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PolitiFact Florida: Nelson says Mack's 'Penny Plan' would lead to massive spending cuts

U.S. Rep. Connie Mack IV, R-Fort Myers, says his plan to balance the federal budget is so simple it comes down to a penny.

But Mack's Senate rival, Democratic U.S. Sen. Bill Nelson, said that the Penny Plan would lead to massive cuts in entitlements and defense.

"He has a Penny Plan that would absolutely eviscerate Medicare and Social Security," Nelson said during the one and only Senate debate on Oct. 17. "Over $200 billion out of Medicare. Over a trillion out of Social Security. And we are going to release tonight the impartial nonpartisan Congressional Research Service study that shows how he absolutely savages Medicare, Social Security, and oh, by the way, to boot ... $3  trillion out of defense. That is what his Penny Plan is."

So what is Mack's Penny Plan? And are Nelson's numbers accurate?

Mack's proposal is H.R. 1848, the One Percent Spending Reduction Act. The math works like this: For six years, the federal government reduces spending by 1 percent each year.

If Congress and the president couldn't reach an agreement about what to cut, the plan would trigger automatic across-the-board spending cuts.

In the seventh year, funding would be capped at 18 percent of gross domestic product (or GDP, a measure of the size of the overall economy). The plan would balance the budget by 2017, according to Mack's congressional staff.

To give you an idea of how dramatic this is, the well-known budget plan from Republican vice presidential nominee Paul Ryan, who's also the House budget chairman, wouldn't balance the budget until 2040.

Mack introduced his bill in May 2011, and it was introduced in the Senate about a month later. Since then, it has seen no official action.

We asked several federal budget experts from across the political spectrum about Mack's Penny Plan. They generally agreed that Mack's math is correct, and the 1 percent annual reductions would balance the budget. The challenge, though, is how do you get there: Do you cut everything by 1 percent?

Most notably, the bill doesn't explain how it would adjust Medicare and Social Security to make up for the expected growth as baby boomers retire.

We asked Mack's congressional office if Mack supports cutting peoples' Social Security 1 percent a year for six years. Its statement:

"The Penny Plan sets a framework for reducing spending. It will be up to Congress and the president to work together to determine how best to achieve those spending reductions."

A recent report from the Congressional Research Service analyzed the impact of Mack's Penny Plan on Medicare and Social Security. The service is considered impartial and nonpartisan, but the report was requested by U.S. Sen. Bernard Sanders, I-Vt., an opponent of the Penny Plan.

The report explained that the plan would establish caps and enforce them through automatic cuts if lawmakers can't reach an agreement. The report then detailed how those cuts would be applied.

The bottom line, according to the report: Mack's plan would lead to about $2.89 trillion in defense cuts and $2.89 trillion in nondefense programs between 2013 and 2022. The cuts would include about $211 billion for Medicare and about $1.124 billion for Social Security.

We sent Nelson's claim and the study to several budget experts.

Alan Viard, resident scholar at the conservative American Enterprise Institute, told us in an email that it appears the Congressional Research Service correctly outlined how sequestration would work.

But no matter how you slice it, to achieve the bill's spending caps would "require gigantic reductions in federal spending, relative to the baseline," he wrote. Congress would balk at such dramatic cuts. "There is no prospect that cuts of this magnitude could ever be adopted," he said.

The Mack campaign said the report's findings were just "one opinion" and reiterated previous claims that the plan would work to reduce federal spending.

Overall, Nelson's description didn't mention that the cuts would go into effect only if Congress couldn't find other things to cut. But Mack's plan, if implemented across all programs, would cut Medicare, Social Security and defense between 2013 and 2022 by the dollar figures Nelson specified.

Nelson's claim requires explanation about the plan and its time line, but his numbers are correct. We rate this claim Mostly True.

This report has been edited for print. PolitiFact Florida is partnering with 10 News for the 2012 election. See video fact-checks at

PolitiFact Florida: Nelson says Mack's 'Penny Plan' would lead to massive spending cuts 10/28/12 [Last modified: Sunday, October 28, 2012 10:44pm]
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