Rand Paul's Plan To Save $500 Billion, Ctd

By Patrick Appel

Last week Conor asked for your thoughts on Rand Paul's proposed budget cuts. The most common criticism:

Defense gets a 6.5% cut, and education 83%? Can I be reading this right? Education gets the largest single cut? (other than Energy, which goes to Defense, for some reason). How can this be justified? We'll have a balanced budget on the backs of our uneducated children?

Another reader goes into more detail:

I’ll pick on Rand Paul and his slashing of the education budget. I’ve worked in business for a long time now in many different financially declining environments. So, I’ve seen many attempts to stabilize these declines through expense control. There’s a point when expense control deepens to the point of cost cutting. Once that happens, I have not been with a business that has not recovered without declaring bankruptcy or folding. You can’t cut your way to growth. And growth is the only thing that will get you out of a financial decline. The difference between expense control and cost cutting is that expense control looks to eliminate costs everywhere that they do not fund an operation that contributes to growth, but leaves intact all those areas that do foster growth. The trick, of course, and what makes a senior management team a good one, is being able to identify the difference. Rand Paul clearly cannot identify the difference.

Commission on Fine Arts? No contribution to growth. Education? 83% cut? Really?! Might as well cut off all our legs below our knees. If we do not IMPROVE education we will NOT achieve growth as a nation. The ‘internationalization’ of business has allowed businesses to tap into a worldwide pool of employees whose educations now surpass that of Americans, at far less cost. This is where the President’s message about the future rings true to me. If we want to maintain our standard of living here we have to justify the higher average salaries we hold vs most of the rest of the world. If we aren’t making things for less, then we have to be making better things. We have to be on the forefront of new industry to justify business paying more to have it done by Americans. And the only way to remain on the forefront of new industry is to invest in education.


I'm all for some tough love on the deficit, but no Consumer Product Safety Commission and instead rely on Consumer Reports?  I love Consumer Reports, but this is a totally bourgeois view of things.  By and large, the working poor and lower middle class do not read Consumer Reports, cannot afford Consumer Reports and may not even know what it is.  One of the silent ways that the U.S. standard of living has increased in the last 40 years is "safety creep" in everything from car seats to drills to ovens (not to mention NHTSA's car work, most stark of all).  Yeah, it has an air of paternalism, but this is paternalism that is universally publicly favored -  see, e.g., rush to hysteria on Chinese drywall or e-coli lettuce. Plus, this is essentially regressive vs. the poor and the young.  

Another reader:

Just like to point out that the suggestion that DOD take over the nuclear function from DOE is illegal. Nukes are to be administered by civilians, that's the law, Truman's Atomic Energy act of 1946.

Another reader:

What struck me most about the Rand Paul’s budget proposals were the extremely deep cuts to the National Science Foundation (62% !?).   This is in addition to significant cuts to the National Institute of Health,  the Centers for Disease Control,  abolition of the Department of Energy.  The Rand Paul budget would be a devastating blow to the sciences in the United States of America.

What is striking (and some of this may be due to omissions in the Washington Examiner article) are the choices of things that are not touched:  Agriculture subsidies (direct farm payments are about $20B annually versus $7B for the entire NSF budgets),  subsidies for oil,  gas or coal, etc.   These are things that Paul apparently feels are more important ways to spend money than basic sciences.

I am not sure what Paul was thinking when making these choices. My hypotheses (based on conversations from a few self-identified libertarians and Paul fans)

(1) Basic science will be funded by the private sector if it is not funded by the government.    

(2) Basic science when funded by the government is a form of largesse, corrupting the recipients, who invariably tow “the government line”. We will be better off without it.

(3) Basic science is not important.  At least not as important as continuing direct farm payouts.  Especially since Paul’s budget was a publicity stunt thrown together in a couple of days and will never be enacted.

Possibility  1 strikes me as a pipe dream-  there is no good economic model for basic sciences.  If there is a thriving scientific culture somewhere in the world where the private sector funds most basic research, please point me to it.  I wouldn’t be surprised if Paul thinks we can roll things back to how things worked in the 18th and 19th centuries.

Possibility 2, which I have actually heard expressed (usually in the context of global warming or health research),  is a form of elite bashing which might play well with some tiny segment of Paul’s base.  But honestly,  I’m not sure how many people really get excited about sticking it to the scientists.

As for possibility 3, I’ll let you make up your mind about that.

Another reader:

I will at least give Paul credit for being honest about what they think is important and what's not.  Some things seem pretty reasonable such as:

  1. Selling Federal buildings
  2. Reducing government travel (depending on what's really being cut there)
  3. Defense cuts

However, I do see a number of flaws.  First of all, a lot of what he's doing is shuffling things around.  Does moving Department of Energy responsibilities under the Department of Defense make sense?  Does moving the Coast Guard under Department of Defense make sense given that the majority of the Coast Guard's purpose is law enforcement, search and rescue, etc?  Generally speaking departments are more accountable and effective when they aren't submerged in a larger bureaucracy (Homeland Security anybody?)

Furthermore, it seems that a lot of what he cuts would ultimately fall on states to handle.  That actually makes many of these functions more expensive in aggregate because each state would have to have it's own bureaucracy and raise taxes to cover that.  Examples include cutting education spending, and converting some national parks into state parks.  

Another reader:

I took a look at the summary and the associated description.  Obviously, with any plan of this type, there will be objections to nearly every item.  I want to comment on just a few:

1.  In generalpretty clearly, the Paul plan would result in thousands of lost jobs, both at the Federal government level and in the private sector businesses that receive funding that would be cut.  The savings Paul envisions are, to some extent, offset by the loss of tax revenue and the increased cost of unemployment benefits, etc.  That’s not necessarily a reason to not realize cost savings in the Federal budget, but it may speak to the timing.  Do we really want to be increasing the unemployment rolls in a period of high unemployment?    Just as “moderate” Republicans in 2009-2010 argued that health care reform should, perhaps, wait until the economy improved, perhaps budget cutting and the resulting job losses should wait until the employment figures are better.  In any event, the savings Paul claims must be discounted for the increased loss of revenue/cost.

