During the 2011 fiscal year, the U.S. federal government spent $1.3 trillion more than it collected in revenues. Eliminating the deficit is not an easy thing to do. President Obama has never proposed a path to a balanced budget. Republican House budget committee chairman Paul Ryan's bold yet gradual plan takes over 20 years to reach balance, according to the Congressional Budget Office. And the conservative House Republican Study Committee claims it would take 9 years to reach balance under its preferred budget.
So when Herman Cain said at last Tuesday's Republican presidential debate at Dartmouth College that he would balance the budget in one year, he was making a rather amazing claim. "The first year that I'm president and I oversee a fiscal year budget, [I will] make sure that revenues equals spending," Cain said. How exactly would he do it? During a phone interview this afternoon, Cain told THE WEEKLY STANDARD that revenues generated by his 9-9-9 tax plan and a 20 percent cut to the federal budget--without touching Social Security or Medicare--would do the trick.
Cain said that his 9-9-9 deficit plan was designed to be revenue neutral, but when factoring in economic growth, revenues will skyrocket along with the economy. "We calculated based upon initially no growth, just replicate the amount of revenue we’re already bringing in," Cain said in a recent interview with Don Imus.
"It was designed to be revenue neutral," Cain told me. “But we know it’s going to generate much more revenue."
"Revenues will be coming in because people will be going back to work," Cain continued. "Businesses will be expanding. So we will have a revenue projection for fiscal year 2014 that’s going to be much higher than what I inherited."
As for cutting spending, Cain said: "I would mandate a 10 percent cut to every federal agency off the top."
”I’m going to give the people in each agency a chance to tell me how we get that first 10 percent," he added. “If they don’t get it, I know how to get it.” Cain said, following another analysis, the government would begin eliminating unnecessary programs. "I believe we will be able to get about a 20 percent reduction without cutting red meat, without cutting bone."
Cain said he wouldn't touch Social Security or Medicare in the first year: "I would change them further out." By exempting those programs, that would leave two-thirds of federal spending left to cut. Cutting 20 percent of the rest of the government, no easy task (to put it lightly), would save about $450 billion. (I neglected to ask Cain whether Defense cuts are on the table, and his staff did not respond to an email requesting comment.) My back-of-the envelope math indicates that in order to eliminate the deficit, economic growth would need to account for about another $850 billion in greater revenues--in other words, an implausible 38 percent increase from 2011 revenues.