How Would Rand Paul Pay For His "Spend What You Have" Plan?

January 04, 2011 12:00 pm ET — Media Matters Action Network

Rand Paul

You might think that federal spending is a huge, delicate, and massively complicated project that demands carefully considered cuts to specific items, rather than haphazard hatchet-swings from congressional appropriators. Senator-elect Rand Paul (R-KY) would like you to know you're wrong; it's actually so simple that we can balance the budget in just a few months, and never have to raise the debt limit.

On Fox News yesterday with Andrew Napolitano, Paul said, "What about, we don't raise the debt ceiling and we just spend what comes in? I call it the Spend What You Have Plan."

PAUL: I can't imagine voting to raise the debt ceiling. I would only consider it if we attached a balanced budget rule to it, or if we attached significant spending cuts. So I can't imagine voting for it 'cause year after year we vote to raise the debt ceiling, but no one ever restrains spending....

But here's my point. They make it out to be a Hobson's choice. You either do it or the government shuts down. What about, we don't raise the debt ceiling and we just spend what comes in? I call it the Spend What You Have plan. We bring in $200 billion every month up here. Over two trillion a year comes in. Why can't we just spend two trillion instead of spending four trillion? Just spend what comes in!

Paul did not, of course, offer any specific ideas on how we should cut federal spending in half by spring, when we will likely reach the current debt limit. Some back-of-the-envelope math is helpful.

Back in March 2010, the CBO projected federal revenues of $2.673 trillion for FY 2011. The lame-duck deal that extended Bush's tax cuts through 2012 shaved $337 billion off of the 2011 revenue projection, meaning the government's now expecting to take in about $2.336 trillion for the year. A simple baseline 2011 budget, one that does not grant White House budget requests, would spend $3.728 trillion. Under Rand Paul's Spend What You Have Plan, we just need to slice almost one-and-a-half trillion dollars by springtime.

Paul is one of those rare Republicans willing to cut defense spending, but he doesn't get specific there either. The OMB baseline for 2011 would spend $846 billion on defense and security programs, including the wars in Iraq and Afghanistan. Underfunding discretionary programs like the Veterans Health Administration is a GOP tradition, but even that critical budget item is about $45 billion a year — peanuts compared to the demands of the Spend What You Have Plan.

Everyone knows entitlement spending is the big stuff. According to OMB, we're going to spend $730 billion on Social Security next year. Rand Paul wants to change Social Security for younger Americans, but he's adamant that "I oppose any cuts in benefits for seniors or those nearing retirement." Thus, the Spend What You Have Plan can't touch 2011 Social Security spending. Paul's proposal to raise Medicare deductibles is also supposedly aimed only at the young, so Medicare spending in 2011 would stay close to the projection: $492 billion. Paul has said contradictory things about Medicaid, but assuming that "we must keep our promises" to Medicaid patients as well as retirees, there's another $271 billion in mandatory 2011 spending. Sub-total for Medicaid, Medicare and Social Security? $1.493 trillion.

Chuck in our defense budget ($846 billion), and you're already at $2.339 trillion. According to Spend What You Have, we've got literally nothing left to spend on everything else the government does — VA hospitals, roads, schools, children's insurance programs, food stamps, unemployment benefits, etc.

Of course, Rand Paul and his ilk want the government to stop doing some of those things. The point is, they should have to say which services Washington ought to stop providing. Should we just immediately halt operations in Iraq and Afghanistan ($172 billion last year)? Dissolve the Department of Education completely ($49.7 billion for 2011)? Dismantle the Department of Agriculture ($132 billion for 2011)? We could erase the United States Department of Transportation from the face of the earth, and still only save $75 billion for 2011. Obviously the new senator from Kentucky is going to have to get creative — and precise — if he wants this Spend What You Have thing to catch on.