The Bigger Budget Bucket Exposed

I’ve been pounding this drum for years from right here in Plano, Texas: the federal budget isn’t broken because of Social Security. It’s broken because Washington has spent decades mortgaging our kids’ futures on an entitlement monster that no politician wants to touch. Christopher Jacobs just dropped the cold-hard proof in The Federalist yesterday, and every taxpayer who still believes in fiscal sanity needs to read it twice—and then forward it to their Congressman.

Jacobs ran the numbers straight from the latest CBO baseline. This fiscal year’s deficit sits at a staggering $1.853 trillion. Eliminate the entire discretionary bucket—military spending, border security, highways, prisons, national parks, NIH research, the whole kit and caboodle—at roughly $1.88 trillion and you squeak out a tiny $27 billion surplus. Wipe out major health-care programs (Medicare, Medicaid, Obamacare subsidies, CHIP) totaling $1.908 trillion and you actually get a $55 billion surplus. But zero out Social Security’s retirement and disability payments at $1.666 trillion? You’re still $187 billion in the red—and that’s before you even add veterans’ programs, food stamps, farm subsidies, student loans, welfare, and the exploding interest on the national debt. Interest alone is already over $1 trillion this year—more than the entire defense budget last year—and CBO projects it will hit $2 trillion annually by 2035. Cumulative deficits over the next decade? More than $23 trillion, pushing debt to dangerous new highs as a share of the economy.

The message is brutal and bipartisan in its failure: Politicians of both parties have been literally selling our children’s financial future to buy votes. The real cancer isn’t the third rail of Social Security. It’s the health entitlements bucket—Medicare, Medicaid, Obamacare subsidies, and CHIP—that’s exploding fastest and eating the budget alive. By 2036, Social Security, Medicare, Medicaid, and net interest combined will devour nearly three-quarters of all federal spending. Health programs alone are the fastest-growing driver after interest payments, fueled by an aging population, rising per-beneficiary costs, and unchecked expansion. Fox News, Breitbart, National Review, and The Daily Signal have warned about this for years: zeroing out Social Security still leaves a gaping hole because the entire welfare/entitlement state plus reckless borrowing is the true third rail. Conservatives must attack the bigger bucket first for maximum savings and structural fixes.

The Root Problem: Middlemen Touches and Rampant Fraud

The root problem is exactly what I’ve been hammering since our conversation started: too many middlemen “touches” between patient and provider. Every insurer, pharmacy benefit manager (PBM), billing company, claims processor, and layer of bureaucrats takes its cut—“wets its beak,” as I put it—driving up costs, adding complexity, and creating a fraud paradise. Look at the scandals in Minnesota, Maine, Ohio, California, and beyond. In Minnesota, federal probes estimate fraud in Medicaid programs (housing services, autism therapy, personal care) could exceed $9 billion since 2018, with half or more of billings potentially bogus. Schemes involved billing for services never provided, funneled through nonprofits and contractors exploiting loose oversight. Maine saw whistleblowers allege millions defrauded via contractors charging for undelivered work. Ohio had providers billing for in-home care while patients were hospitalized, using unqualified aides, forging signatures. California’s pandemic-era COVID-19 Uninsured Program and ongoing hospice/disability abuses racked up hundreds of millions in false billings. These aren’t isolated incidents; they’re symptoms of a system where every handoff invites waste, upcoding, phantom billing, and kickbacks. Breitbart, Washington Examiner, and ZeroHedge call the middleman layer a legalized extraction machine that rigs the system while patients and taxpayers pay the price.

Pragmatic Edge Wins: Building Momentum Without Full Confrontation

But here’s the pragmatic truth I keep coming back to: Don’t charge K Street’s PBM cartel head-on yet. Score wins around the edges first. Build momentum. Prove the model works. That means:

• Expanding Direct Primary Care (DPC) so patients pay their doctor directly for unlimited routine care—no insurance middleman, no prior authorizations, no fraud layers. DPC improves access, quality, and lowers costs—studies show 56% fewer non-elective hospitalizations in some analyses. Practices have grown from about 1,200 in 2020 to over 2,800 now, with memberships past 1.4 million and employer adoption surging past 7,200 companies. Market projections hit $90–96 billion by 2030–2035. Policy wins: remove state barriers, allow Medicare/Medicaid opt-ins, and let HSAs cover fees.
• Converting Medicaid to block grants (or per-capita caps with flexibility) so states get fixed pots of money adjusted for population and inflation but full control over design. This ends the perverse incentive to maximize federal dollars through expansion and waste. Past GOP plans showed billions in savings without gutting care for the truly vulnerable; states can innovate with work requirements, managed care, or direct alternatives.
• Making privately purchased insurance fully tax-deductible (or via refundable credits) to level the playing field with employer-sponsored plans. The employer exclusion is the original sin distorting healthcare—driving over-insurance and hiding true costs. Shifting to individual deductibility encourages portability, HSAs, high-deductible plans, and direct-pay models like DPC.

