Can You Please Tell Me What Is Wrong With This Federal Budget Plan?

Question by Tommy: Can you please tell me what is wrong with this federal budget plan?
This is Ron Paul’s Plan to Restore America Budget that will cut one trillion in one year and balancing the budget in 3 years with more proposals that have been unannounced. I think it is a good plan for I support Ron Paul AND it actually cuts spending and downsizes government. Now I am no expert on budgets and things like that, but for people who are, tell me what is wrong with this plan, why this would negatively affect the economy? After WW2, we had a budget that cut 50% percent of things after 10 million soldiers came home from the war, and it boosted the economy. So why is Ron Paul’s Plan bad or is it good because it actually cuts spending and downsizes the federal government?

Spending cuts:
eliminate five cabinet-level agencies (Education, Interior, Commerce, Energy, and Housing and Urban Development)
privatize the FAA and the TSA
cut the federal workforce by 10%
cut funding (down from 2006 levels) for the
Food and Drug Administration by 40%Centers for Disease Control by 20%Department of Homeland Security by 20%National Institutes of Health by 20%Environmental Protection Agency by 30%Substance Abuse and Mental Health Services Administration by 20%cut the Department of Defense budget by total 15%; eliminate all foreign war funding
freeze funding for most other federal agencies at 2006 levels
eliminate all foreign aid
eliminate international drug programs
substantially reduce federal travel
eliminate international organizations and commissions
administer Medicaid and other joint federal-state social welfare programs (SCHIP, food stamps, etc.) through block-grant funding mechanisms to the states

Revenue changes:
cut the top corporate tax rate to 15% (down from 35%)
allow companies to repatriate capital without additional taxation
permanently extend the Bush administration tax cuts
eliminate capital gains and dividends taxes
eliminate estate and gift taxes
end taxes on personal savings
sell federal lands and other federal assets

Other economic and regulatory measures:
repeal the new healthcare law (“Obamacare”) as well as the Dodd-Frank and Sarbanes-Oxley financial services and banking regulations
cancel certain “onerous” regulations instituted under executive order by previous presidents
conduct a full audit of the Federal Reserve
seek competing currency legislation “to strengthen the dollar and stabilize inflation”

Social Security and Medicare commitments to older workers and retirees would be honored, while workers younger than 25 would be given the option to opt out of participating in these programs. The Veterans Administration would be the only agency whose funds would be maintained at current levels of growth. Federal-state social welfare programs like Medicaid would be shifted from the mandatory section of the budget to the discretionary section, so that Congress would need to approve funding allocations each year.[39]

The president’s salary would be cut from $ 400,000 to approximately $ 39,000 per year (the median personal income of the American worker), and congressional pay and perks would be slashed.

Paul has stressed that certain essential responsibilities currently performed by agencies that he proposes to eliminate would be assumed by remaining agencies, or in the case of aviation management (FAA and TSA), would be transferred to the private sector.[40]

Best answer:

Answer by abriel
Well it seems very informational and it seems perfect to me just trying to be nice so your budget will be good I guess by opinion good luck

Answer by Scott Stevenson
Some of it is good, some not so good. I’ve got problems with:

40% cut to Centers for Disease Control: I just can’t go along with this one. There are too many potential pathogens out there, and the CDC does a really good job for the $ 6.6 billion we spend

privatize the FAA: Sorry-this is really one of those things that the Feds need to do

eliminate all foreign war funding: This is one of those things that sounds good on a first reading, but the real world is more complex than that. Sometimes, fighting a foreign war is a good thing–unless you think we shouldn’t have fought the Nazis until they were in New Jersey.

sell federal lands and other federal assets: How much? All of them?

conduct a full audit of the Federal Reserve: Since this is already done (as required by law), there’s no need.

seek competing currency legislation “to strengthen the dollar and stabilize inflation”: I keep seeing this claim from RP supporters, but nobody seems to be able to say exactly how this “strengthens the dollar and stabilizes inflation”.

And history shows that when we’ve had “competing currencies”, that hasn’t been the case. As just one example: The “Panic of 1893” lasted six years (in fact, until the 1920’s, it was known as the Great Depression). In circulation at the time were:

Legal Tender Notes (aka United States Notes, or greenbacks)
National Bank Notes
Silver Certificates
Treasury Notes (aka Coin Notes)
Gold Certificates

How much more “competition” would it take? Also, the only reason that the long term inflation rate was lower than it is today (about half a percent lower) was because we’d have periods of sharp inflation followed by sharp deflation.

When the vast majority of people’s spending is on “necessities”, the “floor” of economic activity that has to take place is much higher (IOW, if 10% of my spending is “discretionary”, I’m going to spend about the same amount regardless of what the dollar is doing–assuming I have the money). Because of that, spending can’t fall that much in a deflationary period. If my discretionary spending is 50%, I’ve got a lot more that I might choose not to spend in a deflationary cycle. Why buy a $ 30,000 car this year if I can get next year’s model for $ 27,000 because of deflation?

That’s what happens in a modern economy with lots of discretionary spending in a deflationary period. People stop buying stuff unless they have to have it, because they know they can get it cheaper if they wait. For a concrete example, take a look at Japan’s “lost decade”.

The president’s salary would be cut from $ 400,000 to approximately $ 39,000 per year (the median personal income of the American worker), I’m just not a fan of this. POTUS is an important, incredibly difficult job, and I don’t have a problem with the position being well-compensated.

I agree we need to do some serious cutting at the Federal level, but those are specific things I’d take issue with.

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