2016 Presidential Candidate Spending Platform Analysis: Gary Johnson

Each policy listed below includes Gary Johnson’s proposal in his own words or from language on his campaign website.  The cost of each proposal is based on the net change in spending. While there is insufficient information to determine a cost in some cases, related information is presented where possible to provide budgetary context.

Economy, Transportation, & Infrastructure:

Department of Commerce: “At the end of the day count on me to sign off on any legislation that abolishes any federal agency. But those [cabinet departments to eliminate] that come to mind if I were the dictator and could wave a magic wand, would be the Department of Commerce … .” (source)

• Cost per Year: -$2.237 billion (-$8.948 billion over four years)
• Notes: The entire budget of the Department of Commerce in FY 2016 is $10.527 billion. Approximately 15 percent of its budget is for “grants or fixed charges.” NTUF assumes that Johnson would wind-down the Department over four years but that the grant programs would be converted into block grants to the states.  This estimate excludes certain costs that would “continue for existing contracts and other legal requirements, and certain new costs would be incurred, such as the cost of paying for accrued annual leave and unemployment benefits to federal employees whose work had ended.”

Department of Housing and Urban Development (HUD): “At the end of the day count on me to sign off on any legislation that abolishes any federal agency. But those [cabinet departments to eliminate] that come to mind if I were the dictator and could wave a magic wand, would be the Department … Housing and Urban Development ... .” (source)

• Cost per Year: -$36 million (-$1.435 billion over four years)
• Notes: The budget for HUD in FY 2016 is $28.691 billion. Approximately 95 percent of its budget is for grants or fixed charges. NTUF assumes that Johnson would wind-down the Department over four years but that the grant programs would be converted into block grants to the states. (The campaign was contacted for clarification regarding the grants.) This estimate excludes certain costs that would “continue for existing contracts and other legal requirements, and certain new costs would be incurred, such as the cost of paying for accrued annual leave and unemployment benefits to federal employees whose work had ended.”

Regulatory Reform: “Eliminating unnecessary regulations and applying common sense to those rules that are necessary will free up capital and allow those who want and need to create jobs to do so.” (source)

• Cost per Year: Indeterminate
• Notes: There could be significant administrative and enforcement savings, but a cost estimate is indeterminate.

Education, Science, & Research:

Department of Education: “ … Gov. Johnson believes there is no role for the Federal Government in education. He would eliminate the federal Department of Education, and return control to the state and local levels.” (source)

• Cost per Year: -$2.375 billion (-$9.498 billion over four years)
• Notes: The entire budget of the Department of Education in FY 2016 is $79.098 billion, of which grant funding to the states totaled $69.867 billion. Based on Johnson’s statement, NTUF assumes that he would convert existing funds to the states into block grants and reduce and wind-down the Department over four years. However, it is unclear what would be done with student loans. (The campaign was contacted for clarification.) This estimate excludes certain costs that would “continue for existing contracts and other legal requirements, and certain new costs would be incurred, such as the cost of paying for accrued annual leave and unemployment benefits to federal employees whose work had ended.”

Government Reform:

FairTax: “Governor Johnson advocates the elimination of tax subsidies, the double taxation embodied in business income taxes, and ultimately, the replacement of all income and payroll taxes with a single consumption tax that will allow every American and every business to determine their tax burden by making their own spending decisions. Taxes on purchases for basic necessities would be ‘prebated’, with all other purchases taxed equally regardless of income, status or purpose.” (source)

• Cost per Year: -$12.637 (-$63.183 billion over five years)
• Notes: Related legislation has been introduced in the form of H.R. 25, the FairTax Act of 2015. The bill would replace the existing Tax Code with a national sales tax. The FairTax is intended to be revenue-neutral and would be set at a tax-inclusive rate of 23 percent. All lawful U.S. residents would be eligible to receive a monthly sales tax prebate from the Social Security Administration “to ensure that each family unit can consume tax-free up to the poverty level.” The legislation would result in savings for the repeal of the outlay portions of refundable credits where the credit exceeds income tax liability (estimated at $84.9 billion for FY 2016) and the wind-down and elimination of the Internal Revenue Service (saving $3 billion per year). The costs associated with mailing the monthly rebate checks would be about $290 million per year (based on the number of households and bulk mail rates), assuming that all eligible individuals register for the rebates. Expenses could be lower to the extent that rebates are provided in the form of smart cards or direct deposit). In addition, administering states would be permitted to retain one-quarter of one percent of the revenues collected as an administration fee. Based on FY 2015 actual revenues, NTUF estimates the annual amount retained by administrative agencies would total $8.1 billion, and assumes that this would be recorded as an outlay in the budget. The bill would also establish an Office of Revenue Allocation to arbitrate disputes among administering states, however a cost estimate for this is indeterminate.

Health Care:

Medicaid and Medicare Block Grants: “I think that the only way you reform Medicaid and Medicare is to devolve those functions to the states … . As Governor of New Mexico … if given a fixed amount of money I could have delivered health care to those on welfare and those over 65.” (source)

• Cost per Year: Indeterminate
• Notes: This option would allow states the opportunity to craft Medicaid and Medicare plans to serve their population’s needs. NTUF assumes that projected funding levels ($401 billion for Medicaid and $699 billion for Medicare in FY 2017) would be maintained initially and set to a standard formula for future years. However, it is unclear what level of funding Johnson would support for Medicaid and Medicare over the long-term.

