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President Donald Trump has a fix for the federal deficit.
Trump wrote on social media on Nov. 12, according to Reuters: “Our Budget could be quickly BALANCED with the correction of this large scale criminal activity.”
He wants Vice President JD Vance to focus on crime and corruption in Democratic-run cities. (1)
Nope. The numbers aren’t close.
The federal government ran a $1.992 trillion deficit in fiscal 2026, according to the Congressional Budget Office. (2)
The Government Accountability Office estimated that the federal government could lose between $233 billion and $521 billion a year to fraud, based on data from fiscal 2018 through 2022, a period that includes pandemic-era spending. GAO says the estimate isn’t predictive. (3)
Even if the government recovered every dollar at the very top of that range, it would cover only about a quarter of the deficit, leaving a hole of roughly $1.5 trillion.
I’ve been a CPA since 1981, and in the early 1980s I sold bonds, back when 30-year Treasurys topped out around 15%.
So here’s what that $2 trillion hole means for you, and what it would really take to close it.
1. Big deficits help keep your borrowing costs up
“Federal deficits, and the borrowing they necessitate, tend to raise the cost of private borrowing,” according to Yale’s Budget Lab. (4)
Its researchers assume that for every 1 percentage point that forecasted federal debt rises as a share of the economy, the rate on 10-year Treasury bonds rises by 2 basis points, or 0.02 percentage point. (4)
That ripples into your loans. In the Budget Lab’s model, a 0.1-point rise in Treasury yields raises 30-year mortgage rates by 0.1 point and auto loan rates by 0.05 point. (4)
Those are small steps, but they stack up as the debt grows, and they reach anyone taking out a new mortgage or car loan, or carrying variable-rate debt.
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2. Savers can win, but bondholders can lose
Higher rates aren’t all bad if you’re a saver rather than a borrower. When rates rise, newly issued bonds pay more, and so do banks and brokerage money market funds. In Investor.gov’s example, new Treasurys offer a 4% coupon. (5)
But if you already own bonds, watch out. “When market interest rates rise, prices of fixed-rate bonds fall,” the SEC’s Investor.gov explains. In its example, a $1,000, 10-year Treasury bond paying 3% falls to $925 a year later when market rates rise to 4%. (5)
Longer-term bonds generally carry more of that risk than shorter ones. (5) If your bond funds are full of long-term bonds, a rate surprise can hurt.
If you have $100,000 or more invested and aren’t sure how much rate risk you’re carrying, a fiduciary advisor can help.
You can find one quickly and easily with services like SmartAsset. They offer a free service that matches you with up to three fiduciary financial advisors.
They can help with tax savings, investment advice, Social Security strategies, and planning gaps you’d never see alone. And first appointments are typically free.
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The service is designed for those with $100K+ in investments.
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3. Interest on the debt now costs more than Medicare
Here’s the number that should get everyone’s attention. In fiscal 2026, the government spent $1.142 trillion on net interest on the public debt. It spent $1.069 trillion on Medicare, after premiums and other offsetting receipts. (2)
That interest doesn’t pay for a single road, benefit check or soldier. And the bill keeps growing: Net interest rose from $1.028 trillion in fiscal 2025 to $1.142 trillion in 2026, according to CBO. (2)
4. Your Social Security and Medicare are in the math
Social Security benefits cost $1.654 trillion in fiscal 2026, and as I just mentioned, Medicare cost $1.069 trillion, according to CBO. (2) Total federal spending was $7.396 trillion, and revenue was $5.403 trillion. (2)
If fraud can’t close a $2 trillion gap, it will ultimately get closed by higher taxes, spending cuts, more borrowing or some mix. And with programs that big, it’s hard to see any serious plan that never touches them.
I’m not predicting cuts. I’m saying anyone who tells you the budget balances itself without hard choices is selling you something.
5. Plan for your money, not for Washington’s
Don’t build your retirement on the hope that Congress fixes the deficit. My advice: Plan as if borrowing costs stay higher than they were a few years ago, and pay down variable-rate debt where you can.
Keep an eye on how much of your savings sits in long-term bonds. And make sure your plan still works if taxes go up someday.
My take
Fighting fraud is worth doing. Every stolen dollar is a dollar taken from taxpayers. But calling it a way to balance the budget is like planning to pay off your mortgage by skipping restaurants. It helps. It isn’t a realistic plan.
The deficit is a $2 trillion problem. The honest fix involves taxes, spending and time. Until Washington admits that, the best protection is a plan for your own money that doesn’t depend on politicians doing math.
Sources: 1. Reuters via Yahoo News; 2. Congressional Budget Office; 3. Government Accountability Office; 4. The Budget Lab at Yale; 5. Investor.gov
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