Penny Plan Would Fix the Debt Crisis

By
Real Estate Agent

This afternoon on the radio, Rep Connie Mack talked about the “One Percent Spending Reduction Act," legislation – also known as the "Penny Plan" – that was introduced by Senator Mike Enzi (R-WY) last week, and authored by Congressman Connie Mack (R-FL) last spring in the U.S. House of Representatives. 

The Penny Plan balances the budget by:
    • Cutting total federal spending by one percent each year for six consecutive years,
    • Setting an overall spending cap of 18 percent of gross domestic product in 2018, and
    • Reducing overall spending by $7.5 trillion over 10 years.

If Congress and the President are unable to make the necessary cuts, the bill’s fail-safe triggers automatic, across-the-board cuts to ensure the one percent reductions are achieved.

This plan makes perfect sense and will dig us out of the financial hole we’re in. But Mack said that the House was unwilling to even vote on the plan. I can only guess it’s because this plan actually has some teeth and Congress isn’t serious about solving the debt crisis.

The Boehner plan on the other hand,  calls for cuts, but they’re not actual reductions in current spending, but rather cuts to the automatic increased spending that’s part of Congress’ baseline budgeting.  If passed, the “cuts” are to be made over the next 10 years, which would NOT decrease the annual deficit, would continue to increase the national debt, and aren’t likely to ever happen at all if a future Congress doesn’t want to implement them.
 

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Rainmaker
2,790,906
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Colleen

The one percent makes sense and CUTS THE SPENDING NOW and that is one of the key factors in working through the debt crisis.

Good luck and success.

Lou Ludwig

Jul 28, 2011 11:17 AM #1
Rainmaker
160,500
Retired Notworking
Tallahassee, FL

I wish congress would do their job!!

Jul 28, 2011 11:22 AM #2
Rainmaker
2,024,498
Lisa Von Domek
Lisa Von Domek & Associates LLC Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Washington is so broken, commone sense can't make it's way through the "bull...t"  Until the budget and spending are handled properly, nothing will be resolved.

Jul 28, 2011 11:30 AM #3
Rainer
111,558
John Saari
Worcester, MA
"The Mortgage Buddy"

It's a nice plan but it's too late for this debate they have to vote on one of the two plans now and fight about it later.

Jul 28, 2011 02:36 PM #4
Rainmaker
635,431
Don Sabinske
Don Sabinske, Sabinske & Associates Inc. - Zimmerman, MN
Sabinske & Associates Inc.

Letting the Bush tax cuts expire saves us trillions of dollars.  And Grover Norquist would approve that since he is now running the country.

Jul 28, 2011 02:46 PM #5
Rainmaker
434,477
Eric Crane -- Your Full Service, Discount Fee Realtor®
DPR Realty LLC - Gilbert, AZ
Greater Metro Phoenix Arizona

The problem with all of the plans is that they have very minor cuts (if any) up front, and then the bulk of the cuts are back-loaded.  It is difficult to guarantee that the cuts will take place 7 or 10 years down stream.  The cuts need to be now and they need to be deep.  We are borrowing more than 40 cents of every dollar that is spent at the federal level -- so cutting spending by 1% is like trying to bail a leak in a row boat with a thimble.  But hey, at least he is talking about making spending cuts now -- so it is a start.

Jul 28, 2011 05:24 PM #6
Rainmaker
286,526
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

I rarely agree with Enzi on his political positions, but it's nice to see an actual constructive solution proposed by a fellow Wyomingite for a change! But as you noted, not much chance Congress would do something constructive...

Oct 13, 2011 08:55 AM #7
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