Homeland Security & Law Enforcement:

Criminal Justice Sentencing Reform: “ … [M]andatory minimum sentences for a wide range of offenses and other efforts by politicians to be ‘tough’ have removed far too much common-sense discretion from judges and prosecutors. … Fortunately, a growing number of state and local governments are taking steps toward meaningful criminal justice reform. The federal government must do the same, and Gary Johnson is committed to bringing real leadership to this long-overdue effort.” (source)

• Cost per Year: -$75 million (-$376 million over five years)
• Notes: Legislation to reform sentencing for nonviolent offenders has been introduced in the form of S. 502, the Smarter Sentencing Act of 2015, which would reduce prison sentences for certain non-violent drug-related offenses. The Congressional Budget Office (CBO) scored a previous version of the bill in 2014 and found that it would lead to a net reduction in federal spending by $376 million over five years.

Drug Enforcement Administration: “At the end of the day count on me to sign off on any legislation that abolishes any federal agency. But those [cabinet departments to eliminate] that come to mind if I were the dictator and could wave a magic wand, would be … I realize this is not a cabinet agency but the Drug Enforcement Agency ... .” (source)

• Cost per Year: -$745 million (-$2.981 billion over four years)
• Notes: The entire budget of the Drug Enforcement Administration in FY 2016 is $2.981 billion. NTUF assumes that Johnson would wind-down the Department and all of its funding over four years. This estimate excludes certain costs that would “continue for existing contracts and other legal requirements, and certain new costs would be incurred, such as the cost of paying for accrued annual leave and unemployment benefits to federal employees whose work had ended.”

Immigration Reform: “Governor Johnson has long advocated a simplified and secure system of work visas by which willing workers and willing employers can meet in a robust labor marketplace efficiently and economically. Aspiring immigrants would undergo a background check, pay taxes and provide proof of employment.  

Making it simpler and efficient to enter the U.S. legally will provide the greatest security possible, allowing law enforcement to focus its time and resources on the criminals and bad actors ... .” (source)

• Cost per Year: Indeterminate
• Notes: Increased levels of immigration could boost spending for entitlement programs such as Medicaid and Medicare. For example, during the 113th Congress, the Senate passed S. 744, the Border Security, Economic Opportunity, and Immigration Modernization Act, which would have overhauled the federal immigration system by providing a path to legal status for many current illegal aliens. CBO’s estimated that the Senate-passed bill would increase mandatory spending related to entitlements by $89 billion over the first five years. Johnson has been unclear on the specifics of what exactly he supports in regards to entitlement programs and legal immigrants.

National Security Agency (NSA): “At the end of the day count on me to sign off on any legislation that abolishes any federal agency. But those [cabinet departments to eliminate] that come to mind if I were the dictator and could wave a magic wand, would be … I realize this is not a cabinet agency but … NSA ... .” (source)

• Cost per Year: Indeterminate
• Notes: This could reduce spending, however, the budget of the NSA is classified.

National Defense & Foreign Affairs:

Military Spending: “I would look to reduce the size of the military … . I would be looking to reduce those expenditures by 20 percent and that wouldn’t be going back but a handful of years. …  The fact that we have 100,000 troops on the ground in Europe, does anybody see the logic in that? … We have executive treaties with 69 countries that we are obliged to defend their borders. This just doesn’t seem right. The fact that we have bases anywhere in the world when right now we can fly aircraft from the United States and because of our refueling capabilities we really don’t need any Air Force bases. … Let’s start with a 20 percent reduction in the military which would not reduce our ability to provide for an impenetrable national defense … .” (source)

• Cost per Year: -$117.6 billion (first-year savings)
• Notes: The federal government will spend $588 billion on defense in FY 2016. NTUF assumes that Johnson would seek a 20 percent cut in his first year.

Social Security:

Means Testing: “With regards to Social Security, it is absolutely fixable, but [requires] ... having a fair means testing.” (source)

• Cost per Year: -$6.222 billion (-$31.11 billion over five years)
• Notes: A 2011 study from the Center for Economic and Policy Research indicated that eliminating Social Security benefits for those making over $200,000 per year would result in savings of about 0.6 percent of Social Security outlays. Based on data from the Congressional Budget Office, eliminating Social Security benefits for those earning over $200,000 per year could save about $6.2 billion per year over five years.

Retirement Age Increase: “With regards to Social Security, it is absolutely fixable, but [requires] … raising the retirement age.” (source)

• Cost per Year: -$1.08 billion (-$5.4 billion over five years)
• Notes: In 2013, CBO estimated the budgetary impact of increasing the full retirement age for Social Security by one month per year. It was determined this budget option would save $5.4 billion over five years and $58.2 billion over ten.

Self-directed Distribution: “As President of the United States I would sign legislation that would allow 100 percent of Social Security funds to be self-directed. … Allow those that pay into Social Security and die before the amount of money that they paid in was actually paid back, perhaps that could be passed on to their heirs and that could also be a part of fair means testing.” (source)

• Cost per Year: Indeterminate
• Notes: When a recipient of Social Security payments dies, any unpaid benefits remain in the Social Security trust fund. However, certain family members are eligible for survivor benefits. A cost estimate for Johnson’s proposal is indeterminate.

Fiscal Quotations:

Balanced Budget: “Governor Johnson has pledged that his first major act as President will be to submit to Congress a truly balanced budget. No gimmicks, no imaginary cuts in the distant future. Real reductions to bring spending into line with revenues, without tax increases. No line in the budget will be immune from scrutiny and reduction.” (source)

• Notes: The Congressional Budget Office’s March 2016 budget baseline outlook projects the federal government will run a $550 billion deficit in FY 2017. While this proposal could result in significant spending reductions, NTUF is only able to analyze specific proposals to achieve budget cuts.