Wednesday, May 23, 2018

Sid Salter: Rand "Penny Plan" Was Theatrics

Federal Social Security and Medicare entitlements as they exist today are in deep trouble and can’t sustain themselves under current law while at the same time 78 million Baby Boomers like me hurtle toward retirement.

The two largest segments of mandatory federal spending are in fact Social Security and Medicare, estimated to be a cool $2.74 trillion for Fiscal Year 2019. That’s 62 percent of all federal spending.

No one can talk seriously about dealing with federal budget debt and deficits without talking about entitlement reform – and that means hard choices that carry political consequences.

As the nation’s population grows, so do the number of U.S. citizens entitled to Social Security and Medicare unless and until Congress amends the authorization laws governing those two entitlements. In the U.S. Senate, amending those entitlements will take a 60-vote majority vote.

So entitlement are 62 percent of all federal spending. Impacting that huge portion of federal spending in any way will require a 60-vote majority in a U.S. Senate that said an emphatic 76-21 “no” to yet another round of blue smoke and mirrors budget theatrics from Kentucky Republican U.S. Sen. Rand Paul.

Paul last week orchestrated the political side show of a floor vote on the so-called “Penny Plan” for what he claims is an effort to balance the federal budget in five years by reducing government spending by an oh-so-reasonable sounding 1 percent per year.

“Does anyone in America think the government can’t do with 1 percent less?” Paul asked in a Tweet on May 17. By a vote of 76-21, the Senate rejected the fiscally-flawed plan. Both Mississippi senators voted in the majority – and were immediately attacked by those peddling the plan as a simple and easy solution for a complex national debt problem that’s been around for many years.

Paul’s been trying to sell the plan since 2011. Each time, his effort fails. And each time, the problem is not a political or philosophical problem, it’s a math problem.

The problem is that the math doesn’t work. Paul’s proposed 1 percent per year spending cut for five years is based on cutting 1 percent from current spending levels, not projected higher spending levels. It roundly ignores U.S. population growth, which neoclassical economic models have since the 1880s held that as an economy grows the size of the government will also grow as a percentage of the economy. 

Paul’s “Penny Plan” will result in cuts far deeper than 1 percent per year for five years, which he claims would be $13 trillion over the next 10 years. Paul’s plan does not address Social Security but directs non-specific federal spending cuts. Paul wants to cut, uh, something.

If Rand Paul and his small group of supporters in the Senate want to seriously debate debt and deficits and a balanced budget, how can they hold a straight face and not mention entitlement reform? How can they fail to face the acknowledge that the path to any meaningful long-term budget and debt/deficit reforms runs through public health care and Social Security reforms as well?

That answer’s pretty simple. Paul and his backers know that talking about cutting Social Security and Medicare is still personal political suicide, even in GOP primaries and even more so on a general election ballot.

Some of Paul’s sycophants in Mississippi politics are upbraiding Mississippi’s two sitting U.S. Senators for rejecting the Kentucky senator’s latest political stunt and choosing instead to continue to work to craft more difficult but substantive debt and deficit reforms.

The failed Rand Paul “Penny Plan” begs one more question: If balancing the federal budget were as simple as a 1 percent spending cut a year for five years, don’t you think Republicans and Democrats would have been falling over each other to do it years ago? 

 Sid Salter is a syndicated columnist. Contact him at


Anonymous said...

The RINO memo must have gone out from the Yazoo Street bunker to protect Hyde-Smith's flank on this vote. First New Market Tax Credit Yannnnggggeeee and now Salter.

Ironic how both Yannnnggggeeee and Salter are keen to comdemn 'political stunts' yet they never called out any of the Republicans for their repeated 'show votes' -- for their theatrics -- following nearly 70 other votes since 2010 to repeal or gut Obamacare.

Have to hand it, though, to these establishment Republican blowhards like Salter, and Crawford, for one thing. They sure are making Kingfish some dinero.

$$ Cha-ching $$

Anonymous said...

Social Security just doesn't factor in traditional Social Security payments to retirees. It also encompasses Disability and SSI payments which for the most part can be considered entitlements. Disability and SSI payments should be removed from Social Security budgeting so it won't be so politically toxic to touch Social Security.

Anonymous said...

What a load of horse manure. The reason we elected a Republican majority was to cut debt and spending. 1% is just the start. And yet that's too much for Salter and the status quo brigade. I'm so sick and tired of this bloviating to convince people that any principled conservative stand isn't actually feasible. Bless our little hearts, it's a good thing we have folks like Sid in the intelligence class to explain to us why our ideas won't work.

Change the Flag and Fill the Potholes said...

RINO...Blah, blah, blah... Maybe YOU elected a Republican to cut debt and spending but it takes more than a "principled conservative stand" to manage a trillion-plus dollar federal budget when over two-thirds is off-limits. Your ideas won't work because you and Rand Paul fail to understand the basic economics. This country operates like one giant under-funded pension. Reducing the budget won't touch the $20T+ debt - it just barely lowers the interest payment. It's going to take a combination of huge GDP growth, increased revenues and major changes to the funding formulas for mandatory spending programs like SS and MC. Are you willing to take a cut - now that would be a principled stand...

