the lowest replacement rate in the OECD. There is no fiscal reason to cut.

Medicare: a healthcare system problem, not an entitlement problem

Medicare per-beneficiary cost growth has tracked overall US healthcare cost growth for 50 years. The US spends about 17% of GDP on health, more than any peer, for outcomes that are mediocre at best. The "Medicare problem" is the "US healthcare cost problem" applied to retirees. The fix is on the cost side of the entire system, not the eligibility side of one program.

The biggest available levers:

• Medicare Advantage overpayments. MedPAC's 2024 report estimates Medicare Advantage plans are overpaid by ~$83B/year through risk-score gaming and quality-bonus inflation. CMS's own actuaries project MA payments at 122% of traditional Medicare. Fixing risk adjustment alone closes a major share of the projected Medicare gap.
• Drug-price negotiation. The IRA gave Medicare authority to negotiate prices on a small set of drugs. CBO scored the first 10-drug round at ~$100B in savings over 10 years. Expanding negotiation to all Part D drugs and to biologics earlier would save several hundred billion more.
• Site-neutral payments. Medicare currently pays hospital outpatient departments more than independent physician offices for identical services. Equalizing payments saves ~$150B over 10 years (CBO) without affecting any patient.
• Hospital price transparency and antitrust. Hospital consolidation has driven prices up ~50% above competitive levels (Cooper, Craig, Gaynor, Van Reenen). Enforcing antitrust on hospital mergers slows Medicare cost growth indirectly.

Why "entitlement reform" framing matters

Solving each problem on its own terms — payroll cap adjustments for Social Security, MA reform and drug pricing for Medicare — points toward politically popular fixes that don't require cuts to scheduled benefits. The umbrella "entitlement reform" framing makes broad benefit reductions a default conclusion rather than one option among several.

3. The 90% Threshold Claim — Reinhart, Rogoff, and the Replication

The "high debt slows growth, especially above 90% of GDP" claim, cited in the prepared testimony, rests on a result that did not survive replication. The threshold finding is no longer supported by the broader literature.

What Reinhart-Rogoff (2010) claimed

In a 2010 paper, Carmen Reinhart and Kenneth Rogoff reported that economic growth dropped sharply — to roughly zero or negative — when public debt exceeded 90% of GDP. The result was cited in every major austerity argument of the 2010s, from EU policy to Paul Ryan's budget proposals.

What Herndon, Ash, and Pollin actually found in 2013

Three economists at UMass-Amherst obtained the underlying spreadsheet and tried to replicate the result. They found three problems:

1. An Excel coding error that omitted Australia, Austria, Belgium, Canada, and Denmark from the average computation in the high-debt cell range.
2. Selective data exclusion — early postwar years for Australia, Canada, and New Zealand were dropped despite high debt and high growth (which would have flattened the relationship).
3. Country-weighting — averaging country-period observations rather than weighting by years, so one bad year for New Zealand counted as much as 19 years of UK data.

Correcting all three problems eliminates the threshold result entirely. The "growth-killing cliff at 90%" is an artifact. Average growth for countries with debt above 90% of GDP is ~2.2%, not the ~−0.1% reported in the original paper.

The follow-up literature has gone further

• Pescatori, Sandri, & Simon (IMF Working Paper, 2014): No evidence of a debt threshold. What matters is the trajectory of debt, not the level.
• Ash, Basu, & Dube (2017): Statistically demonstrate that reverse causation (slow growth → high debt-to-GDP) accounts for most of the apparent correlation.
• DeLong & Summers (2012, Brookings): In a depressed economy, deficit-financed investment can actually reduce the future debt-to-GDP ratio because of hysteresis effects — the long-run output gain exceeds the borrowing cost.
• Blanchard (AEA Presidential Address, 2019): When r < g (interest rate below growth rate), the welfare cost of debt is far lower than standard textbook analysis assumes. This was the typical condition in the US through most of the post-WWII era.

Empirical counterexamples

• Japan: Gross debt has been above 200% of GDP for nearly two decades. No fiscal crisis, no inflation, no bond strike. Interest rates remained near zero for most of that period.
• United Kingdom: Held debt above 100% of GDP for most of the 19th century — the British industrial revolution. Held it above 250% of GDP after WWII, throughout the postwar growth miracle.
• United States: Held gross debt at 119% of GDP in 1946. The subsequent quarter-century was the highest-growth period in American history.

