Candidates lay out plans to trim federal debt

Copies of the proposed federal budget for fiscal year 2012 are seen at the Government Printing Office Feb. 14, 2011, in Washington.
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DES MOINES, Iowa - On the eve of the Iowa caucuses, of all the issues voters care about, 60 percent of Iowa Republicans say the federal debt worries them most. Three of the major candidates -- former Massachusetts Gov. Mitt Romney, Texas Rep. Ron Paul and former House Speaker Newt Gingrich -- laid out their plans in interviews for what they would do as president to trim the budget.

The three presidential hopefuls all want to cut the size of the federal government, and some share the same ideas of ending federal departments, letting the states run Medicaid -- the government health care program for the poor -- and eliminating workers from the government payroll.

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Romney has stressed that his success as a businessman -- he ran the investment firm Bain Capital -- makes him most qualified to turn around the economy, cut the deficit and bring down the massive federal debt.

Candidate Page: Mitt Romney
Romney: I'm going to get boost out of Iowa

"I'm going to go through the federal budget line by line, item by item," he told CBS News political correspondent Jan Crawford. "I will fight to remove those things I don't think are absolutely essential.

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"You know in the private sector, in small business and big business, if you don't balance your budget, you go out of business," said Romney. "We can't continue in good conscience to borrow massively more and spend massively more than we take in, and so what I will do is I will, one, cut programs, including some programs I like, but my test is, is this program so critical for America that it's worth borrowing money from China to pay for it?"

Romney proposed to slash $500 billion from the budget in his first term by:

  • Repealing President Obama's health care law
  • Turning Medicaid over to the states
  • Reducing the size of the federal workforce by 10 percent
  • Cutting federal subsidies to programs like Amtrak that he calls non-essential

"I'm going to end programs, not just cut them, not just reduce the rate of growth but eliminate them," Romney said.

Unlike his competitors, Romney would not cut defense spending. He also has not said he would kill entire federal agencies, but he said he would consider it.

That is a big difference between Romney and Paul, who is polling a close second here.

Candidate Page: Ron Paul

Paul's deficit reduction plan is the largest of all the candidates, and his spending cuts would happen fast, $900 billion during his first year in office, CBS News correspondent Wyatt Andrews reports.

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Reducing the federal deficit is the signature issue for Paul in Iowa. His plan calls for reducing the federal workforce by 10 percent, slashing the pay of Congress and eliminating the federal departments of Commerce, Education, Energy, Housing and Urban Development and Interior.

The largest cut he proposes would end all spending on U.S. troops overseas, starting with Iraq and Afghanistan, then possibly Japan and Korea. Foreign aid spending would go to zero, including the $3 billion in aid to Israel.

But cutting off aid to Israel and reducing America's global reach would get very little support in Congress, but he has a plan to get it passed.

"Obviously you have to bring a coalition together ... but you have to change people's minds too, and this is what is happening today," said Paul. "Four years ago there wasn't near the support for coming home from overseas. Today it is."

The Paul plan may be a long shot, but here in Iowa the deficit is very important, and voters will turn out for him, and it makes him a serious contender to firmly promise cutting the deficit so quickly.

Gingrich is another serious contender with promises of serious cuts to the budget.

Candidate Page: Newt Gingrich

The former speaker would cut the deficit primarily by unleashing and modernizing the U.S. economy.

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"First, create dramatic economic growth to put people back to work because that's the biggest single step towards balancing the budget," Gingrich told CBS News correspondent Dean Reynolds.

Gingrich would also:

  • Press for a balanced budget amendment
  • Expand energy production
  • Return some financial power to the states -- giving governors more control over Medicaid for example
  • Modernize and shrink government -- doing away with the Energy Department, reforming the Environmental Protection Agency and privatizing much of the Housing and Urban Development Department's holdings

All with no tax increases.

"None," said Gingrich. "The problem with the United States is not that we're under, overtaxed, it's that we're overspent."

Gingrich doesn't call his plan austerity, saying that he agrees with the theory that austerity in the time of a sputtering economy is the wrong way to go.

"My goal is to create massive economic growth," said Gingrich. "You can't sustain austerity in a free society. People will fire you. They won't take the pain. They're not going to voluntarily let elected officials cause pain."

The economic growth and prosperity he envisions would, he said, remove any pain from spending cuts, but critics are doubtful about that. They said that fewer regulations could spur some productivity, but they also said that to really reduce the deficit there would need to be a combination of spending cuts and tax increases.

  • Wyatt Andrews

    Wyatt Andrews is a CBS News National Correspondent based in Washington D.C. He is responsible for tracking trends in politics, health care, energy, the environment and foreign affairs.