Replies

...if only it were that easy.

It is a start though. If you discount debt service (since the idea is not to default), the numbers don’t add up (and debt service is not that much anyway). Here’s the “savings” over 7 years:

1: $34B
2: $68B
3: $102B
4: $136B
5: $170B
6: $204B
7: $238B
Total: $952B

Not bad, but not the $7.5T he’s talking about. The only way you can get this to add up to $7.5T is to count it against projected spending...then this number may be accurate.

The problem with that is the ‘cuts’ involved will be much deeper than 1% per year, due to increasing population (especially old-timers) and inflation. So Social Security payments, for example, will have to go down 2% per year (due to more people being on it), every year, for those 7 years...and probably more like 5% in real terms, as they cannot adjust for inflation either. So the cumulative drop in purchasing power will be more like 30% over those 7 years.

The bottom line is that the problems we’re talking about are HUGE and this 1% number is deceptive in that way.

But hell, if it passes, this country will FINALLY be on the right track. It’s just that I don’t see it being supported on this site (once the real effects are known) and it doesn’t have a prayer with the general public.

I heard him on Hannity.

The explanation is that it finally does away with the “Base Line Budget” that assumes 7% increase per year.

So by eliminating the built in 7%, and then subtracting 1%, it adds up to big cuts.

If we start with $100 and use the two accounting methods we get:

Year 1 $99.00 vs. $107.00
Year 2 $98.01 vs. $114.49
Year 5 $95.10 vs. $140.26
Year 10 $90.44 vs. $196.72

So the “Penny Bill” would cut the budget by 54% over 10 years vs. the current base line budgeting.