The honest version of the debt-and-growth literature is: high debt accumulated for stupid reasons (Greece 2001–2009, Argentina) can correlate with slow growth. High debt accumulated for productive reasons (war, crisis response, public investment) doesn't.

4. The Long Track Record of Bond-Market Crisis Predictions

Each of the prepared statements raises the prospect of a bond-market crisis. Predictions of an imminent crisis have been a fixture of fiscal commentary for roughly 30 years. The record of those predictions is worth putting on the table alongside the underlying argument.

Track record of similar predictions over time

Across the broader "fiscal hawk" institutional ecosystem — the Concord Coalition, Peterson Foundation, CRFB, American Action Forum, and others — versions of the bond-crisis prediction have been a recurring feature since at least the mid-1990s. The historical record:

• 1995 — debt 47% of GDP — "fiscal crisis imminent." Subsequent decade: surpluses, falling rates.
• 2009 — debt 52% of GDP — "Greek-style crisis ahead." Subsequent decade: rates fell to record lows.
• 2013 — debt 71% of GDP — fiscal-hawk testimony predicting "bond market pressures will force action." Subsequent: rates kept falling.
• 2019 — debt 79% of GDP — "the most predictable crisis in American history." Subsequent: rates fell to 0.5% in 2020.
• 2026 — debt 100% of GDP — same fundamental warning, now updated.

Why the prediction keeps failing — structural reasons

1. Monetary sovereignty. The US borrows in dollars, which it controls. A bond-market panic cannot trigger a default the way it did in Greece (which borrows in a currency it doesn't issue). The Fed is always the buyer of last resort.
2. Reserve currency status. The dollar is ~58% of global FX reserves, ~88% of FX transactions, ~70% of cross-border lending. There is structural global demand for Treasuries as the safe asset.
3. Depth of the Treasury market. ~$28T outstanding, near-perfect liquidity. There is no substitute. The Eurozone, UK, Japan, and China combined cannot offer a credible alternative deep safe asset.
4. r < g for most of the postwar period. When the real interest rate on government debt is below real GDP growth, debt-to-GDP stabilizes on its own even with primary deficits. Blanchard's 2019 AEA address is the canonical reference.

What actually moves long Treasury yields

Not the fiscal trajectory in any first-order sense. Empirically the term structure is dominated by:

• Expected future short rates (Fed reaction function — by far the largest component).
• Inflation expectations (which can be driven by tariffs, supply shocks, or wages).
• The term premium — which has been quietly negative or low for most of the past 15 years.
• Foreign demand shifts (China, Japan, OPEC reserve management).
• Fed balance-sheet operations (QE compresses; QT widens).

The real near-term risks to Treasury demand

If we are honest about what could trigger a 2025-style yield spike, it is not "entitlements." It is:

• Tariff escalation. April 2025's yield spike was almost certainly the bond market reacting to dollar-weaponization risk and reshoring-driven inflation expectations, not to a SS/Medicare projection update.
• Fed independence pressure. Political demands that the Fed lower rates raise inflation risk premia and reduce the safety premium foreign reserve managers attach to Treasuries.
• Weaponization of dollar payments. Use of SWIFT exclusion and reserve freezes against Russia (2022) — and signals that other powers could face similar treatment — has accelerated diversification away from dollar reserves at the margin.
• Debt-ceiling brinksmanship. Repeated near-misses raise actual default risk in a way that revenue-loss tax cuts do not.

Notably, several of these risks originate in the same political environment that produces the warnings about long-run fiscal credibility.

5. What "Waste, Fraud, and Abuse" Actually Measures

The Holtz-Eakin testimony is candid that WFA functions, in part, as a political precondition for selling benefit changes. The dollar magnitudes involved are modest. But the rhetorical work is large — and the largest fraud categories sit outside where the prepared statements focus.

