The Pence Debt Reduction Plan – A Preliminary Assessment

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Stephen R. Rolandi
August 19, 2024

In recent weeks, there have been numerous reports in both print and online media by several “good government” type organizations about the ever-increasing United States national debt (currently, approximately $35.2 trillion and when compared to total current GDP of $28.6 trillion, this yields a debt: GDP ratio of 123 per cent—which while not indicative of a severe crisis, is close to it unless corrective actions are implemented).

Even more alarming have been reports prepared by the Congressional Budget Office (CBO) and others that interest paid to service the nation’s debt in the current fiscal year will be approximately $892 billion, slightly higher than the budget for the nation’s defense.

Last month, former Vice President and 2024 Republican Party primary candidate Michael R. Pence advanced a blueprint, entitled “Confronting Our Debt Crisis” to reduce Federal spending as a way to confront the national debt. Currently a teaching fellow at grove City College, Vice President Pence leads an advocacy group, known as Advancing American Freedom (AAF), a 501 c-4 tax exempt not-for-profit advocacy organization.

This organization recently made a number of spending proposals, which are an outgrowth of the former Vice President’s unsuccessful campaign (the report is available at www.advancingamericanfreedom.com).

Given my long standing interest in the Federal budget and national debt, I am devoting this month’s column to a closer look at the Pence debt reduction proposals.

Recognizing that the United States is “on course for a sovereign debt crisis,” the Pence plan consists of three tracks:

Reduce mandatory spending (“entitlements”) which comprise the majority of the Federal budget by reforming Social Security and Medicare;
Eliminate tax expenditures; these refer to subsidies passed by Congress and made part of the Federal tax code (Title 26) that benefit specific activities; and
Propose discretionary budget spending reductions by ending earmarks, freezing non defense spending and eliminating certain agencies.

It should be noted that the Pence/AAF proposals put the former Vice President not only at odds with the likely Democratic Party Presidential nominee, but also with the current Republican Presidential nominee and former President.

Some specific proposals advanced by AAF are as follows:

Reduction in Mandatory Spending

Halt Student Loan Cancellation
Repeal the Inflation Reduction Act (IRA)
Significantly reduce agricultural subsidies
Institute mean-testing cost of living adjustments (COLAs) for Social Security and related programs
Reinstate the U.S. Department of Agriculture (USDA) plan to end categorical eligibility
Eliminate the Commodity Credit Corporation (CCC) intended for agricultural income support.

Elimination of Tax Expenditures

Phase out the Energy Production Credit, as well as similar programs for Energy Investment, Clean Fuel Protection, Clean (Electric) Vehicles, Manufacturing Investment, etc.

Discretionary Budget Reductions:

Freeze Non-defense spending between Fiscal Years 2025-2030, thus yielding nearly $250 billion in savings
End earmarks, rescind COVID-era funding
Rescind specified funding for AMTRAK
Zero out a number of programs including the Export-Import Bank; Appalachian Regional Commission; National Endowment for the Arts (NEA), Consumer Financial Protection Bureau (CFPB), Davis-Bacon Requirements for Federal Projects, the Community Development Block Grant (CDBG) program and many others

The Pence proposal also supports creation of a “Congressional Fiscal Commission,” which would have fast track legislative authority to reduce spending, but not increase taxes. This proposal should be contrasted with the proposed Fiscal Stability Commission Act of 2023 (S. 3262) which was advanced late last year by retiring U.S. Senators Mitt Romney (R-Utah) and Joe Manchin (I-West Virginia) and which has numerous co-sponsors in the Senate and House.

Preliminary Assessment

In my opinion, Vice President Pence deserves credit for shining a light on an ever worsening national problem which, if continued to fester, would engulf the nation—and most likely the world—into an economic catastrophe.

However, I believe his plan places near total reliance on spending reductions and which do not assess the total impact on the nation’s economy and state/local governments. For example, if the states and local governments have to pick up the slack caused by the elimination of many Federal programs, states and local governments would be forced to cut their spending and increase taxes, as state and local governments are required to have balanced annual budgets. From a political and equity point of view, I do not see how Congress could pass these reductions without some level of revenue (tax) increases.

From a budget process perspective, while the Pence plan rightly criticizes fiscal cliff crises and calls for an end to “shutdown theatrics,” I do not find any mention of tools that could reduce/freeze spending, such as Zero-Base Budgeting (ZBB) and empower the President to utilize a Line Item Veto currently in use by most governors (of course, there are constitutional hurdles that would have to be overcome).

Such a plan would also require the executive branch and Congress to work more closely together, which is something we have not seen in many years. The Pence Plan is a starting point and hopefully, will lead to a national conversation in this election year, and serious action down the road. Time will tell.

Post script: For further information and reading, please consult the following:

Non-partisan Advocacy Organizations:

The Concord Coalition, 1530 Wilson Blvd., Suite 550, Arlington, VA. 22209; (703) 894-6222; concordcoalition.org
Committee for a Responsible Federal Budget, 1025 Connecticut Avenue, NW, Suite 1100; (202) 596-2597; crfb.org
Peter G. Peterson Foundation, 880-C Eight Avenue, New York, NY 10019; (212) 542-9200; www.pgpf.org

Books:

“America’s Expiration Date: The Fall of Empires and Superpowers and the Future of the United States,” by Cal Thomas, publisher: Harper Collins (2020)
“America’s National Debt: Examining The Facts,” by Dr. Thomas Arndt, Ph.D. , publisher: ABC-CLIO Books (2022)

Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He teaches public finance and management as an Adjunct Professor of Public Administration at John Jay College of Criminal Justice (CUNY) and Pace University. Professor Rolandi is a Trustee of NECoPA; President-emeritus/Senior Advisor for ASPA’s New York Metropolitan Chapter and past Senior National Council Representative. He has served on many association boards, and is a frequent guest commentator on public affairs and political issues affecting the nation and New York State. You can reach him at: [email protected] or [email protected] or 914.441.3399 or 212.237.8000

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