As Republican lawmakers advance a budget reconciliation bill expected to add over $2.4 trillion to the national debt, California Congressman Ro Khanna unveiled a competing plan Tuesday that promises to reduce the deficit by $12 trillion over the next decade while investing in critical services for working Americans. The Progressive Deficit Reduction Plan proposes a combination of targeted spending cuts and new revenue streams, including tax reforms aimed at billionaires, corporations, and fraud in federal contracting.
“Progressives have a real plan to reduce the deficit by $12 trillion in the next decade—freeing us up to invest in essential programs for ordinary Americans: childcare, universal healthcare, affordable housing, free college, student debt cancellation, advanced manufacturing, and good-paying jobs,” the report states.
Khanna’s plan outlines $2.4 trillion in spending cuts and $9.7 trillion in increased revenue, plus $1.9 trillion in savings from lower debt interest payments. In total, the plan aims to save $14 trillion by 2034 and reduce the deficit-to-GDP ratio to 3 percent, compared to the GOP plan’s projected 7 to 8.6 percent.
The proposal identifies five major areas for cutting wasteful government spending. The largest savings—$850 billion—would come from modernizing the military and reforming Pentagon procurement, which Khanna says is riddled with bloat and inefficiency. The report notes the Pentagon has failed seven consecutive audits and criticizes ongoing support for weapons systems like Sentinel and Golden Dome, as well as cost overruns from the F-35 program.
Instead of expanding the military budget beyond $1 trillion, as Republicans propose, Khanna argues the U.S. should redirect those funds to diplomacy, humanitarian aid, and sustainable development—“all of which keep us safer in the long run.” The plan also calls for eliminating duplicative contracting and limiting cost-plus contracts that reward overspending.
An additional $830 billion in savings would come from eliminating fraud and abuse in the Medicare Advantage system. The report specifically targets “upcoding,” where private insurers inflate diagnoses to bill Medicare at higher rates.
“Republicans want to slash nearly $1T from Medicare and Medicaid—ripping away healthcare from 16 million ordinary Americans to pay for tax breaks for billionaires,” the report states. “Instead, we could save $830 billion by ending corporate profiteering.”
Another $200 billion could be saved by allowing Medicare to negotiate drug prices—a policy long blocked by pharmaceutical industry lobbying.
“There is absolutely no reason Americans should pay two to four times more for prescriptions than people in Canada, Germany, or the UK,” the report argues.
By ending fossil fuel subsidies, the plan would save $170 billion and prevent an estimated 6 billion tons of carbon pollution. The plan states, “We shouldn’t be paying polluters to give our kids asthma and fleece the American public.”
Finally, $333 billion in savings would be achieved by reforming federal procurement practices. The report recommends upgrading technology and training to prevent fraud and improve efficiency across agencies.
Khanna’s blueprint proposes a broad overhaul of the tax code to generate $9.7 trillion in new revenue, starting with corporate taxation. The plan calls for restoring the domestic corporate tax rate to 28 percent, closing the carried interest loophole, and implementing a 0.01 percent financial transaction tax—reforms projected to raise $2 trillion.
The plan also targets billionaire wealth with a series of changes aimed at closing tax avoidance strategies. It proposes a direct tax on billionaire wealth, taxing loans taken against that wealth as capital gains, ending the step-up in basis at death, restoring the top marginal income tax rate to 39.6 percent, and increasing the estate tax for fortunes above $11 million. Combined, these measures would raise $4.7 trillion.
“Trump gave billionaires a free ride,” the report states. “My plan ends this special tax treatment by making them pay taxes on their wealth and on loans on their wealth.”
Khanna also proposes removing the Social Security payroll tax cap for incomes over $250,000 and taxing investment income for high earners at the same 12.4 percentage rate. These changes would raise $2.9 trillion and help secure the Social Security trust fund without cutting benefits.
“Today, billionaires stop paying into Social Security after their first $176,000,” the plan says. “My plan removes that cap for those making over $250,000 and taxes investment income for those making over $250,000—bringing in $2.9 trillion to protect the benefits Americans earned.”
The timing of Khanna’s announcement underscores the widening gulf between progressive and Republican economic strategies. The GOP’s so-called “big, beautiful bill,” which recently passed the House, is estimated to increase the deficit by more than $3 trillion by 2034, according to the Congressional Budget Office. If temporary provisions in the bill are made permanent, the true cost could exceed $5 trillion.
The Republican plan also risks significantly increasing interest payments on the national debt, which the Khanna report estimates could double to nearly $2 trillion. It warns that the GOP approach could “shake market confidence and ultimately drag down long-term economic growth—all while doing less for working families.”
“That’s not fiscal responsibility—it’s a giveaway to the wealthy that sticks future generations with the bill,” Khanna’s report argues.
By contrast, the Progressive Deficit Reduction Plan would reduce interest payments by $1.9 trillion over ten years, bringing total federal savings to $14 trillion. A chart in the plan details these projections year by year, showing substantial net gains for deficit reduction, even as it unlocks major public investments.
Khanna, widely viewed as a likely presidential contender, is using this plan to signal a comprehensive progressive alternative to the status quo. His proposal echoes a January policy framework from Public Citizen that targeted government inefficiency and billionaire tax evasion, and it builds on momentum from Democratic proposals to tax wealth and fund services like Medicare for All and tuition-free college.
The plan is also meant as a direct challenge to those who claim progressives lack fiscal discipline. “Do they think Americans can’t do the math? We can—and we know their numbers don’t add up. Ours do,” the report concludes.
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