What GAO actually measures

The Government Accountability Office's $186B "improper payments" headline for FY2025 combines three very different things:

1. Documentation errors (most of the total): A payment was made, the recipient was eligible, but the documentation file is incomplete. The payment is "improper" in a procedural sense but no money was stolen.
2. Underpayments (a non-trivial share): Eligible beneficiaries received less than they were owed. These are counted in the "improper" total even though they understate, rather than overstate, government spending.
3. Actual fraud: Payments to ineligible recipients, billing for services not delivered, false claims. This is a much smaller share — single-digit percentages of the headline number in most programs.

GAO itself is explicit about this distinction. The "WFA" rhetoric typically is not — the headline figure travels without the breakdown.

Where the real fraud is

• Medicare Advantage upcoding — ~$83 billion per year (MedPAC, 2024). Private MA plans systematically code patients as sicker than they are to extract higher capitation payments. This is the single largest healthcare overpayment category in the federal budget, by orders of magnitude. The prepared statements do not focus on it.
• PPP loan fraud — ~$200 billion estimated by SBA OIG. A consequence of the 2020 program's emergency design to push money out the door rapidly with minimal verification — a feature, not an accident. Notably, pandemic-era spending is now part of what gets criticized for fiscal looseness.
• Tax evasion by high-income filers — ~$160B/year (Treasury, IRS). Roughly 70% of the federal tax gap comes from the top 10% of filers. Estimates by Sarin & Summers put the figure higher.
• Corporate tax avoidance via offshoring and pass-through gaming. JCT estimates revenue losses in the tens of billions per year that targeted enforcement could recover.

What the administration is actually doing

Every action of the current administration cuts against serious anti-fraud capacity:

• IRS enforcement funding cut in OBBBA — JCT scored this as a net revenue loser. Every dollar of cut enforcement costs more than $1 in lost revenue, and proportionally hits high-income evaders most.
• Inspectors General have been fired in multiple agencies, removing the institutional fraud-detection backbone.
• CFPB enforcement of consumer financial fraud has been gutted.
• SEC enforcement of securities fraud is at historical lows.
• Medicare Advantage risk-adjustment auditing has been delayed by political pressure from MA plans.

The honest interpretation: "waste, fraud, and abuse" rhetoric is currently disconnected from the actual fraud-reduction policy agenda — it functions largely as a political prelude to beneficiary-program changes. As the Holtz-Eakin testimony candidly states, "as a matter of politics, it seems unlikely that voters will accede to major changes in the social safety net unless they are confident their government is making every effort to use their tax dollars wisely elsewhere."

6. Regulatory "Budgets" Function as Caps on Benefits Too

Beach and Holtz-Eakin both call for a permanent statutory regulatory budget. In practice, a cost-only cap operates as a cap on the government's ability to address market failures — including climate, financial stability, drug safety, and worker protection.

The cost-benefit record

OMB has been required by statute to publish a retrospective cost-benefit summary of major rules since 2002. The pattern across administrations of both parties:

• Aggregate benefits of major regulations exceed costs by roughly 4-to-1 to 8-to-1 in monetized terms.
• The largest benefits come from air quality (Clean Air Act amendments), financial-stability rules, drug safety, and workplace safety.
• Even with very conservative valuations of mortality, premature death avoided dominates the benefit column.

The "regulatory cost" estimates that Beach and Holtz-Eakin cite typically exclude benefits entirely. A regulatory budget that caps "costs" without comparing to benefits would systematically prevent net-beneficial rules.

The 2008 financial crisis as the bill for deregulation

The repeal of Glass-Steagall, the CFTC's exemption of credit derivatives, the SEC's 2004 consolidated-supervised-entity rule that let investment banks raise leverage, the OCC's preemption of state predatory-lending laws — each of these was justified at the time on regulatory-cost grounds. The Government Accountability Office, IMF, and Treasury estimates of the cumulative GDP and household-wealth cost of the 2008 crisis range from $16T to $22T. That is the bill for "regulatory budgets" that don't count benefits.

The Trump deregulatory record as natural experiment

• OSHA enforcement: Workplace fatality rates rose under reduced inspection regimes. BLS Census of Fatal Occupational Injuries shows a clear trend.
• EPA air-quality rules: EPA's own analysis projects thousands of premature deaths annually from rollbacks of methane and particulate rules.
• Vehicle efficiency: Rollback of CAFE standards increases consumer fuel costs and CO2 emissions; net welfare effect negative even in industry-friendly models.
• Financial-stability rules: Tailoring of post-Dodd-Frank rules for "mid-size" banks was a direct contributor to the SVB / Signature / First Republic failures in March 2023, which required the FDIC to invoke the systemic risk exception.