These three reforms create a virtuous cycle: more DPC reduces primary care touches, block grants let states experiment with fraud controls and efficiency, tax fairness boosts individual coverage and competition, starving intermediaries organically. They’re low-resistance, market-driven fixes straight out of Heritage Foundation and Republican Study Committee blueprints—lower costs, less fraud, higher patient satisfaction—before scaling up.

The Reconciliation Engine: Tax Relief and Growth

To pay for it all and deliver real growth, I’m pushing a clean reconciliation vehicle: Bundle full tax deductibility for individual health insurance with repeal of the 3.8% Net Investment Income Tax. Reconciliation is perfect—bypasses the filibuster, focuses on budget impacts, and Republicans have used it successfully for tax cuts (2017 TCJA) and health tweaks (individual mandate repeal). While the OBBBA locked in TCJA extensions and delivered big wins on rates and new deductions, the NIIT lingers as Obamacare’s punitive surtax, and individual insurance deductibility remains unfinished business. That’s why pushing these in the next reconciliation—paired with clawbacks—keeps the momentum going The NIIT is pure punitive double-taxation on savings and capital: 3.8% surtax on dividends, capital gains, rental income, and more for high earners above $200k single/$250k joint thresholds. It hits home sellers and buyers indirectly—primary residence gains up to $250k/$500k are excluded from regular capital gains and NIIT, but excess gains on second homes, vacation properties, or investment flips get slammed with an effective top rate of 23.8%. Rental income often counts as passive and subject to the surtax unless the owner qualifies as a real estate professional. This discourages mobility, new investment in housing supply, and capital deployment exactly when we need more homes built in growth states like Texas. Repealing the NIIT frees up seller mobility, boosts investor activity, increases supply over time, supports construction jobs, and lifts property values without rate hikes. Paired with deductibility, it empowers self-employed families and small businesses to shop private insurance directly, bypassing employer/PBM layers. Dynamic scoring shows growth from freed capital and investment can partially offset revenue loss—especially when bundled with deregulation or spending restraint. Heritage, Daily Signal, and Washington Examiner analyses back this as pro-family, pro-growth tax relief without exploding deficits.

Funding the Wins: Clawbacks from Fraud-Enabling States

And those savings? They come from clawbacks—straight from the state treasuries of places proven to have enabled fraud. Once audits, investigations, or improper payment findings substantiate systemic abuse, the feds claw back federal matching funds from the state treasury—not just chase shady providers. This holds governors and agencies accountable for enabling or failing to prevent abuse. No more treating federal dollars as blank checks. CMS under Dr. Mehmet Oz and the Trump administration is already moving aggressively: deferring $259.5 million from Minnesota for Q4 FY 2025 over unsupported claims in high-risk areas like personal care, housing supports, and services for non-citizens, threatening up to $2 billion annually until corrective actions are delivered. Minnesota sued to block it, but Fox News frames this as the state fighting accountability after estimates of $9+ billion in fraud. The House Energy & Commerce Committee expanded probes to 10 states including California, Maine, New York, Massachusetts, Oregon, and others, demanding records on fraud, waste, and abuse. Trump called out California, Maine, Massachusetts, and Minnesota in his State of the Union as “even worse.” DOJ’s False Claims Act recoveries hit record $6.8 billion in FY 2025, with Medicaid fraud units pulling in $1.4 billion. Clawbacks end blue-state bailouts and force tighter controls: better audits, prepayment reviews, work requirements. Tie this into reconciliation as offsets—amend language to require CMS clawbacks for states with high improper payment rates or proven fraud patterns. Use CBO-scored savings from reduced future outlays. These are easy, evidence-based targets that deliver real money back to taxpayers.

