The One Cent Solution

What is the One Cent Solution?

The Three Keys

1. A Plan that Works

The One Cent Solution is beautifully simple: If the government cuts one cent out of every dollar of its total spending (excluding interest payments) each year for five years, and then caps overall federal spending at 18 percent of national income from then on, we can:

  • Reduce federal spending by $7.5 trillion over 10 years.
  • Balance the budget by 2019.

Moreover, instead of using inflated budget “baselines” to claim nonexistent spending “cuts” a common practice in Washington, the One Cent Solution calls for real cuts.  Under the One Cent plan, the sum of all discretionary and entitlement spending will have to go down from one year to the next, by one percent or more.

2. Legislative Strategy

The One Percent Spending Reduction Act of 2011 embodies the principles of the One Cent Solution.   Also known as the “Penny Plan” on Capitol Hill, this legislation was introduced by Congressman Connie Mack (R-FL) and Senator Mike Enzi (R-WY) and is currently supported by 71 Members of the House and 13 Members of the Senate. Visit our current legislation page to view the list.

The “Penny Plan” legislation would cap overall spending to fit within the One Cent Solution targets.  The legislation then calls on Congress to evaluate all areas of the federal government to make certain that future spending fits under the caps.

Under the One Cent Solution or “Penny Plan”, not all programs must be cut by one percent.  Congress may determine that some programs are too critical to cut, but that would require that other programs be reduced more so that the total amount cut is equal to one cent for every dollar each year for six years. 

For example, let’s say the federal budget only had three programs, each with an annual budget of $1.00. How might Congress meet the One Cent mandate?

  1. Congress cuts Program A by one cent every year for six years. That means the annual budget for Program A is $0.99 in year one and then $0.98, $0.97, $0.96, $0.95 and finally $0.94.
  2. Program B is found to be essential and efficient — Congress chooses not to cut Program B.
  3. Program C is outdated and needs to be restructured — Congress cuts two cents each year for six years from Program C.

In this example, Congress is able to make program-by-program decisions to bring spending within the One Cent Solution caps.  If Congress fails to make those tough decisions, then automatic, across-the-board cuts would be imposed to make sure the caps were enforced.  The One Cent Solution is a “belt and suspenders” approach to making certain spending is brought under control and the budget is balanced.

3. Public Support

The One Cent Solution provides Americans with a clear path from massive deficits to a balanced budget.  Every family in America can reduce its overall spending by one percent per year, and they know the federal government can too.  Do that for six years in a row and the federal budget is balanced.

Public support is essential to the plan’s success.  As citizens, we must own this problem. Without public involvement, Congress will fail to act.  It is simply not right for us to pass on this debt to our children and grandchildren. Tough decisions are ahead. The key to balancing the budget and reducing the national debt is you.  Become the solution.