‘Penny Plan’ more theatrics than proposal

Published 8:06 pm Wednesday, May 23, 2018

Federal Social Security and Medicare entitlements as they exist today are in deep trouble and can’t sustain themselves under current law while at the same time 78 million Baby Boomers like me hurtle toward retirement.

The two largest segments of mandatory federal spending are in fact Social Security and Medicare, estimated to be a cool $2.74 trillion for Fiscal Year 2019. That’s 62 percent of all federal spending.

No one can talk seriously about dealing with federal budget debt and deficits without talking about entitlement reform — and that means hard choices that carry political consequences.

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As the nation’s population grows, so do the number of U.S. citizens entitled to Social Security and Medicare unless and until Congress amends the authorization laws governing those two entitlements. In the U.S. Senate, amending those entitlements will take a 60-vote majority vote.

So entitlement are 62 percent of all federal spending. Impacting that huge portion of federal spending in any way will require a 60-vote majority in a U.S. Senate that said an emphatic 76-21 “no” to yet another round of blue smoke and mirrors budget theatrics from Kentucky Republican U.S. Sen. Rand Paul.

Paul last week orchestrated the political side show of a floor vote on the so-called “Penny Plan” for what he claims is an effort to balance the federal budget in five years by reducing government spending by an oh-so-reasonable sounding 1 percent per year.

“Does anyone in America think the government can’t do with 1 percent less?” Paul asked in a Tweet on May 17. By a vote of 76-21, the Senate rejected the fiscally-flawed plan. Both Mississippi senators voted in the majority — and were immediately attacked by those peddling the plan as a simple and easy solution for a complex national debt problem that’s been around for many years.

Paul’s been trying to sell the plan since 2011. Each time, his effort fails. And each time, the problem is not a political or philosophical problem, it’s a math problem.

The problem is that the math doesn’t work. Paul’s proposed 1 percent per year spending cut for five years is based on cutting 1 percent from current spending levels, not projected higher spending levels. It roundly ignores U.S. population growth, which neoclassical economic models have since the 1880s held that as an economy grows the size of the government will also grow as a percentage of the economy.

Paul’s “Penny Plan” will result in cuts far deeper than 1 percent per year for five years, which he claims would be $13 trillion over the next 10 years. Paul’s plan does not address Social Security but directs non-specific federal spending cuts. Paul wants to cut, uh, something.

If Rand Paul and his small group of supporters in the Senate want to seriously debate debt and deficits and a balanced budget, how can they hold a straight face and not mention entitlement reform? How can they fail to face the acknowledge that the path to any meaningful long-term budget and debt/deficit reforms runs through public health care and Social Security reforms as well?

That answer’s pretty simple. Paul and his backers know that talking about cutting Social Security and Medicare is still personal political suicide, even in GOP primaries and even more so on a general election ballot.

Some of Paul’s sycophants in Mississippi politics are upbraiding Mississippi’s two sitting U.S. Senators for rejecting the Kentucky senator’s latest political stunt and choosing instead to continue to work to craft more difficult but substantive debt and deficit reforms.

The failed Rand Paul “Penny Plan” begs one more question: If balancing the federal budget were as simple as a 1 percent spending cut a year for five years, don’t you think Republicans and Democrats would have been falling over each other to do it years ago?

Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.