A reader, Greg, asks:
J.J. I have been reading your commentary on the various plans and non-plan plans out there for dealing with our national debt. What do you think of the Mack Penny Plan? Any thoughts on it?
-Greg, Houston
Oh dear. Yes, the magical Mack Penny Plan put forth by Rep. Connie Mack. The plan that makes even smart people like Senator Paul swoon with delight.
No, I do not support it because it relies on too many ifs and buts.
The Mack Penny Plan sounds great! We freeze spending at this year’s level, about $3.7 trillion, and cut 1% (the penny) each year moving forward for six years. Then in eight years magically we have a balanced budget. But the problem with the plan is that it assumes that revenues in eight years coming into the federal treasury will be $3.48 trillion, about $1 trillion more than today.
Here is the way it breaks down:
Years out/Fiscal Year/Spending
0/2010-2011/$3.70 Trillion
1/2011-2012/$3.66 Trillion
2/2012-2013/$3.63 Trillion
3/2013-2014/$3.59 Trillion
4/2014-2015/$3.55 Trillion
5/2015-2016/$3.52 Trillion
6/2016-2017/$3.48 Trillion
7/2017-2018/$3.48 Trillion
8/2018-2019/$3.48 Trillion
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.
Can we really afford to guess? We already have $14.3 trillion in debt. This plan which claims to balance the budget in 8 years would add about $4 to $6 trillion more than that at a minimum.
This is not a real solution. If $14.3 trillion in debt is bad, $20 trillion in debt is worse. That is just simple math.
Sorry, the Mack Penny Plan does not provide me with any confidence just like the Paul Ryan Plan did not. We need to cut spending today. We do not need cowards looking for gimmicks and hoping and praying that their projections for revenues come true so that they don’t have to make the tough choices now.
The Mack Penny Plan is just more smoke. There are not even any mirrors with it. Connie Mack hopes the mirrors get delivered, but not even he can say for certain. It is better than nothing, but that is not saying a whole heck of a lot. Painting yourself green and running around naked while calling President Obama a Marxist and demand he stop spending our children’s future is better too. But you don’t see anyone proposing that plan do you?
Please note that my response to criticisms about this posting is found here, Complaints About My Criticism Of The Mack Penny Plan
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