U.S. Senator Rand Paul (R-KY) introduced his “Five Penny Plan” federal budget resolution that will balance within five years. Dr. Paul also plans to offer his Five Penny Plan as an amendment to any forthcoming budget resolution that is brought to the Senate floor.
“Four years ago, we could balance our budget with a freeze in spending. Not cut anything. Since then, our debt has sky rocketed to $28 trillion with $3 trillion just from this past year,” said Dr. Paul. “We are now in a situation that a simple penny, two, or even three is insufficient to balance our budget. It requires five. We cannot keep ignoring this problem, this budget sets a goal for balance and provides Congress with necessary tools to achieve that objective.”
Background:
Dr. Paul offered his first balanced budget in 2011. In 2017, Dr. Paul introduced his first budget that balanced using a flexible, top-line, on-budget spending reduction. That budget was not a reduction in spending, but a simple five-year freeze. Had that budget been adopted then, the budget would have actually balanced next year.
By 2018, the nation’s fiscal imbalance had worsened. Dr. Paul again offered a budget that balanced, but now required a one penny per-dollar reduction in spending off the top-line. In his accompanying report, Dr. Paul warned of the risk that continued deficit spend would make the U.S. more vulnerable to foreign advisories and hinder our capacity to respond to emergencies. In particular, he noted inflation was how such risks would manifest. Congress ignored his warning then; today we see an inflation rate of 5.4 percent.
In 2019, the situation was still worse. Whereas in the previous year a single penny on the dollar was required to balance, now it required two cents. Dr. Paul again offered a now “Pennies Plan,” which again would have balanced in just 5 years.
With the COVID-19 pandemic, Dr. Paul did not offer a budget in 2020. However, as Congress deficit spent to address the emergency, Dr. Paul continued to raise concerns about spending not paid for. Many of these concerns harkened back to his budget from just two years earlier, where he warned that excessive debt would hamstring law makers from addressing crises, and in fact create its own crisis.
Since Dr. Paul’s first spending freeze budget, Congress has added nearly $10 trillion to the federal debt. The annual structural deficit has more than doubled, and interest payments on the debt have grown by 12.2 percent, despite interest rates dropping by nearly 75 percent. Inflation has more than doubled. And now, a simple penny or two is insufficient to balance.
Now, it requires FIVE pennies – actually 5.5 pennies – to balance the budget in five years.
Instead of celebrating a balanced budget next year, and again allowing spending to grow at historic norms, we are faced with a weakened and teetering economy, a prescription for our ills that is five times more dramatic than it ever had to have been. Short-term political gains of the past, is in fact beginning to cause us harm now. Not to our children and grandchildren off in the future, but to us here today.
Source: Sen. Rand Paul