An Intelligent, Achievable Solution – The Penny Plan

[Guest]

The One Percent Spending Reduction Act of 2011” (H.R. 1848) provides an understandable and enforceable common sense solution to our current budget/deficit dilemma.

It requires that a hard cap of the 2011 total expenditures be put in place with requirement to reduce Federal spending in each department by one percent. This process would continue for five years and after that, the budget would be balanced and total government expenditures capped at 18% per year. In other words, DOD would be cut by one percent each year (end the Libyan war?) , farm subsidies would similarly have to be reduced (cut support for corn based gas?), Foreign Aid would be trimmed by one percent, Congressional staffs and travel budget would have to be reduced by one percent – the same for the White House.

Very few of us have never gone through a time when we did not have to trim our household budgets by much more than one percent. The same for any company we have worked for. If outgo was more than income, we cut. It’s time for our government to do the same.

Here is a link to Congressman Connie Mack’s website giving a brief overview of the bill – he is the primary sponsor and there are now over 40 co-sponsors.

http://mack.house.gov/index.cfm?p=Articles&ContentRecord_id=f18dea5d-c7db-400d-8eb5-bc0a5ee9d104&ContentType_id=a993f954-3acb-477f-b874-3661f9f6fb25&Group_id=2c61596a-fccc-47a0-8682-eeac569510d9

Here is a link to HR 1848 as listed in’Thomas’.

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:h.r.1848:

Take a look at them and see if you do not agree with the ideas presented.

[Guest]

The One Percent Spending Reduction Act of 2011” (H.R. 1848) provides an understandable and enforceable common sense solution to our current budget/deficit dilemma....I saw Representative Mack describe his plan on TV the other night. It sounded way too easy, so I tried to do the math to see if it works.

Before I start I wondered, geez, if the arithmetic doesn't work, why would Mack actually go on TV and present the plan? But let's get on with the arithmetic.

To start, let's make the math easy. let's say that we'll spend $4 trillion in fiscal 2012 (fiscal 2011 is over). I know Mack says we'll spend only $3.382 trillion, but I have no idea where he got that number. It doesn't square with anything coming from the Government Accounting Office. Let's also say that our national debt at the end of 2012 will be $15 trillion. (That'll be pretty close, I think.) And given that Representative Mack is a leader in the Tea Party, I think it's safe to assume that there are no tax increases built into his plan.

So if we look at the description of the plan that Mack has on his website, government spending would be cut by 9.41% in six years. But even starting with a lower spending number as Mack did, the budget is far from balanced. Our total revenues in 2012 are expected to be about $2.3 trillion. Mack's plan would still create a deficit each year of a little less than $1 trillion!

Folks, Representative Mack's "solution" sounds awfully good in a soundbite, but the arithmetic doesn't work at all. Before we get all excited about this plan, maybe we'd better get a more thorough explanation.

Simply put, there is absolutely no way that a 1% cut in spending for five years will result in "the budget being balanced".

A simpler and I think more accurate way to look at the problem is this. Our total spending is about $4 trillion a year and our total revenues are about $2.3 trillion. Without any changes to those numbers--and that's not likely with a weakening economy and increasing inflation--the spending cuts needed each year for five years would have to be more like 8-1/2% each year, a total reduction of spending of almost 43% in five years in order to achieve a balanced budget with no additional tax revenue.

Mack's plan is designed to reduce federal spending to 18% of GDP. But even if the numbers he uses in his plan are achieved, there would still be a deficit each year that would approach $1 trillion. Mack's plan assumes a 2% growth in GDP for each of the six years until 2018. That should seem pretty optimistic to anyone who is paying attention to what has been happening to U.S. GDP in the last couple of years. His proposed bill caps spending at 18% of GDP. If as an example we only achieved an average of 1% growth in GDP for six years, federal spending would have to be cut by an additional $300 billion or so in 2019. That would require almost a 10% cut in spending in 2018 alone! His whole plan is based on what appears to be some optimistic GDP growth numbers. Plus remember, he starts his calculations with "government spending" that is about 18% less than it really is!

Why in the world would Congressman Mack try to make the solution to our budget problem sound so easy? Why would the content of his bill be so inaccurate and misleading? If Mack or any of the others in his caucus try to make the solution to this fiscal problem sound that easy, they are really dumber than I thought. Dangerously stupid!

[Guest]

Mack ignores things like:

The retiring baby boomers. You can't cut 1% from Social Security when you have another huge wave of retirees coming into the system.

Increased debt service. You can't cut 1% when you add another trillion to the debt.

[Guest]

Why in the world would Congressman Mack try to make the solution to our budget problem sound so easy? Why would the content of his bill be so inaccurate and misleading? If Mack or any of the others in his caucus try to make the solution to this fiscal problem sound that easy, they are really dumber than I thought. Dangerously stupid!

There is, in fact, no 2012 budget. The one the OMB is operating from is the President's budget that that was turned down 93 to zero in the US Senate. The Senate then refused to take up the House budget because they did not want to act, but preferred to remain cravenly quiet and not deal with the problems facing this country. They similarly tabled Cut, Cap and Balance rather than go on the record. They feared the consequences to their terms in office if they actually made a controversial decision.

As I noted, we are spending too much. Like most of your fellow Dumbos you sit and carp rather than proposing action to reduce the deficit. Unless and until you understand that reducing spending is the only way to ensure that our children and grandchildren can live in a country anywhere near as prosperous as the one we have today.

You strike out at the Tea party as dumb, however the only dumb ones are those that continue to hide from the facts - your fellow beloved Dumbos and the Dumbocrat party.You advocate nothing other than doing nothing and watching our debt bloom until it destroys this country.

[Guest]

...You strike out at the Tea party as dumb, however the only dumb ones are those that continue to hide from the facts - your fellow beloved Dumbos and the Dumbocrat party.You advocate nothing other than doing nothing and watching our debt bloom until it destroys this country.If you've bothered to read any of my other posts, you'd know that I am a fiscal conservative and in many respects espouse what the Tea Party stands for.

What I don't accept is their stubborn embrace of their ideology, even at the expense of ruining the U.S. economy even worse than it already is. They had a wonderful chance to plant the flag for fiscal conservatism and work from there. I'm afraid that their irresponsible conduct in these negotiations will set fiscal conservatism back awhile.

In this case we have a leading member of that caucus setting forth a "plan" which isn't based on real numbers and is simplistically presented to appeal to those who choose not to read or think about what he's saying. Probably the partisans who later will say, "...but the Tea Party had a plan", even though a third-grader would see through the faulty thinking and arithmetic of that plan.

I criticized the number that Mack used to make his plan sound plausible. It's wrong. If you or Congressman Mack bother to check, actual federal spending in FY 2011 was $3.819 trillion. What we spent has nothing whatever to do with what may or may not have been budgeted.

Sorry BBQ that you don't bother to read either my posts or the Mack plan before striking out with a vitriolic reply. You obviously have no idea what I advocate, nor do you appear to understand the errors I tried to point out in the Mack "plan".

And if you choose to simply vote to elect candidates from a political party rather than taking the time to understand what candidates stand for regardless of their party, or what they have accomplished in the time they might have served in government, you'll deserve to get whatever kind of government that results.

Dumbo