From nextBIGfuture, February 19:
I worked with Grok 3 to analyze all of the spending deep federal government spending cuts, possible end to the Ukraine war, privatization of parts of government, streamlining agencies and functions. I looked at using improved tax and other policies to achieve strong economic growth (doubling GDP growth from 2% per year to 4-5% per year).
This is an update of a prior analysis. Elon Musk has now discussed $5000 stimulus checks in 2026. The previous plan had recession risks in 2026. Stimulus checks can be used to offset that risk to avoid recession.
For the past 10 years (2014-2023):
The average annual GDP growth rate for the USA from 2014 to 2023 is approximately 2.26% and has been 2.16% over the last 20 years. The new plan could see the US reach double the annual GDP growth with 4-5% average GDP growth.
The potential impacts of federal government spending cuts in the range of $1 trillion to $2 trillion per year (15% to 30% of the $6.7 trillion 2024 federal budget), paired with the proposed policy changes, on the U.S. economy by September 2026, September 2028, and 2030 and beyond. Use historical examples (post-WWI, post-WWII, and Clinton-era 400K federal staffing cuts), economic principles, and the specific measures you’ve outlined—military spending efficiencies, fraud reduction, tax reforms, stimulus checks, and geopolitical/supply chain fixes. Outline a best plan for a stronger economy.
Assumptions include a negotiated halving (or substantial successful agreed reductions) of military spending with Russia, China, and the U.S., $500 billion in annual federal fraud and waste per GAO reports, DOGE identifying waste (e.g., USAID as 90% scams and CIA tool), shutting down the Department of Education with functions transferred to states, privatizing the U.S. Postal Service (USPS) and Veterans Affairs (VA), and implementing DOGE’s X discussions and Project 2025 plans from Heritage for 75% cuts in federal workers/contractors via privatization, IT modernization, and efficient processes. Evaluate all U.S. government agencies for necessity and effectiveness, considering state/local or private delivery. The goal remains a stronger economy by September 2026, 2028, and 2030+.
Overview and Historical Context
Federal spending cuts of this magnitude would be significant but not unprecedented in relative terms. Post-WWI, U.S. federal spending dropped from $18.5 billion in 1919 to $6.4 billion by 1922 (a 65% cut), driven by demobilization, leading to a sharp but brief recession (1920–1921) with unemployment peaking at 11.7%. Post-WWII, spending fell from $92.7 billion in 1945 to $34.5 billion by 1948 (63% reduction), yet the economy transitioned to growth due to pent-up consumer demand, private investment, and a global economic boom. During the Clinton administration (1993–2001), federal employment was reduced by about 400,000 (mostly military-related), and discretionary spending tightened, contributing to budget surpluses by 1998 amid a tech-driven economic expansion. These cases suggest large cuts can trigger short-term contraction but, with the right conditions, enable long-term growth.
Tax Reforms
Flat Tax: A revenue-neutral flat tax (e.g., 1i% across all income with 30K exemption) simplifies compliance, potentially boosting investment. Low earner exemptions prevents low income hit.
Middle-Class Cuts/No Tax on Tips: Eliminating taxes on tips (with rules like a $50,000 cap to prevent abuse) and cutting middle-class rates could increase disposable income by $100B–$200B annually, spurring consumption.
No Taxes on Seniors: Exempting Social Security income might cost $50B–$100B yearly but supports retirees’ spending power.
Stimulus Checks
$5,000 Checks: One round for 80 million households in summer 2026 costs ~$400B; two rounds total $800B. Post-COVID $1,200–$1,400 checks boosted GDP by 1–2% short-term; $5,000 could add 3–5% temporarily, offsetting recession risks.
Geopolitical and Supply Chain Fixes
Ukraine War Cessation: Ending U.S. aid (~$50B/year) saves funds and, if paired with normalized Russia/Ukraine trade, lowers fertilizer/energy costs, cutting inflation by 0.5–1%.
Supply Chain: Streamlining logistics (e.g., port efficiency) could reduce goods prices, amplifying consumer purchasing power.
Inflation/Interest Rates: Effective Fed policy keeping rates at 3–4% (from 5%+ now) supports borrowing/investment without overheating. Managing with deregulation and other policies that lower inflation, interest rates and lower energy costs are pro-growth.
Assumptions and Cuts
Federal Budget Baseline: $6.7 trillion (2024). Cuts aim for $1T–$2T (15%–30%), now leaning toward $2T+ with aggressive reforms.
Military Spending: Current U.S. defense budget is ~$850B. A negotiated halving with Russia and China drops it to $425B, saving $425B/year. Assumes global stability reduces need for overseas bases and arms races....
....MUCH MORE
Keeping in mind that as we saw in yesterday's "Okay, You Tell Me: How Do You Cut The Current Federal Debt and Deficit" the deficit for the first four months (Oct. 2024 - Jan. 2025) of fiscal year 2025 is $840 billion. This situation will obliterate Our Democracy™ unless the deficit is reined-in, fast.
