Every so often, you'll hear about a balanced budget amendment, but at this point, I honestly don't think that goes far enough. We need a budget surplus amendment.
I propose that, for the next 40 years, the government's expenditures have to remain less than their revenues. It's a long time, sure, but this didn't happen over the course of one or two years; it makes sense that it would take a while to undo the damage.
So where would the surplus money go? I'm glad you asked because I've got a rough, but still pretty good, idea of how the capital should be allocated.
25% is to go towards debt repayment. This is a logical choice, as the debt itself is what brought this into being. In addition, bringing the debt balance down will reduce the amount of interest we pay over time. That means more capital. Besides, just think of how cool it would be to see that number moving down instead of rocketing upward as it has been for so long.
*Amended* 15% is to go towards unfunded liabilities. This is another figure that some bring up when it comes to the government's dismal fiscal situation. This isn't debt in a traditional sense, but it is money that the government is going to have to pay eventually, even though they don't have it. While this number isn't likely to ever "go away", getting it under control would still be to our collective benefit.
10% is to go towards a national endowment. It turns out that I'm not the first person to see the appeal of a budget surplus. Amusingly, this was apparently put together back when the debt was at $15 trillion, ah the good old days. Not going to lie, I like mine better, but they did have a neat concept in the national endowment. Basically, the idea is that the government sits on the money and uses the interest generated to fund things. Whether it would ever be enough to erase the need for income tax, I don't know, but it is a cool idea regardless. As such, I'm incorporating it into my own iteration of the idea. It takes the pressure off the taxpayers. it can help fund government endeavors and it even gives the government a bit more leeway in terms of the frivolous stuff. If they want to fund a hamster fight club, they can use endowment dollars and people would be more likely to shrug and say, "whatever". This was originally set to go towards unfunded liabilities, but I had to pull from something. Besides, endowment income can help cover those costs, so it does help address it albeit in a different fashion. I would suggest that only a portion of the interest get spent, that way the government can utilize compound interest to raise even more funds down the line.
*Amended* 15% is to go towards universal income. It might not be the "basic" income number that has been making the rounds, but it is at least a start. Seeing as this was our money, it makes sense that we should get a portion of it back. From an economic standpoint, this has the same effect as a tax cut, only this can't push us back into deficit territory and it would work on a much wider scale.
*Amended* 15% is to go towards universal income. It might not be the "basic" income number that has been making the rounds, but it is at least a start. Seeing as this was our money, it makes sense that we should get a portion of it back. From an economic standpoint, this has the same effect as a tax cut, only this can't push us back into deficit territory and it would work on a much wider scale.
10% is to go towards universal investing. Originally, I had this set up so that another 25% would go towards universal income. However, I recently came across a suggestion for a really cool idea to get everybody into the stock market. This would go towards giving everybody an S&P 500-centric portfolio. Admittedly, they can't touch it for 15 years, but the payoff is worth it and in the meantime, people would see growing dividend income.
15% would go towards universal HSA's (health savings accounts). Even before the pandemic, healthcare was a major issue. Some want more privatization, while others want to move to a single payer. This splits the difference and gives people a means of covering healthcare costs without any need for bureaucratic oversight, as each person would decide how to put their equal cut to use. You could use it to cover smaller, day to day medical costs, or allow it to accumulate and act as a medical emergency fund. It would do what people think single payer would do, only better. It's easier on the budget and, rather than take a bulldozer to the system, we apply spackle and fill in the cracks. Insurance plans, regular HSA's, and government plans would still be up and running; this would just operate along side it.
The last 10% would go towards an emergency/reserve/savings fund. It's abundantly clear that emergency funds are a good thing. This is true for individuals, for businesses, and for government. Imagine having money tucked away so that when something big did come up, we as a country would be ready for it and wouldn't have to scramble to get some plan together. Rather than constantly being on our back foot and frantically trying to figure out how things are going to get done, we'd have funds set aside to help carry us through. This may seem similar to the endowment, but they are two separate funds with two separate purposes. The endowment is there to generate income, where this is designed to be a pool to pull from when things turn South.
