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Thread: The “Penny Plan” to Trim Government Spending

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    The “Penny Plan” to Trim Government Spending

    President Obama’s pet solution is to have millionaires hand over a minimum of 30 percent of their income to the federal government. This is the so-called “Buffett rule.”

    There are two problems with the president’s approach. First, a millionaires’ tax would not solve our fiscal problems - there just aren’t enough millionaires. According to the congressional Joint Committee on Taxation, the official authority for tax legislation, the Buffett rule would only raise $47 billion over a decade. That’s a far cry from even the $1.2 trillion deficit we face this year alone.

    Second, raising taxes does nothing to solve the federal government’s spending problem.

    Any viable solution must cut spending growth. Sen. Mike Enzi of Wyoming and Rep. Connie Mack of Florida have introduced legislation in their respective chambers to do just that. Their “Penny Plan” - recently updated to reflect the latest budget developments - calls for reducing federal spending (excluding interest payments) 1 percent a year for five years, balancing the budget in the fifth year.

    To maintain balance once it’s reached, Mr. Enzi and Mr. Mack would cap federal spending at 18 percent of GDP. By no small coincidence, 18 percent of GDP roughly matches the U.S. long-run average level of taxation since World War II.

    Is it realistic to think Congress could limit federal spending to 18 percent of GDP? Actually, there is precedent. Federal spending fell as a share of GDP for nine consecutive years before bottoming out at 18.2 percent of GDP in fiscal 2000 and 2001. The Penny Plan would return federal spending, expressed as a share of GDP, near the level achieved during the last two years of the Clinton administration.
    Washington Times

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    The “Penny Plan” to Trim Government Spending

    That would mean major cuts to Medicare. Is that something you support?

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    Quote Originally Posted by Huskerwirejay View Post
    That would mean major cuts to Medicare. Is that something you support?
    I'm for a cap on spending and a balanced budget.

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    Quote Originally Posted by Huskerwirejay View Post
    That would mean major cuts to Medicare. Is that something you support?
    Obama has no budget; his stopgap measure to temporarily fund the government slashes the military budget by $500 billion and Obamacare, which has passed, will cut medicare in half. The Penny Plan is basically a cap on spending and will not gut Medicare. It makes too much sense for Harry Reid to let it see the light of day.
    "I'm not allowed to argue with you until you've paid."

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    What cuts will be made to reduce federal spending by approximately 30% in order for the penny plan to work?

    Specifically, where are the spending cuts going to come from?

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    I'm not on board with any Penny Plan, unless it involves Kaley Cuoco...

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    Quote Originally Posted by Huskerwirejay View Post
    What cuts will be made to reduce federal spending by approximately 30% in order for the penny plan to work?

    Specifically, where are the spending cuts going to come from?
    You know darn well where they would come from. Balance the budget and reduce the deficit on the backs of children, poor and working class, and students, same as Ryan Budget II.
    I cried because I had no shoes until I saw a man that had no feet.

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    The plan is pretty simple, reduce ALL spending by 1% per year until spending equals 18% of GDP. If spending is $3.5 trillion this year, in 10 years spending would be about $3.15 trillion. If revenues grow at 4% per year the budget would be balanced by year 7.

    I think the major problem with this approach is the use of social security surplus revenue to offset spending in other areas. The government has used SS surplus revenue for over 25 years to mask their over spending.

    Since SS and Medicare, and Highways, have their own revenue stream, they should have their own budget process.The social security trust fund has a balance of about $2.7 trillion and is still taking in more than it pays out.

    These politicians have used the SS revenues for spending and tax cuts and now they don't want to pay it all back.

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    Quote Originally Posted by Warhorse View Post
    You know darn well where they would come from. Balance the budget and reduce the deficit on the backs of children, poor and working class, and students, same as Ryan Budget II.
    How is that different from the current plan of building a mountian of debt on the backs of children, poor and working class, and students?

    None of these plans (or non plans) matter because we don't have the poltical will to do what we must to stop the coming collapse of all these programs. In the end the truly needed and those in real need will suffer right along with the rest of us who have become addicted to the entitlement spending.
    I am Fred Lawrence Anderson and I approve this post.

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    Quote Originally Posted by FLA4NEB View Post
    How is that different from the current plan of building a mountian of debt on the backs of children, poor and working class, and students?

    None of these plans (or non plans) matter because we don't have the poltical will to do what we must to stop the coming collapse of all these programs. In the end the truly needed and those in real need will suffer right along with the rest of us who have become addicted to the entitlement spending.
    Seems plain enough to me...Building debt and paying off that debt are two totally different things.
    I cried because I had no shoes until I saw a man that had no feet.

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    Quote Originally Posted by FLA4NEB View Post
    How is that different from the current plan of building a mountian of debt on the backs of children, poor and working class, and students?

    None of these plans (or non plans) matter because we don't have the poltical will to do what we must to stop the coming collapse of all these programs. In the end the truly needed and those in real need will suffer right along with the rest of us who have become addicted to the entitlement spending.
    Quote Originally Posted by Warhorse View Post
    Seems plain enough to me...Building debt and paying off that debt are two totally different things.
    I am Fred Lawrence Anderson and I approve this post.

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    Quote Originally Posted by Warhorse View Post
    You know darn well where they would come from. Balance the budget and reduce the deficit on the backs of children, poor and working class, and students, same as Ryan Budget II.
    So you favor continuing the unsustainable path and continuing to kick this can down the road?

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    The only problem I see with the penny plan is that it makes no provision for paying off the debt, just maintaining it without growth. Our debt is now 5 trillion dollars. How do we get that stagering amount off our backs?

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    Quote Originally Posted by Huskerwirejay View Post
    What cuts will be made to reduce federal spending by approximately 30% in order for the penny plan to work?

    Specifically, where are the spending cuts going to come from?
    Jay, my major was in engineering, not math - but I'm still having trouble understanding your claim - that to "reduce federal spending (excluding interest payments) 1 percent a year for five years", which is what the Penny Plan advocates, that we must "reduce federal spending by approximately 30%?" Interesting math indeed!

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    Quote Originally Posted by Bamsker View Post
    The only problem I see with the penny plan is that it makes no provision for paying off the debt, just maintaining it without growth. Our debt is now 5 trillion dollars. How do we get that stagering amount off our backs?
    If you only are counting the past 3 years...yes but in total it is about 15 Trillion and growing very very fast.

    (if President Obama is re-elected and continues on his planned trajectory of spending it is estimated to be over 22 Trillion by 2017 when he would leave office. That is if interest rates don't go up.)
    I am Fred Lawrence Anderson and I approve this post.







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