What a real "regulatory budget" looks like

A serious framework would set net-benefit targets, not cost ceilings. CBO and OIRA could be required to publish annual estimates of foregone net benefits from regulations not promulgated due to caps. That would invert the political accountability — politicians would have to defend not regulating where benefits clearly exceeded costs.

The proposed framework is consistently the cost-only cap, not a net-benefit framework. The asymmetry is what makes the cap binding in one direction.

7. Federalism and the Cost-Shift Question

Several of the Rauh proposals — per-capita caps on Medicaid, FMAP reductions, provider-tax limits, SNAP state cost-sharing, conditioning the muni-bond exemption on pension policy — share a common feature: they shift federal commitments toward states. The underlying need does not change; what changes is whose budget carries the cost.

The Medicaid cost-shift

Every "Medicaid reform" Rauh endorses operates on the federal share of financing, not on what care costs or who needs it. The mechanics:

• Per-capita caps: Federal payment per enrollee is capped at a growth rate below medical inflation. The federal government saves money; states either raise their own taxes, cut eligibility, or cut provider rates. CBO scored the 2017 BCRA per-capita cap proposal at ~$770B in federal savings and ~15M coverage losses.
• Block grants: Same idea, more aggressive. Eliminates the federal match entirely and gives states a fixed pot regardless of enrollment growth. States have no fiscal cushion in recessions when caseloads spike.
• Provider-tax limits: Provider taxes are how states finance the non-federal Medicaid share. Capping them does not save federal money — it forces states to find general fund money or cut. In practice, states cut.
• FMAP reductions (specifically for the ACA expansion population): The 90% federal match is what enabled 40 states to expand coverage. Cutting to "regular" FMAP would force most states to roll back expansion, eliminating coverage for ~20 million working adults.
• Work requirements: Administrative burden that knocks eligible people off the rolls (Arkansas's 2018 experience: ~18,000 lost coverage in 5 months, no employment effect, court ruling halting the program).

Every one of these is "federal savings" only in the narrowest budget-scoring sense. The underlying medical need does not disappear. It reappears as state cuts, hospital uncompensated care, household medical debt, and worse health outcomes.

The pension-policy proposal

The Rauh testimony proposes conditioning the federal tax exemption on municipal bond interest on whether states adopt particular pension-funding rules. That is a significant use of federal tax leverage to shape state policy choices — and the same general mechanism has been objected to elsewhere when it has been applied to civil rights, education, or environmental policy.

It's also empirically targeted at a problem that has been shrinking. Federal Reserve data show state pension funding ratios have improved substantially since 2020. The post-COVID equity rally pushed average funding ratios from ~70% to ~80%+ at the system level. The notion that state pensions require federal coercion to be solvent is a 2010-era talking point that hasn't been updated for current data.

The political logic

Federal-to-state cost-shifting accomplishes several things at once:

1. It scores as "federal savings" in CBO 10-year windows, even though total public spending barely changes.
2. It diffuses political accountability — state legislators get blamed for the eligibility cuts that federal policy forced.
3. It creates pressure for state-level tax competition: states under fiscal stress cut services rather than raise taxes, because their tax bases can migrate.
4. It creates a race to the bottom: states that maintain robust safety nets become tax-magnet states for in-migration, which intensifies fiscal stress.

What is presented as federalism reform functions, in practice, as federal budget arithmetic pushing states toward policy choices the federal government has not enacted directly.

8. Measurement Choices Have Policy Consequences

The Rauh testimony's most technical-sounding proposal — changing how Census measures income — would lower measured poverty from 12% to 3% on paper. The methodological choices behind that number are contested, and the policy implications would be substantial.

What is proposed

Direct Census to adopt a "comprehensive income" measure as its primary headline figure. Count Medicare and Medicaid at provider cost as household income. The cited authority is Gramm, Ekelund, & Early's 2022 book The Myth of American Inequality, which uses this method to argue US inequality is "much smaller than reported" and poverty is "essentially solved."

