Working Draft — Version 2, 2026 · Policy framework, not an introduced bill
Sources: CBO · Treasury · IRS · OECD · IMF
Interactive breakdown
Start with the problem as published by CBO and Treasury. Then the Version 1 pillars, the Version 2 flourishing addendum, the calendar, and what success — and failure — look like for a household, not just a ratio.
Version 2 · Comprehensive Edition · 2026
Fiscal balance for what? Fiscal sustainability is the enabler of human flourishing, not a substitute for it. Version 2 adds a fifth pillar that closes ten measurable gaps between the United States and peer democracies — in health, education, housing, mental health, public safety, immigration efficiency, and civic infrastructure — without leaving the twenty-year path to 70 percent of GDP. Browse Pillar D.
01 — Current problem
Debt held by the public is near 98 percent of GDP. The FY2025 deficit was about $1.8 trillion. Net interest is roughly $970 billion — already the third-largest federal item. CBO’s long-term outlook takes that path to 107 percent by 2029 and 156 percent by 2055. None of those figures is a partisan talking point.
~98%
Debt held by the public
Share of GDP as the United States enters FY2026. CBO projects 107% by 2029 and 156% by 2055.
$1.8T
FY2025 federal deficit
The gap between what the government spends and what it collects in a single year.
$970B
Net interest
Already the third-largest item in the federal budget, behind only Social Security and Medicare.
$696B
Annual gross tax gap
IRS estimate of tax owed but not paid for tax year 2022. Closing part of this gap does not require new rates on wages.
Countries that protect household demand and social insurance during consolidation — Canada and Sweden in the 1990s are the clearest cases — achieve more durable results than countries that front-load contraction. This framework is built around an explicit hold-harmless mandate for households earning $40,000–$150,000.
Disaster response, agricultural disruption, infrastructure replacement, and public-health costs are already showing up as fiscal liabilities. A budget that treats climate as someone else’s problem will be invalidated by the budget itself within twenty years.
OECD history is unambiguous: consolidations succeed when governments have independent analysis and durable rules. They fail when they do not. The Foundation Layer exists for that reason.
Version 1 answered how the United States stops accumulating debt without hurting the middle class. Version 2 answers the follow-on question: fiscal balance for what? Every dollar saved on interest is a dollar available for the health, education, housing, safety, and civic infrastructure that peer democracies already deliver at lower cost.
02 — The strategy
Expand each proposal, or browse all 44 policies by category, with fiscal, timeline, middle-class, and planetary indicators. Version 2 adds Pillar D without reopening Version 1 scoring except where the crosswalk is noted (B2, B9, C4, C5, F3).
| Component | Best case | Base case | Stress case |
|---|---|---|---|
| Pillar A — Revenue | +$6.5T | +$5.0T | +$3.7T |
| Pillar B — Efficiency | −$5.0T | −$3.9T | −$2.5T |
| Pillar C — Growth (net cost) | +$1.5T | +$2.1T | +$2.8T |
| Pillar D — Human Flourishing (net cost) | +$0.05T | +$0.13T | +$0.35T |
| Foundation Layer | −$0.5T | −$0.3T | −$0.1T |
| Net 10-year deficit reduction | ~$10.4T | ~$7.0T | ~$3.3T |
Negative values for efficiency and the foundation layer are savings. Pillar C is a net cost before dynamic growth effects, which are excluded from conventional scoring. Pillar D is a net cost of about $130 billion over ten years, absorbed inside the Version 1 stress-case bands.
Pillar A
Broadens the federal tax base by closing the tax gap, aligning corporate rules with international standards as political conditions permit, and pricing carbon with a household dividend. Avoids increases in marginal rates on labor income below $400,000.
+$5.0 trillion ($3.7T–$6.8T over 10 years)
Pillar B
Brings U.S. unit costs closer to OECD norms, especially in healthcare, modernizes defense procurement, and extends Social Security solvency without cutting benefits for current retirees.
−$3.9 trillion ($2.5T–$5.0T in savings over 10 years)
Pillar C
Invests in infrastructure, skills, early childhood, research, and supply-chain resilience so the denominator of debt-to-GDP rises. Costs are scored conservatively; dynamic growth effects are noted, not added.
+$2.1 trillion cost ($1.5T–$2.8T net cost before dynamic effects)
Pillar D · New in Version 2
Ten policies drawn from country-tested programs in primary care, family leave, teaching, vocational education, social housing, mental health, corrections, community violence, immigration processing, and once-only digital government. Each respects the middle-class hold-harmless mandate and the twenty-year path to 70 percent of GDP.
+$130 billion net (Gross ~$550B offset by ~$420B over 10 years)
Foundation layer
Independent fiscal analysis, medium-term rules, digital government, and an intergenerational standard. Largely budget-neutral; the value is durability across administrations.