Anonymous said...

Salter should mention that he works for a public university and has a vested interest in keeping the pork coming. Any conservative would look at Rand Paul’s plan and say it probably would not balance the budget; however, any reduction in the deficit would be a good start. Not to mention if the plan were implemented it might spur the movement to address the tough issues. Salter needs to quit explaining why any reduction in spending is a bad idea. Maybe being on the public payroll and being conservative are mutually exclusive. I’m sure that’s not universal, but it appears to be the case with Salter.

Anonymous said...


Wicker has proven that we don't want his butt anywhere near budgets and money management.

Anonymous said...

Social Security and Medicare an "entitlement"? Perhaps that word carries a different meaning to others than it does to me. Yes, I do believe I am "entitled" to Social Security and Medicare when I reach that magic age, because I PAID FOR IT into the system. Therefore, it is my old age insurance. "Entitlement"? That word puts those of us who have worked all of our lives and paid into the system in the same common vocabulary used for those on welfare.

Time to call things the way they are. Stop rewarding laziness and lack of ambition in people. Stop paying illegals welfare. Stop providing free healthcare to those who are just as able as I am to get their butts out of bed and go to work every day and on weekends.

I'm sick of this $*&^! And if the Republicans can't get it done that are now in office, time to remove the plug that is keeping the swamp from getting drained.

Now...I think I'll go find my calming pills...

Anonymous said...

I like the way 2:18 thinks.

Anonymous said...

When I filed for disability, I had 35 years of work in the books. Call it an entitlement all you want, I paid for it. So like today the 4th Wednesday and every 4th Wednesday I get paid. I am not shame that its 2 times what most people get either. Again I paid for it.

Anonymous said...

SS and Medicare will NEVER be touched until it goes completely bankrupt. Then Congress, in a bi-partisan manner, will have to decide whether or not to move massive amounts of money from Defense spending and Homeland Security to entitlement programs. I would argue that the social unrest generated by cutting those programs would be catastrophic and no politician would touch it with a ten foot pole. Uncle Sugar is the world's largest Ponzi scheme. God help the folks in office when it bottoms out.

Anonymous said...

Trump will double the deficit if he does not go to jail. Wicker and Hyde-Smith are 100%. for exploding the deficit. The GOP plan in the long run is to simply stop paying for any of these programs and the checks will stop coming.

Change the Flag and Fill the Potholes said...

I. Can't. Even... You people obviously don't have a clue how Social Security payroll taxes (FICA) work. I hate to break the news but it's not in a big bank account in DC with your name on it. In fact, your actual contributions have already been spent - i.e. you are paying the current recipients. That is the way the system was designed. It should not be construed as savings nor relied upon to meet your living expenses throughout retirement. You should be funding a 401(k) through your employer or investing in a separate IRA. As the number of retirees continues to grow and the working population continues to shrink, the shortfall of funds to cover the obligations will increase.

...And before you say it, Congress can't just eliminate "pork" (as you like to call it) or defund everything else to make up the difference - government entitlement programs don't work that way. Yes, Social Security is an
"entitlement". They could lift the payroll ceiling, increase SS taxes, raise the retirement age, change the COLA, reduce benefits, etc. - or some combination. They haven't already because all you blog-griping recipients also vote.

Anonymous said...

"Trump will double the deficit if he does not go to jail."

Actually it was Obama who doubled the deficit in eight years, personally running up a debt equal to the total debt incurred by all 43 presidents before him.

How much did you object to him then? Please repost your heartfelt laments about that terrible situation because I must have missed them when it was happening.

Anonymous said...

Actually the social security fund has a huge surplus at this point in time. Congress just spent the money in return for IOUs. SS is getting blamed when it is not the problem. Cut Medicaid or subsidies to corporations or federal employment.

Anonymous said...

The only problem with 6:57 is he underestimates the misery Obama inflicted on this country. Obama didn't just double the deficit, he nearly tripled it. Throw in the drag on business, the escalation of unemployment etc.

"But the stock market grew under Obama!" The S&P 500 had a P/E ratio of 9 when Obama took office. Porky Pig could have overseen that bull market.

otisfyfe said...

Oh, for the love of Lucretia. Where would we be and what would you titty-babies whine about were it not for Carlo Pietro and your inclination to blame all your ills on him? The reasoning ability of every one of you begins and ends and circles back to him sooner or later.

Born Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi; March 3, 1882 – January 18, 1949), he was an Italian swindler and con artist in the U.S. All the unfortunate shit that happens in the world can be traced back to him and today's modern offshoots of his scheming.

Anonymous said...

Thanks for the laugh, Dee Ray!

The Ghost of Seth Green said...

@9:17...More like this...

$$ CHING! $$

Anonymous said...