The methodological issues

• An internal tension: The same prepared testimony cites Finkelstein's finding that low-income adults value Medicaid at 20–50¢ per dollar of spending — i.e., Medicaid is "worth" much less than provider cost. The Census proposal would count Medicaid at full provider cost. The two valuations are difficult to reconcile: Medicaid cannot be worth its full cost for income-counting purposes while being worth a fraction of it for welfare-evaluation purposes.
• Medical need is not the same as income. Two otherwise-identical households, one healthy and one with a chronically ill child, would register as different on this measure by $30,000+ because the second receives more medical services. That is hard to defend as a measure of economic well-being. Rent cannot be paid with Medicaid coverage.
• Asymmetric coverage of in-kind benefits. The method counts Medicaid (received largely by the poor) but does not similarly count the cash value of the employer health-insurance tax exclusion, the mortgage interest deduction, or stepped-up basis (all received largely by higher-income households). The asymmetry is built in.

The Supplemental Poverty Measure already exists

The SPM, introduced by Census in 2011 on the recommendation of a National Academy of Sciences panel, already incorporates:

• SNAP, WIC, school lunch, LIHEAP (cash-equivalent in-kind transfers)
• Housing subsidies
• Refundable tax credits (EITC, CTC)
• Out-of-pocket medical costs (subtracted)
• Childcare and work-related expenses (subtracted)
• Geographic cost-of-living adjustments

What SPM does not count is medical insurance benefits as income, because — for the reasons above — those benefits are not fungible with cash and reflect medical need, not economic capacity. This is the modern mainstream consensus among poverty researchers (Wimer, Fox, Smeeding, Citro, Meyer, Sullivan).

The policy consequences of this measurement change

Adopting this measure would have several downstream effects on the policy debate:

1. It weakens the rhetorical case for the safety net. If headline poverty is 3%, the existing safety net appears largely successful on its face, and further investment looks unnecessary.
2. It compresses measured inequality. The same method, applied to inequality measures (as Gramm, Ekelund, & Early do), implies inequality has barely risen since the 1960s — reducing the empirical case for redistributive policy.
3. It can lock in current policy. Under the new measure, future cuts to the safety net would not register as increases in poverty, by construction — until the assumption is changed again.

The history of the debate

The "include in-kind transfers at provider cost" approach has been raised periodically since the 1970s. Census, the National Academies, and the academic poverty community have repeatedly declined to adopt it on methodological grounds. The current revival reflects a renewed political moment rather than new evidence.

9. A Fuller History of How We Got Here

The prepared statements describe current debt largely as the product of "structural imbalances." A specific policy history sits underneath that phrase — particular tax cuts, particular wars, particular crisis responses. Putting that history on the record reframes the conversation.

Debt-to-GDP, 1980 to today

The administration-by-administration record

Bush 43: Took office with CBO projecting $5.6T in surpluses through 2011. Cut taxes twice (2001, 2003) with no pay-fors, launched two wars financed by borrowing, signed Medicare Part D without revenue offsets. Left office with debt at ~40% of GDP and rising sharply.

Obama: Inherited a $1.4T deficit from financial crisis stabilization. ACA enacted with revenue offsets, scored by CBO as deficit-reducing. Deficits fell from 9.8% of GDP (2009) to 2.4% (2015). Then deficits rose again as the Bush tax cuts were largely extended in 2012.

Trump 45 (first term): 2017 TCJA cut corporate rate from 35% to 21%, added ~$1.9T to the debt per CBO/JCT. Corporate tax revenues never recovered. COVID response (CARES, late-2020 packages) added another ~$3T.

Biden: ARP added ~$1.9T (COVID recovery). IRA was approximately deficit-neutral with revenue offsets and was projected to reduce deficits in the second decade. CHIPS and IIJA added to discretionary spending, partly offset.

Trump 47 (current): OBBBA extension of TCJA + new cuts: scored at ~$4.6T over 10 years. The single largest one-time addition to projected debt in the entire 25-year window — passed in 2025, currently being implemented.