−$339 billion ($100B–$500B net savings over 10 years)
Version 2 addendum
Version 1 answered how the United States stops accumulating debt without hurting the middle class. Version 2 answers the follow-on question that surfaced after publication. Each gap is documented in internationally comparable data; each policy is drawn from a country program with published results. Open the Pillar D catalog.
D1 · 18% of GDP
The United States spends about 18 percent of GDP on health and ranks 30th of 38 OECD countries in life expectancy. Peer democracies spend 10–12 percent and live 3.7 years longer.
D2 · 22.3 / 100k
U.S. maternal deaths are more than 50 percent higher than the nearest peer. The Black maternal-mortality rate is about three times the white rate. Infant mortality is 5.4 per 1,000 versus an OECD median near 3.0.
D3 · ~28th in PISA math
The United States ranks about 28th among OECD countries in PISA mathematics despite above-average per-pupil spending. Top performers — Finland, Singapore, Estonia — combine selective teacher training with coherent curricula.
D4 · $1.86 trillion
Forty-three million borrowers carry $1.86 trillion in student debt. Australia’s HECS-HELP income-contingent system has operated at scale since 1989 without a default mechanism.
D5 · ~650,000 homeless
Rent-to-income exceeds 40 percent in major metros. Vienna houses 60 percent of residents in city-owned or limited-profit stock at about 26 percent rent-to-income.
D6 · WHR rank 24
The World Happiness Report places the United States 24th (23rd in 2026). Youth suicide is up about 60 percent since 2007. Nordic countries occupy the top five.
D7 · 531–580 / 100k
The U.S. incarceration rate is about five times the OECD median. The Netherlands has closed 19 prisons since 2009 as sentences shortened and diversion expanded.
D8 · 44,447 firearm deaths
Firearm deaths in 2024 placed the United States at the 93rd percentile globally. Peer-country rates are five to twenty times lower. Community violence intervention has the strongest U.S. evidence base.
D9 · Years of backlog
Employment-based green-card backlogs are measured in years. Canada’s Express Entry has processed most skilled-worker applications in about six months since 2015.
D10 · 0 agencies once-only
Estonia’s X-Road saves an estimated 2 percent of GDP a year in administrative time. U.S. federal digital delivery remains fragmented across agencies.
03 — Timeline
Years 1–3
Peaks near 101% of GDP
Stand up the Independent Fiscal Council, fund IRS modernization, enact the carbon fee with dividend, expand drug-price negotiation and site-neutral Medicare payment, begin defense procurement reform, authorize the first growth-investment tranche, and start the Version 2 foundation: 988 and talking-therapies pilots, points-plus-employer immigration, digital public infrastructure, Teacher Corps recruitment, and the CVI fund.
Years 4–10
Falls toward 92% of GDP
Complete the measures that need a longer coalition: universal pre-K, Social Security solvency, remaining corporate-tax alignment, full workforce and manufacturing deployment, and the core of Pillar D — national primary care, paid family leave, income-contingent loans, social housing, and the Well-Being Impact Standard. Statutory reviews at Years 5, 7, and 10 can adjust course without abandoning the trajectory.
Years 11–20
Approaches 70% of GDP; surplus in the base case
Lock in the gains. Activate the Generational Investment Framework and seed a sovereign wealth fund once debt-to-GDP reaches 70 percent and the structural deficit is closed. Standing Pillar D programs continue under five-year Independent Fiscal Council reviews; social-housing inventory targets 500,000 permanently affordable units by Year 15 and one million by Year 20.
| Year | Phase | Milestone | Debt / GDP | Real growth |
|---|---|---|---|---|
| 1 | Foundation | Stand up the institutions. Independent Fiscal Council; IRS multi-year funding; digital-government directives; Teacher Corps first cohort; D6 talking-therapies pilots. | ~99% | 2.0–2.4% |
| 2 | Foundation | Price carbon; cut drug and hospital overpayment. Carbon fee enactment; drug negotiation expansion; site-neutral Medicare rules; D9 CRS live; D10 e-identity provisioning; CVI fund appropriated. | ~100% | 2.0–2.3% |
| 3 | Foundation | Debt ratio peaks. First growth tranche (infrastructure, R&D); defense procurement reform; D2 matching grants to states with existing leave programs. | ~101% (peak) | 2.1–2.5% |
| 5 | Structural | First statutory review. Corporate-tax and capital-gains tranche; Independent Fiscal Council long-horizon report. | ~100% | 2.0–2.4% |
| 7 | Structural | Family investments at scale. Universal pre-K rollout; Social Security solvency package; D2 paid leave for all workers; D4 income-contingent conversion underway. | ~98% | 2.0–2.3% |
| 10 | Structural | Mid-course sunset review. Statutory review of all titles, including Title VIII; D1 primary care national; 250,000 social-housing units; 15 agencies on once-only. | ~92% | 1.9–2.3% |
| 15 | Consolidation | Path to surplus. Complete remaining revenue phase-ins; continued IRS and digital modernization. | ~80% | 1.9–2.2% |
| 20 | Consolidation | Target year. Surplus-deployment framework activates; sovereign wealth fund seeding. | ~70% | 1.8–2.2% |
Unchanged current-law path versus this framework’s base case.