Ground Zero: California’s LA Hospice Scandal

Ground zero right now is California’s LA hospice scandal. CBS News dropped a bombshell investigation exposing “ground zero” for hospice fraud in LA County. Hospices exploded from about 109 in 2010 to over 1,800 now, with billing far above national averages (~$29,000 per patient). Nearly 500 registered hospice companies crammed into a 3-mile stretch along Van Nuys Boulevard in the San Fernando Valley. The smoking gun: 89 different hospices all registered at one single building (some reports cite up to 112). CBS reporters found empty offices, piles of unopened mail, dead phone lines—no staff, no patients, no actual care. Over 700 of those 1,800+ hospices trigger multiple red flags per California’s own standards: geographic clustering, low patient counts, high “live discharge” rates, excessive billing, staff overlap. One agency hit all six red flags. State audits flagged it years ago; there’s been a moratorium on new licenses since 2022 (extended to 2027), with over 280 revocations. But fraud indicators grew, costing hundreds of millions—some estimates tie LA hospice overbilling to $105 million+ in a single year, with broader fraud in the billions when including home health scams. Fox News called LA “off the charts,” with Dr. Oz blasting the 7x growth in spots and 30% of national hospice services in SoCal. DOJ sentenced folks for $16 million in sham LA hospices involving unnecessary billing and money laundering. Newsom’s moratorium and revocations are too little, too late; CMS sent pre-enforcement letters demanding a comprehensive program integrity action plan; if unsatisfied, deferrals of hundreds of millions loom. Newsom’s team filed civil rights complaints accusing discrimination, but conservatives see deflection. This is prime clawback material—proven red flags, empty shells, improper payments. Add it to the reconciliation offsets alongside California’s $1.3 billion improper payments for non-emergency immigrant coverage.

Expanding the Net: Minnesota’s Somali-Linked Fraud and Adjacent Buckets

But we’re not stopping at hospice and home health. Expand the net—because the adjacent buckets in Minnesota are just as rotten, and we can’t leave out the Somali fraud scandals. Minnesota has become the epicenter of one of the most staggering Medicaid and welfare rip-offs, with clear ties to the healthcare fraud bucket. Federal prosecutors estimate half or more of Minnesota’s $18 billion in Medicaid spending across 14 high-risk programs since 2018 could be fraudulent—potentially exceeding $9 billion total. Fox News, Washington Times, and Breitbart have relentlessly exposed how lax oversight under Gov. Tim Walz enabled massive schemes, often involving Somali-run nonprofits and providers siphoning billions from Medicaid housing stabilization, autism therapy (EIDBI), personal care services (PCA), integrated community supports (ICS), and more. Shell companies billing for services never provided—phantom home health visits, fake autism therapies, housing aid for nonexistent needs—kickbacks to recruit families (especially in Somali communities), rubber-stamped diagnoses, funds funneled for personal enrichment or even abroad. Recent charges include Mohamed Abdirashid Omarxeyd’s $3 million+ scam via Guardian Home Health Services (billing for undelivered services 2020-2024), with patients hospitalized 20+ times while billed for 24/7 care. EIDBI autism services exploded from a projected $20 million to $342 million in just a few years. DOJ and IRS hit six more defendants in December 2025 (plus guilty pleas like Abdinajib Yussuf’s $6 million Star Autism scam in St. Cloud)—sham therapies for kids under 21, referral kickbacks. House Oversight’s fresh March 2026 report rips Walz for ignoring whistleblowers and retaliating against them. Personal care and ICS: 28 providers suspended for phantom billing. Housing stabilization services: same defendants, same fake support plans. Whistleblowers called the “lack of guardrails pretty shocking.” The documentation is so sloppy—fabricated service plans, inflated hours, ghost clients—a junior auditor could flag it in five minutes. Yet blue-state enablers let it fester to protect political power bases. CMS deferred $259.5 million in federal funds, threatening billions more. This mirrors LA’s ghost ops but on a bigger systemic scale. Expand clawbacks and reforms to these areas alongside hospice and home health for maximum savings and accountability.

The Intrinsic Link: Immigration Enforcement and Fraud Reduction

These aren’t coincidences. Fraud and lax immigration enforcement are intrinsically linked—two sides of the same coin. Foreign networks—Russian-Armenian organized crime rings in California’s LA hospice corridor, Somali networks in Minnesota’s autism, personal care, and housing schemes—exploit weak E-Verify, no immigration status checks, and “sensitive location” protections to set up cottage industries that loot Medicare and Medicaid while Democrats shield them for votes, donors, and political power bases. Oz’s video panned Armenian-script businesses on Van Nuys Boulevard, calling out foreign gangs corrupting doctors to steal beneficiary numbers. In Minnesota, fear of “racism” accusations paralyzed enforcement. Sanctuary policies in blue states enable ineligible billing, kickback networks, and identity theft. Trump’s day-one actions—rescinding “sensitive locations” protections for ICE in hospitals, clinics, and billing offices, expanding travel bans and cartel designations, prioritizing prosecutions of cyber-enabled fraud tied to transnational criminal organizations—show the link perfectly. Loopholes for illegal immigration fuel fraud pipelines draining the health bucket.