Sid Salter is right. The Paul plan was never anything but a political ploy. It had no chance of passing (majority of Republican caucus voted no), and, if it were to pass, could not work. The real problem is entitlements. Unless and until there is bi-partisan willingness to work on a solution, there will be no progress on spending, deficits, and budgets. Unfortunately nothing but a national economic crisis has much chance of bringing about that cooperation, and even a crisis probably would not do it in the present political climate. The two parties are more likely to ride down the sinking ship while accusing each other of being responsible.

Meanwhile the McDanielites think attacking fellow Republicans is the way forward. This, of course, is objectively nonsense, but their leader assures them it is the way to go, and it just feels so good to call fellow Republicans RINOs and to blame them for the problems. The reality is that the McDanielites are the real RINOs. They are not Reagan, big tent, 11th Commandment, willing to work across party lines, pragmatic conservatives who want to get things done. Fighting and attacking feels too good, though it accomplishes no more than giving your mother-in-law a piece of your mind. It feels good for a few minutes but changes nothing.

BTW those who think they paid for SS and Medicare and that they are some kind of insurance are delusional. They never were such. You get out more than you pay in and there is no investment of the funds as with insurance. It has always been a true that the present workers pay for the entitlement benefits of those who are now retired.

Anonymous said...

"pragmatic conservatives" = oxymoron

Anonymous said...

@ 10:08, Pragmatic Conservative is exactly what Reagan was.

“There are some people who would have you stand on principle that if you don’t get all that you’ve asked for from the legislature, you jump off the cliff with the flag flying. I have always figured that half a loaf is better than none and I know that in the democratic process, you’re not always going to get what you want.” Ronald Reagan

Anonymous said...

@ 10:08 What do you think Reagan was? “There are some people who would have you stand on principle that if you don’t get all that you’ve asked for from the legislature, you jump off the cliff with the flag flying. I have always figured that half a loaf is better than none and I know that in the democratic process, you’re not always going to get what you want.” Ronald Reagan

Anonymous said...

Give it a rest Smith. Your huffing and puffing is boring.

Anonymous said...

First of all, Social Security worked too well and was too flush when it was limited to those who paid into the program. The Nixon administration found a way to " raid" Social Security to make it look as if they had reduced " welfare". Make no mistake, the Democrats aided and abetted and continued to raid Social Security.

The public was told that Social Security was overly successful and could NEVER be depleted.

Secondly, Medicare is suffering from the costs of medical care . The failure of both parties to control Pharma so that like every other nation and some " preferred" groups can contract for cost of drugs is egregious. The laws created by Congress and legislators to created " middle men" businesses in medicine has also increased costs. And, the sad fact that doctors who do make innovations, unlike Jonas Salk and countless others who brought new tools to medicine do so for obscene profits. Read about the invention of the stethoscope as an example or the X-ray machine.

Once upon a time ( just a few decades ago) ANY business that made a 20% profit above cost was considered very successful. Now, we have a situation where the " costs" are wildly inflated. The easiest examples are bonuses and hundreds of millions in salaries and the ability buy luxury properties for executives and depreciate them to be purchased later. Walsh lived in a GE owned apartment on 5th Avenue that he was given as a retirement " bonus".

You are told the US has the highest tax rate. It doesn't when you figure in the tax benefits. It drops to 24%. And, that figure doesn't include the nonsense that can be deducted as a business expense before you get to profits.

Under the guise of " de-regulation" , Congress has gutted every regulation that protected us from the Madoffs and those who sell products that kill people and promote and sell worthless stocks and banks that gamble with your money rather than wisely invest it.

That's what happens when you don't know why a regulation existed in the first place. They existed because not all people are honorable and humans rationalize self interest and greed. In a small business do you let everyone have access to the cash drawer or do you regulate who has a key?

Capitalism was not ever intended to be a criminal enterprise. It depended on government acting to create a fair playing field and to recognize that for a society or nation to flourish, a system must be fair. That's done through laws and regulation.

The business model was never thought by any rational person in history to work for professions or critical government functions. Distinctions were deliberately made and understood. For example, it's not an army with interest in protecting a Nation if it's run for profit...that's hiring mercenaries who sell their skills to the highest bidder with zero loyalty to the country. And, there would be no " fake news" except in print media if the FCC still owned the airways and regulated radio and television to keep " fake" off our airways by pulling licenses. We once had enough sense to know that " he who controls the flow of information controls power" and that an INDEPENDENT FCC could insure our citizens had some source of reliable information.

We are giving away our freedom in our ignorance of what is systemically and organizationally crucial in a democratic republic. We don't even understand that capitalism is an economic system, NOT a form of government!

Anonymous said...

That just makes no sense. The deficit, medicare, and social security are all separate. They each have their own separate fund. Fixing social security or medicare does not solve the deficit because they don't come out of the general fund. Likewise, solving the budget deficit does not solve social security or medicare. Social security and medicare are paid out of wages from employees and matched by employer into separate funds for each program.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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