Now, this is all well and good, but how do we get there? The deficit is huge, so it will be no small feat inverting the curve. From a basic math standpoint, the logical answer would be to increase revenue and cut spending. The problem is that even when revenue was going up, spending never went down. Worse, most of the government's expenses are locked in. There aren't many places where they can cut. Even then, any suggestion is met with outrage from some group who advocates for it.
While I'm not averse to seeing the FICA taxed income limit increased (though I think that should be coupled with removing income restrictions on IRA's) or seeing the gas tax increased by one-tenth of a percent (I hate that fraction!) I think the best approach would be to do an end-run around the government. Politicians clearly have no interest in doing anything, so we should do it ourselves. A while back, I laid out some tools at our disposal that would strengthen social safety nets and shift the burden off the government (facilitating the much needed cuts) whilst simultaneously pumping more money into their coffers.
In addition, I think that the layout here motivates cuts. Why bother with bloated pork and wasteful spending when you can streamline and get much better results with surplus dollars?
Just think of how much stronger we'd be by the end of it. Individuals would have a much firmer foundation and the government would have hundreds of billions that was previously going towards interest to invest. It satisfies the conservative desire for fiscal responsibility while also achieving progressive goals. Who knows, while it might not be necessary after 40 years, the country could decide to keep it intact just because it works so well.
Will it happen? Probably not, but it's still a fun hypothetical.
15% would go towards universal HSA's (health savings accounts). Even before the pandemic, healthcare was a major issue. Some want more privatization, while others want to move to a single payer. This splits the difference and gives people a means of covering healthcare costs without any need for bureaucratic oversight, as each person would decide how to put their equal cut to use. You could use it to cover smaller, day to day medical costs, or allow it to accumulate and act as a medical emergency fund. It would do what people think single payer would do, only better. It's easier on the budget and, rather than take a bulldozer to the system, we apply spackle and fill in the cracks. Insurance plans, regular HSA's, and government plans would still be up and running; this would just operate along side it.
The last 10% would go towards an emergency/reserve/savings fund. It's abundantly clear that emergency funds are a good thing. This is true for individuals, for businesses, and for government. Imagine having money tucked away so that when something big did come up, we as a country would be ready for it and wouldn't have to scramble to get some plan together. Rather than constantly being on our back foot and frantically trying to figure out how things are going to get done, we'd have funds set aside to help carry us through. This may seem similar to the endowment, but they are two separate funds with two separate purposes. The endowment is there to generate income, where this is designed to be a pool to pull from when things turn South.
Now, this is all well and good, but how do we get there? The deficit is huge, so it will be no small feat inverting the curve. From a basic math standpoint, the logical answer would be to increase revenue and cut spending. The problem is that even when revenue was going up, spending never went down. Worse, most of the government's expenses are locked in. There aren't many places where they can cut. Even then, any suggestion is met with outrage from some group who advocates for it.
While I'm not averse to seeing the FICA taxed income limit increased (though I think that should be coupled with removing income restrictions on IRA's) or seeing the gas tax increased by one-tenth of a percent (I hate that fraction!) I think the best approach would be to do an end-run around the government. Politicians clearly have no interest in doing anything, so we should do it ourselves. A while back, I laid out some tools at our disposal that would strengthen social safety nets and shift the burden off the government (facilitating the much needed cuts) whilst simultaneously pumping more money into their coffers.
In addition, I think that the layout here motivates cuts. Why bother with bloated pork and wasteful spending when you can streamline and get much better results with surplus dollars?
Just think of how much stronger we'd be by the end of it. Individuals would have a much firmer foundation and the government would have hundreds of billions that was previously going towards interest to invest. It satisfies the conservative desire for fiscal responsibility while also achieving progressive goals. Who knows, while it might not be necessary after 40 years, the country could decide to keep it intact just because it works so well.
Will it happen? Probably not, but it's still a fun hypothetical.
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