Codify Trump’s Executive Orders First: The Permanent Lock-In

That’s why the very first step must be codifying all of President Trump’s executive orders into permanent statute via reconciliation. Trump has issued over 244 executive orders since January 20, 2025—surpassing records with 135+ in the first 100 days alone. Many target exactly these issues: border security national emergency declarations, ending catch-and-release, restarting Remain in Mexico, designating Mexican cartels as foreign terrorist organizations, rescinding sensitive-location protections, the March 6, 2026 EO on Combating Cybercrime, Fraud, and Predatory Schemes (prioritizing TCO prosecutions, victim restitution from seized assets), and the June 2025 memorandum Eliminating Waste, Fraud, and Abuse in Medicaid (directing HHS/CMS to cap rates, eliminate silos). Lock every single one in law—no more Biden-style day-one reversals. Then add statutory mandates in the reconciliation bill: E-Verify and immigration status verification for every Medicaid-certified provider in hospice, home health, EIDBI autism, personal care assistants, integrated community supports, and housing stabilization. Mandate ICE access to clinics and billing offices. Require nationwide site inspections before certification, real-time patient verification (no more live-discharge miracles), bans on license flipping, caps on per-patient billing, AI-driven red-flag audits for clustering and sham documentation. Authorize automatic clawbacks from state treasuries when audits prove enabling—using Minnesota’s deferrals and California’s $1.3B+ improper payments as legislative findings. This codification anchors Title I: Immigration enforcement tied directly to fraud reduction, because they are intrinsically linked. It chokes the cottage industries Democrats protect, deports operators on fraud convictions, and stops taxpayer programs from being used to cultivate political power bases.

The Full America First Package: Reconciliation Blueprint

Then layer in the rest of the package via the same reconciliation vehicle (50-vote threshold, Byrd-compliant). Title II: Full tax deductibility for privately purchased insurance plus NIIT repeal (with the housing boost and dynamic growth scoring). Title III: Medicaid block grants/per-capita caps with state flexibility for work requirements and fraud controls, plus DPC expansions (HSA coverage, Medicare opt-ins). The sequence scores quick, defensible wins: Immigration-fraud tie delivers public outrage-fueled savings (billions clawed back from proven cases like LA ghosts and Minnesota’s EIDBI/PCA scams), proves the model, builds momentum for broader health bucket attacks without full confrontation. Fraud clawbacks + dynamic growth from tax relief keep it deficit-neutral or better. Fox News and Breitbart frame it as protecting taxpayers and seniors from foreign scams shielded by open-border policies—pure America First.

Conclusion: The Courage to Act Before Fiscal Oblivion

This is the full America First blueprint. Start with codifying Trump’s EOs and the immigration-fraud hammer to lock in enforcement permanently. Use whistleblower evidence and junior-auditor obviousness in Minnesota’s Somali-linked autism, personal care, ICS, and housing schemes alongside California’s LA hospice clusters for ironclad clawback offsets. Fund the edge wins—DPC expansion, Medicaid block grants, private insurance deductibility—that reduce middleman touches and empower patients. Add NIIT repeal for the housing and investment lift that frees capital in Texas and beyond. The Federalist laid out the brutal math showing even zeroing Social Security leaves red ink because health entitlements plus interest is the real cancer. Blue-state scandals laid out the evidence of middlemen fraud enabled by lax immigration oversight. Trump’s 244+ EOs laid out the blueprint. Now it’s time for Congress to codify it all, tie immigration enforcement directly to fraud reduction as intrinsically linked, expand clawbacks to every ripe bucket (hospice, home health, EIDBI, PCA, ICS, housing), and finally attack the real health entitlements monster.

Taxpayers in Texas and across America have waited long enough. Our kids’ futures are on the line—no more mortgaging them for vote-buying schemes and foreign-enabled cottage industries. This reconciliation package is the practical, winnable first strike: edge victories around the PBM fight, billions clawed back from fraud-enabling states like California and Minnesota, pro-growth tax relief that boosts housing and individual choice, and permanent statutory locks on Trump’s America First enforcement. It proves the model, starves intermediaries, protects the truly needy, and creates political cover for deeper reforms ahead.

The courage to demand action before fiscal oblivion is here. The evidence is overwhelming. The moment is now. Let’s get this reconciliation bill passed and start draining the swamp for real. Our children deserve nothing less.