Rand Paul Has Smartest Economic Idea Since 9-9-9
So, here is Rand Paul's Teatacular response to the State of the Union address which we did not actually manage to livebloog yesterday because we were streaming the wrong thing on CSPAN or something, we don't really know. We will spare you the awfulness of a blow-by blow response, or even say much about the strange swoopy motions of Rand Paul's hands, and will instead get right to his central idiocy: the idea that "if you cut just one penny from each dollar we currently spend, the budget would balance within six or seven years." Like so many other brilliantly simple plans that don't have a chance of getting passed, it sounds ridiculously easy but blithely ignores reality and math. Remember when Bill Clinton got us excited about arithmetic? Now there was a guy who actually managed to balance a budget .
To be accurate, this penny plan (which is almost certain to suck up lots of airtime in GOP talking points, on Fox News, and elsewhere) isn't actually Rand Paul's; it was introduced by Connie Mack last year before he was voted out of office. We will spare you the detailed explanation of why it's unworkable in reality, which is covered in this piece from the Center for American Progress. For one thing, it's not simply a reduction in spending increases, it's a plan to cut actual spending by 1% a year starting from today's levels -- which immediately ends up being a much bigger cut than that deceptive "one penny from each dollar we currently spend" line, as Keith Rouda explains in a terrific little column from 2011, when this goofy idea first started getting traction:
The penny plan calls for
a 1% reduction in total federal spending per year for six years
a cap on federal spending of 18% of gross domestic product [GDP] starting in 2018
$7.5 trillion less total federal spending than currently forecasted.
For reference, total federal spending in 2011 will be approximately $3.8 trillion. 2011 GDP will be about $13.3 trillion.
A one percent cut to federal spending of $3.8 trillion sounds like a very doable $38 billion.
But $38 billion in cuts each year for the next seven years is only $266 billion in cuts -- a far cry from $7.5 trillion. The reason is that our population is growing, our economy is growing (we hope), and we expect government to grow more or less commensurately....
A 1% cut from current levels each year is way more severe when on top of that you also have to cut all the growth in government spending that is anticipated. But that is what you have to do to achieve the $7.5 trillion in savings.
But the penny plan pretends that none of that growth needs to be accounted for -- or rather, it just doesn't mention it, because somehow, magically, we won't need to expend money on schools or roads or nutritional programs, because economic growth will skyrocket once budgets are slashed. And those cuts would have to continue each year, diverging ever farther from the Office of Management and Budget's projections of spending growth. So in 2018, we can expect to have 25 million more people in the country, but would have to cut the budget by 26%. In a single year. Rouda points out, as a thought exercise, just how big a cut that would be in a single year:
I tried completely eliminating all Medicare spending, all unemployment compensation, all food and nutrition assistance (including both for women and families as well as the school lunch program), and all money spent on elementary, secondary, vocational, and higher education. I completely ended public housing and housing assistance. I zeroed out the foreign aid budget, eliminated all farm subsidies and all federally funded social services, and I got rid of all funding for pollution control and abatement. I, of course, ended all spending on consumer protections and worker health and safety. Then I closed down all of the national parks, eliminated all federal funding for regional development, and I stopped all energy regulation. For good measure, I ended the postal service too.
At that point I only had to cut $11 billion more, which I was able to do by killing off disaster relief.
Or maybe, just maybe, we could try a budget plan that actually works, like that one math-obsessed guy back in the 1990s did.