- Economics
- Budget & Spending
- Answering Challenges to Advanced Economies
Many think that balancing the federal budget would require deep cuts in entitlement programs. This paper shows to the contrary that the budget can be balanced within 15 years through modest and sustained federal spending restraint and moderately higher economic growth. Key to this restraint is to limit the growth in the average future value of entitlement benefits per recipient to today’s level, after adjusting for inflation and rising healthcare costs.
Key Takeaways
- The federal budget can be balanced without deep reductions in social safety net programs or higher taxes.
- Budget balance can be achieved through a combined approach: modestly restraining the growth of federal entitlement spending and adopting pro-growth economic policies.
- The modest spending aspect primarily restrains the growth in the average value of the Social Security benefit per recipient relative to inflation; and the average Medicare payment per recipient relative to the growth in economy-wide healthcare costs. Spending restraint would eliminate two-thirds of the federal budget deficit in 15 years.
- Stronger economic growth is also essential to balancing the budget. Economic growth that matches the average over the past 30 years would eliminate the remaining one-third of the federal budget deficit over the same 15 years.
Cite this essay:
John F. Cogan, “Limiting Federal Spending Growth to Balance the Budget,” Hoover Institution, November 2026.
