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

Ron Paul speaks during a campaign stop in Boone, Iowa.

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:


  • 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"


  • 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.


  • 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.)