2.  Judicial BranchAn annoying characteristic of Paul’s work is that he argues for a budget reductionin this case,$2.4B (32% of the existing budget), without explaining how he would realize this savings.  Will he cut out judgeships (even though there appears to be near-universal agreement that more sitting judges are required)?  Where is the fat?  His only attempt at an explanation is to note that, since 2001 the budget in this area has grown more than 30% faster than the rate of inflation, without offering any explanation as to why that might be.  Here’s a possible explanationmore security.

3.  Food Stamp ProgramRand proposes to take this back to the 2008 level.  He appears to believe that this can be done by eliminated fraud and waste (which seems to be his basis for a lot of his proposed reductions).  I suspect that there are more people eligible now for food stamps than there were in 2008, in part because of simple growth in the population and in part because of the tanking of the economy.  No acknowledgement by Paul of the human cost of such a cutback; in fact, he seems to think that poor people only use food stamps to buy unhealthy food, anyway.

4.  Food and Drug Administrationa proposed 62% cut!  This will, in effect, gut the FDA.  That’s alright with Paul, since he views the FDA’s actions as government “intrusion into the nation’s food supply.”  I view it as government protection of the public from unsafe food and drugs.  In a similar vein, Paul wants to get rid entirely of the Consumer Product Safety Commission, which oversees product safety; thanks but no thanks.

5.  Paul proposes similar cuts to the Center For Disease Control and Prevention, National Science Foundation and the NIHhe’ll find “savings” and, with respect to the NIH and NSF, he will reduce Federal grants.  Paul says that scientific research should be done by private industry and/or by states, and believes that there is no role to be played here by the Federal Government. I’m pretty sure that he is dead wrong about this, but I would be interested in hearing from others examples of where Federally-funded research was essential.

6.Government Services Administrationnot a big deal, but Paul proposes to cut this budget by 85% ($1.9B), believing that each agency can provide its own services.  Obviously, Rand’s experience with large organizations is very limited; forcing the dozens of agencies to each have their own capacity to deal with real estate and the other services currently provided by GSA is incredibly duplicative and, therefore, incredibly inefficient and costly. The GSA exists precisely to avoid this sort of expense.  This item really calls into question Paul’s credibility and the reliability of his other savings projections.  I wonder if he and his team really have any idea what they’re doing here.

7.  Finally, Paul believes that the Federal Vehicle Budget can be reduced by $600 Million, just by telling agencies to “slow down” their new vehicle acquisitions and decrease the miles they drive the vehicles.  Sounds simple.  But Paul give no indication as to whether this is a real number and, if so, how it was determined.  Is he guessing?  Does he have some analysis to back up this number?  For that matter, do any of his numbers have any analytical basis or is he talking through his hat?


Where to begin?  This plan is every bit as political as the one released by the Republican Study Group and could only have come from someone who has no idea what he is talking about when it comes to government programs.  I could point out that it is the antithesis of the technological vision that the President has laid out, but that would be beside the point, wouldn't it? I could also point out that neither ethanol or other farm subsidies appear to have been touched but, again, what would we expect from a Republican?

I'll just focus on the federal department I know most about, HUD, which is completely eliminated in Paul's plan.  Who takes these hits?

  • Seniors -- whose low-income housing through Section 202 programs is eliminated. Find it distasteful to see a young homeless man sleeping on a park bench?  Wait till it's Grandma there!
  • The Disabled -- whose Section 811 housing is eliminated.
  • The poor -- who lose BOTH Section 8 vouchers and facility-based housing programs.
  • Brownfields, Enterprise Zone and other economic development efforts that enable private developers to reclaim urban areas laid waste by previous business and manufacturing efforts. (These could be considered corporate welfare, except that most of the culprits have already left the scene.)

Now I realize that in Rand Paul's libertarian utopia the consequences don't matter. People should just take care of themselves, even poor, disabled seniors. Since shifting these burdens to the states is out of the question in this climate, people will just have to live (or die) with the consequences of their own decisions to grow old, become disabled or slide into poverty.

We don't have to imagine; we know what this looks like.  We have pictures from the Depression.

A final reader:

My initial reaction to Sen. Rand Paul's spending bill was shock. I saw immediately that he proposed to eliminate both the Section 8 Vouchers and the Affordable Housing Program. I work in the affordable housing industry, and the thought, that with the passage of a single bill, both the Section 8 program (which is a small part of my business) and the Affordable Housing Program (Including LIHTC, which is my entire business) left me upset and terrified. The idea that my somewhat comfortable lifestyle could be disrupted by unemployment so suddenly spurred a rather uncomfortable reaction.

Further reflection, however, has tempered my immediate reaction. A fiscal conservative by nature, I began to wonder if there wasn't something larger that I was missing in Sen. Paul's proposal. If we want to get spending under control, jobs are going to be lost. Some of these will be just and natural trimming, while others will be unfortunate casualties of our current situation. Regardless of what category I put myself in, or others put my position in, what is truly at stake? If the bill were to pass, would I complain about the horrifying prospect of finding another job, and take my anger out in the next election cycle? Or would my principals hold, and would I have the wisdom and the courage to recognize that my loss, though personally difficult, served a greater good?

I come from an often maligned generation (X, to be exact), that has not really had to sacrifice much in the way that our grandfathers and grandmothers did. Perhaps it is our time.