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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Topic:
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Tags:
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debt crisis

Comments 7 New Comment

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Rainmaker
1,670,930
Lou Ludwig
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO
Ludwig & Associates

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

July 28, 2011 06:17 PM
Rainmaker
160,070
Colleen McConnell
Tallahassee Retired Realtor

I wish congress would do their job!!

July 28, 2011 06:22 PM
Rainmaker
1,023,745
Lisa Von Domek
....Experience Isn't Expensive.... It's Priceless!
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com

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.

July 28, 2011 06:30 PM
Rainer
111,353
John Saari
"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.

July 28, 2011 09:36 PM
Rainmaker
585,219
Don Sabinske
Sabinske & Associates Inc.
Don Sabinske, 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.

July 28, 2011 09:46 PM
Rainmaker
421,765
Eric Crane -- Your Full Service, Discount Fee RealtorĀ®
Greater Metro Phoenix Arizona
DPR Realty LLC

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.

July 29, 2011 12:24 AM
Rainmaker
255,143
Tim Bradley
Commercial Real Estate Expert in Jackson Hole, WY
Contour Investment Properties

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...

October 13, 2011 03:55 PM
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Rainmaker
160,070

Colleen McConnell

Tallahassee Retired Realtor
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