RSSComplaints About My Criticism Of The Mack Penny Plan
J.J. Jackson | July 30, 2011
Yesterday I took on the Mack Penny Plan as yet another sham attempting to be perpetrated on the American people. I pointed out that the Mack Penny Plan froze spending at this year’s levels and then cut 1% from it for six years. Several of you have different interpretations of the plan. Some of you have claimed the 1% cuts continue for more years beyond that and others have claimed it was fewer years.
Connie Mack himself, and I have heard him say this, said six years of “penny” cuts. So that is what I am going with.
Others of you have been irate that my analysis omitted that at the end of it all, federal spending would be capped at 18% of GDP. Some have claimed the cap is as low as 15%, others of you have said 20%. I recall Mr. Mack saying 18%.
Yeah, you are right. I did not include the GDP percentage cap in my discussion. I did not include it because we do not know what the GDP will be when that cap goes into place. As I stated in my analysis:
The problem arises however when you have to consider what happens if revenues 8 years out are not $3.48 trillion. We simply do not know what revenues will be. We can guess. It might be higher and it might be lower than that guess in reality.
This problem is the same. But it is also more problematic because when you include Mack’s 18% GDP cap you have to consider that the last time we had a debt to GDP ratio of 18% we were still running a deficit.
I know it is a common myth that Republicans today like to tell, and Democrats before them told the same one, that we had a balanced budget in the year 2000. This was when spending was 17.98% of GDP. But the facts of the matter are that, when all the numbers are counted, we still spent $17.9 billion more than we brought in during the fiscal year.
You might call this a “balanced budget”. You would however be lying to yourself. Oh, it was close, but 18% was not low enough. Read my article from 2005, The Surplus Fallacy, which runs the numbers direct from the Bureau of the Public Debt which is a division of the United States Treasury.
For further reference you can see U.S. Debt as a percentage of federal government spending here.
So you see, I have no confidence that Mack’s “18% of GDP” cap solves the problem either. And let us look at the political reality here. If, when this 18% of GDP cap is put into place spending is not $19.3 trillion ($3.48 trillion/18%) then that $3.48 trillion I previously presented to you will have to be cut. Right now GDP is in the $14 to $15 trillion range.
In all likelihood, by the time the Mack Penny Plan would can spending as a percent of GDP the GDP of the United States would more likely be $16 to $17 trillion. If we assume the high end of that range ($17 trillion) government spending would be capped at just a tick over $3 trillion. You think the fighting over $400 to $900 trillion in cuts over ten years ($40 to $90 billion per year) is bad now? Wait until liberals (in both parties) have to come up with nearly $500 billion in cuts in a single year!
And again, as I stated, last time we at 18% of GDP for spending we still did not have a balanced budget no matter how much those in government lie to you and tell you we did.
This is why I do not trust the Mack Penny Plan or any plan that promises future spending comes into balance with revenues. The only real solution, which no one seems to have the political will to implement, is to make expenditures not exceed revenues starting right now.
I put forth a plan that does just this in my weekly article yesterday. I shows how deep we need to cut. It shows a real solution. But people do not want solutions. They want gimmicks. They want to kick the can down the road and hope that future Congresses abide by what the current Congress decides today. We know how well those plans have worked out in the past. Let us not make the same mistake again.
Copyright © 2006-2011
J.J. Jackson is a libertarian conservative author from Pittsburgh, PA who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the Pittsburgh Conservative Examiner for Examiner.com. He is also the owner of The Right Things - Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at LibertyReborn.com (Digital Fingerprint: libertyreborn123456789)
Contributor's website: http://www.libertyreborn.com
Content posted by users from other sites is posted for commentary and news purposes under fair use and each author is responsible for their own postings and a particular posting should not be construed as being endorsed by this site or its owner.
Leave a Reply
Loading ...Recommended Reading:
