Debt and Deficits

Bipartisan Senate Effort Predictably Kills Rand Paul's Plan to Balance the Federal Budget

Paul's proposal to cut 2 percent from the federal budget for the next five years was predictably opposed by both Democrats and most Republicans

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This year, Sen. Rand Paul's (R–Ky.) effort to balance the federal budget didn't even get a floor vote in the Republican-controlled Senate.

Paul's so-called "Pennies Plan" failed a procedural vote on Monday evening when only 22 senators voted in favor of a cloture motion that would have brought the bill to a final vote. A majority of Republicans and all Democrats voted against proceeding to a floor vote on the bill. It's another sign that fiscal responsibility is all but dead in Congress, even as the national debt heads toward record highs and the budget deficit approaches $1 trillion this year.

"We teach our children that money doesn't grow on trees, and then they grow up watching politicians pretend otherwise," Paul said before the vote. "Meanwhile, our debt soars past $22 trillion, endangers our country, and artificially limits what our nation can achieve."

Paul's proposal called for cutting 2 percent from the federal budget for each of the next five years and would reduce federal spending by about $11 trillion over the next decade—even though spending would rise after the first five years. It's an adaptation of the so-called "Penny Plan" that Paul has been pushing for several years, though he now says an additional penny in cuts for every federal dollar spent is necessary to get the budget to balance.

Indeed, the gap between what the federal government spends and what it takes in is growing wider. During the first seven months of the current fiscal year, which began in October 2018, the federal government ran a $531 billion deficit. That's a 38 percent increase over the same period of time last year.

According to an analysis from the nonpartisan Committee for a Responsible Federal Budget, about 60 percent of this year's expected deficit is the result of policies—mostly last year's huge increase in spending that shattered those Obama-era budget caps—put in place by current legislators and signed by the current president.

The share of debt held by the public currently stands at about 78 percent of gross domestic product (GDP), a shorthand measure of a country's economic output in a single year. The numbers are actually worse than that, because "debt held by the public" accounts for only $15.8 trillion of the $21 trillion national debt. The rest is held by parts of the federal government, such as the Social Security trust fund.

Alarm bells are starting to sound. The Government Accountability Office (GAO) warned in April that America's current fiscal situation is "unsustainable." The GAO estimates that the amount of debt held by the public is on track to surpass the all-time high of 106 percent of GDP within the next 13 to 20 years.

Meanwhile, Congress seems as apathetic as ever, if not more, about the growing pile of federal debt.

Most Republicans go back to their districts and say they support balanced budgets, Paul said on the Senate floor before the vote, "but they're not really for balanced budgets if they vote for budgets that don't balance."

Paul also took aim at Democrats, who he accused of pushing for pie-in-the-sky spending plans that promise everything from free college tuition to greater government spending on health care and retirement entitlements. Those proposals will add trillions of dollars to the national debt or will require massive tax hikes, Paul said.

"These proposals are ludicrous," said Paul. "We have so much debt from what we are already trying to give you, and these people want to double, triple, and quadruple that. It's a recipe for disaster."

Last year, Paul was able to get the balanced budget proposal to the Senate floor after striking a deal with Senate Majority Leader Mitch McConnell (R–Ky.) during an earlier budget impasse to get the bill on the floor. Paul called that vote a "litmus test for conservatives," and most of them failed it as the measure went down in flames, 76 to 21.

Before Monday's vote happened, Paul predicted that not a single Democrat would vote for his proposal and more than half the Republicans wouldn't vote for it either.

He was right.