Current-law markers follow CBO’s March 2025 long-term outlook (107% by 2029; 156% by 2055). Plan markers are the framework’s illustrative central estimates, conditional on substantially full enactment. Ranges and stress tests are in the working draft, Section 9.
04 — Expected outcomes
From a projected 107 percent of GDP by 2029 toward 70 percent or below by the mid-2040s in the base case, conditional on substantially full enactment and macroeconomic conditions consistent with the CBO baseline.
Annual deficit from $1.8 trillion today toward roughly $0.6 trillion at Year 10 and surplus near Year 20 in the central estimate.
A $75,000 household is modeled to see $70,000–$125,000 in present-value gains over twenty years (Version 1 plus Version 2) from healthcare, energy, skills, childcare, paid family leave, housing-cost stabilization, and student-debt restructuring — not from a tax cut financed with more debt.
Lower debt service restores room for defense, infrastructure, research, and education that interest is currently crowding out.
| Indicator | FY2025 | Year 5 | Year 10 | Year 20 |
|---|---|---|---|---|
| Debt held by the public% of GDP | ~98% | ~100% (peak) | ~92% | ~70% |
| Annual federal deficitnominal | $1.8T | ~$1.3T | ~$0.6T | Surplus |
| Real GDP growthannualized | 2.2% | 2.0–2.4% | 1.9–2.3% | 1.8–2.2% |
| Median middle-class incomereal, indexed to 100 | 100 | 103–106 | 108–115 | 120–135 |
| OECD Better Life rankingrelative | Mid-tier | Top 15 | Top 10 | Top 5 |
| Net GHG emissions vs. 2005percent | −20% | −35% | −55% | Net zero |
| Life expectancy at birthyears | 79.0 | 79.6 | 80.5 | 81.5 |
| World Happiness Report rankrank | 24 | 20 | 15 | Top 10 |
Fourteen outcome metrics sit alongside the debt-to-GDP target. Baselines are 2025–26; targets are illustrative and conditional on substantially full enactment.
| Well-being domain | Baseline | Year 10 | Year 20 |
|---|---|---|---|
| Debt-to-GDP | 98% | 92% | 70% |
| Life expectancy at birth | 79.0 yrs | 80.5 yrs | 81.5 yrs |
| Maternal mortality per 100k | 22.3 | <10 | <6 |
| Infant mortality per 1,000 | 5.4 | 3.5 | 3.0 |
| OOP health spend / household | Baseline | −$1,800/yr | −$3,200/yr |
| PISA math rank (OECD) | ~28 | Top 20 | Top 15 |
| Housing cost-burdened households | Baseline (HUD) | −15% | −33% |
| Homeless population | ~650,000 | Halved | Chronic homelessness effectively ended |
| World Happiness Report rank | 24 | 15 | Top 10 |
| Suicide rate per 100k | ~14.3 | −15% | −30% |
| Incarceration rate per 100k | 531–580 | 350 | 250 |
| Firearm deaths per year | 44,447 | −25% | −45% |
| Employment-based visa processing | Years | <6 months | <6 months |
| Federal once-only agency compliance | 0 | 15 agencies | All majors |
Action 1
Place it in the legislative branch, with statutory analytical authority and a mandate for long-horizon scenario reporting. This is the precondition for any 20-year program.
Action 2
IRS modernization, prescription-drug negotiation expansion, defense procurement reform, and a border-adjusted carbon fee with dividend — through the FY2027 reconciliation process or an equivalent vehicle.
Action 3
Sequence infrastructure, skills, early childhood, and research over five to seven years, with explicit sunset and review triggers at Years 5 and 10.
Action 4
Enact Title VIII (Human Flourishing and Societal Infrastructure) with independent CBO scoring for each of D1–D10, state-partnership provisions where appropriate, and a five-year statutory review.
Action 5
Require any legislation with a ten-year fiscal impact above $10 billion to carry a well-being impact statement — analogous to a fiscal note — modeled on New Zealand’s Wellbeing Budget and reviewed by the Independent Fiscal Council.
Figures in this framework are illustrative directional estimates derived from publicly available data and conventional Congressional Budget Office budget-window logic. They are not official CBO scores. Any provision adopted from this framework would require formal CBO scoring before legislative consideration. This document is a policy white paper, not an introduced bill.