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U.S. News and Commentary



Wednesday
Feb202013

Sen. Paul resurrected Penny Plan—worth a second look?

Photo: U.S. MintIn 2011 as various Republicans competed for the nomination to oppose Democrat Sen. Bill Nelson (Fla.) in the 2012 election, contender Connie Mack promoted the concept of The Penny Plan.

The Penny Plan was conceived by Georgia businessman Bruce Cook. Sen. Rand Paul resurrected the idea during his response on behalf of the Tea Party to President Barack Obama’s State of the Union address. There’s a lot to be said for the plan, but unfortunately, the messaging was skewed by politics and media.

The idea was simple:

The One Cent Solution is beautifully simple: If the government cuts one cent out of every dollar of its total spending (excluding interest payments) each year for five years, and then caps overall federal spending at 18 percent of national income from then on, we can:  Reduce federal spending by $7.5 trillion over 10 years [and] Balance the budget by 2019.

Would it work? The math is sound, according to the fact check wonks at The Miami Herald. The checkers questioned the legislative approach—do you cut all programs or spare mandated taxpayer investment programs like Medicare and Social Security?

Cook’s plan, however, made allowances for such programs:

Under the One Cent Solution or “Penny Plan”, not all programs must be cut by one percent.  Congress may determine that some programs are too critical to cut, but that would require that other programs be reduced more so that the total amount cut is equal to one cent for every dollar each year for six years. 

The fact checkers deemed Mack’s claims about balancing the budget via the Penny Plan as “half-true,” but if you read the argument carefully, it’s obvious the claims were 100 percent true.

Taxpayers have come to realize neither party is very eager to cut spending in a meaningful way because no one wants those cuts to affect his home district or state. That’s one reason it’s likely that across the board cuts—at least for non-vital agencies—are the only solution that will work.

Spending cuts would be easy if the process wasn’t burdened by political grandstanding. Obama, ever the enthusiast for using people as political props, recently had first responders in uniform behind him at the podium when he spoke about the sequester that, according to author Bob Woodward, was the president’s idea in the first place.

On a daily basis, we read stories about wasted federal dollars and the government has far exceeded constitutional boundaries on federal powers.

The Penny Plan is worth a try. It would be simple for an amendment to be introduced to try the plan on select non-vital agencies like those associated with the arts, education and some aspects of agriculture.

Our government leaders have permitted agencies like the General Services Administration to spend $1 million on a party they called a conference and commissions that have been eliminated but still, like the Parole Commission, burn $12.9 million tax dollars each year. Sen. Tom Coburn (R-Okla.) issued the report Back in Black and he found $9 trillion in potential cuts.

Sen. Paul said, “Both parties will have to agree to cut, or we will never fix our fiscal mess. Bipartisanship is not what is missing in Washington. Common sense is.”

In 2012 media paid more attention to attacks on Republican candidates than to the runaway fiscal mess politicos have made of our country. The Penny Plan—Cook called it the ‘One Cent Solution'—made  sense, one reason media failed to comprehend it and report on it in a positive light.

(Commentary by Kay B. Day/Feb. 20, 2013)

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