The Mack Penny Plan for the federal budget "would balance our budget by 2019" and "continues to gain support."
U.S. Rep. Connie Mack IV faced accusations of using public money for campaigning when he sent an office mailer about his "Penny Plan" beyond his southwest Florida congressional district in May. Mack, R-Fort Myers, is running statewide for the Republican nomination for U.S. Senate. Mack blamed the widespread mailing on the vendor who had also done campaign work for Mack. The vendor then reimbursed the government. While who received the mailer drew much scrutiny, what the mailer actually said drew less attention. Mack’s mailer was about a plan he introduced in May 2011 to balance the budget that he says is so basic it comes down to -- you guessed it -- a penny. "The Mack Penny Plan is simple -- eliminate one penny out of every federal dollar spent," the mailer said. "Doing this would balance our budget by 2019 and restore economic freedom by reducing spending and bringing fiscal discipline to Washington. The Penny Plan continues to gain support and now has 70 cosponsors in the House of Representatives, as well as support from key senators like Marco Rubio, Pat Toomey and Rand Paul. If Florida families can cut one penny, or more, out of every dollar in their budgets, so can Washington." We had a few questions about Mack’s plan: • Does the math work -- would it balance the budget in eight years? • How would Mack get to that 1 percent cut each year -- would it be across the board in every area, including Social Security and Medicare? • Is it really gaining support? Or is it stalled? By the numbers Mack has a fact sheet that shows the numbers for H.R. 1848, the One Percent Spending Reduction Act. Mack got the idea from the One Cent Solution. The founder, Bruce Cook, is a businessman from Georgia and a graduate of Harvard Business School. The math works like this: For six years, the federal government would reduce spending by 1 percent each year. In the seventh year, funding would be capped at 18 percent of gross domestic product, which measures the size of the overall economy. By the eighth year, the plan would balance the budget and save $7.5 trillion over 10 years. If Congress and the president couldn’t reach an agreement about what to cut, the plan would trigger automatic across-the-board spending cuts. Mack’s website shows the 1 percent reduction each year: FY 2012 – $3.382 trillion*, less 1 percent => $3.348 trillion cap FY 2013 – $3.348 trillion, less 1 percentt = > $3.315 trillion cap FY 2014 – $3.315 trillion, less 1 percent => $3.282 trillion cap FY 2015 – $3.282 trillion, less 1 percent => $3.249 trillion cap FY 2016 – $3.249 trillion, less 1 percent => $3.216 trillion cap FY 2017 – $3.216 trillion, less 1 percent => $3.184 trillion cap At the beginning of fiscal year 2018, it sets an overall spending cap of 18 percent of gross domestic product. The mailer says the plan would balance the budget by 2019, while a Mack congressional staffer told us based on the latest figures it would do the trick by 2017. To give you an idea of how dramatic this is, Paul Ryan’s budget plan wouldn’t balance the budget for nearly three decades, until 2040. The math isn’t the hard part We sent Mack’s fact sheet to several federal budget experts and asked them if the math worked and their opinion of Mack’s plan. Our experts included JD Foster of the conservative Heritage Foundation; Chris Edwards of the libertarian Cato Institute; Josh Gordon of the centrist Concord Coalition; Jason Peuquet of the centrist Committee for a Responsible Federal Budget; and Michael Linden, of the left-leaning Center for American Progress. Our experts generally agreed that Mack’s math is correct and would balance the budget. But no one we interviewed thought Mack’s plan was a realistic way to balance the budget. "One can always make the math work, as presented in this fashion it's a fairly straightforward exercise," Foster said. The straight math isn’t the hard part. It’s whether to cut everything by 1 percent or to target programs selectively. "The numbers work, but they have to be made effective by policy changes," Foster said. "The easiest part legislatively is the targets, and you have to have those, but then you still need to finish the job." Republicans have programs they want to protect from cuts, just like the Democrats do, and the GOP can end up fighting amongst themselves about what to cut -- take for example the battle over whether to extend the Export-Import Bank. "There are a lot Republicans in the House and Senate who fashion themselves as being for small government and supporting these overall caps, but when the rubber hits the road and they actually have to vote on cutting particular programs, they chicken out," Edwards said. Most notably, the bill doesn’t explain how it would adjust Medicare and Social Security to make up for the expected growth as Baby Boomers retire. We asked Mack’s congressional office if Mack supports cutting peoples’ Social Security 1 percent a year for six years. Their statement: "The Penny Plan sets a framework for reducing spending. It will be up to Congress and the president to work together to determine how best to achieve those spending reductions." (The One Cent Solution states that some programs could be spared while others cut more than others, so theoretically that could mean Social Security wouldn’t be cut though that would mean larger cuts elsewhere.) Linden, who called Mack’s plan "ridiculous", noted that this plan could mean an even cut larger than 1 percent for each senior, since the number of seniors getting Social Security will increase. And if Social Security and Medicare were off the table, that would remove about 35 percent of non-interest spending from the chopping block, leaving bigger cuts elsewhere. Most proposals to control spending account for the fact that more people are going to be getting Social Security and Medicare benefits in the future, Peuquet said. That means making actual cuts to the programs is very difficult. The Center on Budget and Policy Priorities hasn’t analyzed the Penny Plan but examined a 2011 plan by Sens. Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., to limit total federal spending to no more than 20.6 percent of the gross domestic product -- slightly larger than Mack’s proposal of 18 percent. The Center wrote that the cuts to entitlements would be massive: "There is little possibility that Medicare, Medicaid, and Social Security all would be exempted from these cuts. To do that would require cutting everything else — including defense, veterans’ programs, education, scientific research, and the like — by unthinkable amounts. ...and the cuts would have to be even larger if the economy faltered." Social Security and Medicare aren’t the only programs that our experts raised concerns about. Linden raised questions about whether Mack would cut veterans’ benefits although their needs are growing. "You have to think not just compared to what we spend today, but what we have to spend based on underlying demographics," he said. Gaining support? Mack introduced his bill in the House on May 11, 2011. It was referred to committees and introduced in the Senate on June 30. Since then, it’s seen no official action, according to the Library of Congress website. All 70 cosponsors in the House signed on in 2011. In the Senate, there is one sponsor plus 13 cosponsors and about half of the cosponsors signed on in 2012. Mack’s office also points to this April 2012 article in the conservative Washington Times cowritten by a Treasury official who worked under President George W. Bush. Mack also spoke about his plan at George Mason University’s Mercatus Center in April 2012. We agree that the Penny Plan is still getting some attention, but even Mack’s own website largely links to endorsements and news coverage from 2011. Our ruling Mack’s plan calls for reducing federal spending 1 percent a year for six years and then capping spending at 18 percent of GDP. Our experts agreed that the math works to balance the budget. But Mack has not provided a detailed road map on how to achieve cuts -- he simply says if Congress and the president can’t work it out, there will be across-the-board cuts, with no explanation about what that means for programs serving an increased number of people. We’d like to hear him provide details about whether older Americans should expect lower Social Security checks and to pay more for Medicare, or if they’ll be spared and in turn other departments will face much larger cuts. And we don’t see evidence that the plan is gaining support. The lack of action in the Republican-controlled House of Representatives is a sign that balancing the budget requires broader policy discussions and debates about spending priorities. We rate this claim Half True.
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