The pattern

Across the past 25 years, Republican administrations have generally cut taxes and widened deficits, while Democratic administrations have generally raised some revenue and narrowed deficits. The proposals now on the table address the resulting debt primarily through reductions to benefits — leaving the revenue-side decisions of the last 25 years intact.

If the "Hamiltonian Norm" of repaying debt after emergencies is to be taken seriously, the relevant question is when it broke and what broke it. The most plausible answer is the 2001 tax cut. The norm that emergencies (war, recession, pandemic) get paid for with subsequent revenue increases has not been restored since. OBBBA is the most recent example.

10. A Credible Progressive Alternative

The proposals in the prepared statements would, over time, stabilize the debt — with the adjustment concentrated on Medicaid enrollees, Social Security recipients, and state-funded services. A different package can stabilize the debt with the adjustment concentrated on the income and wealth that have grown most rapidly over the past 40 years. It is worth laying out concretely.

The 5-part progressive deficit package

This is constructed from CBO, CBPP, Tax Policy Center, and JCT estimates. Numbers are 10-year, illustrative, and overlap-adjusted.

A. Revenue (~$5–7T over 10 years)

• Let upper-income TCJA/OBBBA provisions expire (top rate, AMT, estate) — ~$1.6T
• Tax capital gains/dividends as ordinary income above $1M — ~$0.7T
• Restore stepped-up basis at death for large estates — ~$0.4T
• Restore 28% corporate rate — ~$1.3T
• Repeal Section 199A pass-through deduction — ~$0.6T
• Tax billionaire unrealized gains (Wyden mark-to-market) — ~$0.5T
• Restore + expand IRS enforcement funding — ~$0.4T (net of cost)
• Financial transactions tax (10 bps) — ~$0.8T

B. Healthcare cost containment (~$1.5–2T over 10 years)

• Reform Medicare Advantage risk adjustment (close upcoding) — ~$300–400B
• Expand IRA drug price negotiation (Part B; biologics earlier) — ~$300–500B
• Site-neutral payment for hospital outpatient departments — ~$150B
• Cap private commercial out-of-network billing — administrative savings, ~$50B
• Public option / Medicare buy-in (deficit-reducing in CBO scoring of similar past proposals) — variable, ~$200–400B

C. Social Security solvency (dedicated, not counted in deficit reduction)

• Lift payroll cap on wages above $400K — closes ~60% of 75-year shortfall
• Apply payroll tax to investment income above high-income threshold — closes another ~30%
• Expand benefits modestly for lowest-earning retirees (recouped from revenue above)

D. Defense and discretionary efficiencies (~$0.3–0.5T)

• Reform unauditable DOD procurement and contracting practices; the DOD has failed every audit since the requirement began
• End specific weapons programs cited as wasteful by GAO and CBO
• Cancel direct-payment subsidies to fossil-fuel producers (~$15B/yr)

E. Productive public investment (offsetting modest cost)

• Make the expanded Child Tax Credit permanent — CBPP/Columbia estimate cuts child poverty by ~40%
• Sustain IRA, CHIPS, IIJA investments — they raise long-run growth and tax base
• Invest in IRS, OSHA, EPA, CFPB enforcement capacity — most of these pay for themselves

What this package does

• Stabilizes debt-to-GDP at or below current levels over the 10-year window without cutting any beneficiary's check.
• Restores Social Security solvency over 75 years with progressive revenue rather than benefit cuts.
• Bends the Medicare cost curve through provider-side reforms rather than eligibility cuts.
• Reverses the inequality dynamic by raising effective tax rates on the top 1% to historical norms.
• Maintains public investment in growth-enhancing areas (R&D, infrastructure, semiconductors, clean energy).

The political point

This package is not, on its face, a radical one. Most of these provisions are versions of policies that have passed Democratic-controlled chambers at some point in the last 15 years, or that are mainstream within the Democratic policy community. They are politically difficult but not technically difficult, and they do not require a new theory of public finance. They are absent from the prepared statements today because of a different judgment call about who should be asked to contribute.

The fundamental choice in front of the committee is not "cut Social Security and Medicaid or let the debt crisis arrive." It is closer to: "restore historical levels of taxation on capital income and high earners, or reduce safety-net spending to preserve the lowest sustained federal revenue share in postwar US history." Framed that way, the choice looks different.