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Explainer: What Ron Paul's Trillion-Dollar Spending Cuts Axe (and What They Don't)

Tuesday, October 18, 2011

Republican presidential candidate Rep. Ron Paul (R-TX) speaks at the town hall in the Erickson Public Library during a campaign stop on December 8, 2011 in Boone, Iowa. Ron Paul speaks during a campaign stop in Boone, Iowa. (Kevork Djansezian/Getty)

Ron Paul wants to slash government spending by $1 trillion, and he doesn't want to waste any time.

Paul's "Plan to Restore America" would reduce government spending by $1 trillion in his first year as president. It would also balance the budget and create a surplus by 2015, according to the candidate. He reaches $1 trillion by eliminating or shrinking government agencies and ending foreign wars; Paul's budget axes five cabinet departments, privatizes the FAA, and freezes or reduces spending for a slew of other government agencies, just to name a few examples.

Paul would also cut tax revenues by almost $1 trillion by 2016 compared to baseline projections under current tax policy. Taxes would be kept low or lowered further; the "Plan to Restore America" cuts the corporate tax rate to 15 percent and extends all the Bush tax cuts on personal income. It's a more modest proposal than Herman Cain's 9/9/9. It also has many more numbers and nuances.

Here's a breakdown of what Paul's "Plan" does:

Spending

  • Eliminates five cabinet departments: Housing and Urban Development, Energy, Commerce, Interior, and Education
  • Abolishes the Transportation Security Administration
  • Abolishes corporate subsidies
  • Stops foreign aid
  • Ends foreign wars
  • Returns "most other spending to 2006 levels"

Entitlements

  • Allows young workers to opt out of Social Security
  • Block grants Medicaid and other welfare programs to states (including food stamps and child nutrition programs), transferring the program from mandatory spending to discretionary spending.

Government

  • Reduces the federal workforce by 10 percent—about 270,000 employees
  • Slashes the president's salary from $400,000 to $39,336—the median personal income in the U.S. 

Taxes and regulations

  • Cuts the corporate tax rate from 35 percent to 15 percent
  • Allows for the repatriation of capital without additional taxation
  • Extends the Bush tax cuts
  • Abolishes the estate tax
  • Repeals "Obamacare", Dodd-Frank, Sarbanes-Oxley, and other regulations

But of course, what Ron Paul proposal would be complete without a call to audit the Federal Reserve? Don't worry, it's in there.

What it doesn't cut

And what, if anything, does Ron Paul leave untouched?

Spending on Medicare and Social Security are the big ones. In his plan, the outlays for these programs through 2016 hew closely to the CBO's baseline projections. There is, however, a major change for Social Security in Paul's proposal to allow young people to opt out of it. There's also a shake-up in the federal government's entitlement structure, as Paul would transfer Medicaid to a discretionary expenditure in block grant form.

A few more particulars:

→The plan gets rid of programs like supplemental nutrition for women and children (Dept. of Agriculture), substance abuse and mental health (Dept. of Health and Human Services), justice assistance (Dept. of Justice), and more. Agencies that don't go extinct will tighten their belts in areas that are popular with liberal voters.

→Paul's proposal counts on several billion dollars in savings from selling some federal lands and assets.

→Taking spending and revenue cuts together, Paul estimates a $13 billion surplus by 2015. Under current policy, the CBO projects a deficit of $205 billion that year.

In terms of dollars, Paul hits the Department of Defense harder than any other government agency without killing it. The DoD would lose over $800 billion from the CBO's baseline projection through 2016, more money than any other department.

Medicaid is in second with $645 billion cut from the CBO baseline over the same period.

(It should be noted, however, that Medicaid and the DoD also have the largest budgets to begin with. Other agencies see their budgets reduced by a greater percentage, if not a greater dollar amount, than Defense and Medicaid.)

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Comments [9]

Jack Jackson from Central New Jersey

@Yves Jean from Brooklyn

I wouldn't try to handle your finances.

Nov. 04 2012 09:53 AM
Koren Reyes from New York

No empirical evidence that small business owners use saved money from lower taxes to hire people.

Oct. 16 2012 09:32 PM
Mojo

Even if he only lasted 1 term, the millions of lives saved by ending our empirialism would be worth it. If the other cuts don't work, then we can rebuild those programs in a more efficient way, with all the knowledge of what did not work previously. Sometimes you just need to hit reset.

Dec. 30 2011 02:48 PM
Brandon

You know, the rest of the Republican field is a joke. As a democratic voter typically, I think this guy is not too bad. I do however think his ideas to eliminate estate taxes and capital gains taxes is absolutely ridiculous. Privatizing the FAA is also a bad idea. Not sure where he stands on infrastructure funding, but it seems to me like unbridled cutting with no attention whatsoever to investment in the country. We do need cuts but we need to not cut our own head off in the process.

Nov. 15 2011 09:40 AM
Yves Jean from Brooklyn

@Jack Jackson
I certainly wouldn't let you handle my finances.

Nov. 02 2011 03:19 AM
Jack Jackson from Central New Jersey

Sorry, libertarianism is for school kids. It just doesn't work. Not enough subtlety or recognition in how complex the world is. The fall-out from Dr. Paul's positions - if ever implemented - would sweep him out of office in one cycle.

Oct. 30 2011 03:53 PM
Kevin from Brooklyn, NY

Considering the following: baby boomers are retiring, Social Security is expecting to have to pay out a lot more in benefits in the coming decades (it’s a PAYGO system), people are living longer and that the unemployment rate is high; how does Ron Paul plan to fund Social Security benefit payments if he allows younger workers to opt out of paying into the system? As I see it, not only could it cause problems for those “younger” workers when they are ready to retire or if they become disabled and can’t work (since the opted out the amount of money they can draw out of it will be miniscule to none); but it will further reduce the funds available to pay current recipients. Why doesn’t Mr. Paul have a plan for retirement eligible persons to opt out of receiving the benefit? That way the system will pay out less. I am kidding about the last part, but seriously…

Oct. 22 2011 08:44 AM
George Clupsa from nyc

Ron Paul is a statesman not a plastic political hack. Thank God for Ron Paul. I can at least tell my grandkids there was one guy who tried to save the republic. Think hard people.

Oct. 18 2011 06:39 PM
NadePaulKuciGravMcKi from the midwest

Demand the same specifics from the other "Candidates".

Oct. 18 2011 06:00 PM

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