"My thoughts exactly. Regardless of the size of the budget deficit we are still going further into debt. The US. does not have unlimited credit. With a steady de-valuation of the American dollar we are already having trouble finding buyers for our debt. The "growth" of our economy means nothing if it is supported by foreign nations buying our debt. Eliminating the debt is the only sure fire way to stop the house of cards from collapsing." Posted by: Joe

Absolutely true.

The problem of course is that neither side will agree to end entitlements for their pet programs.

But, I do have a proposal that might change all that and I'd welcome feedback on it.

As crazy as this will sound, I believe it’s possible to over a very long time, end the debt, greatly reduce taxes and have plenty of money to spend on needed programs.

No, I am not proposing that we can have our 'cake and eat it too’.

Everything I am about to propose is based in mathematically and fiscally sound principles.

It will take sacrifice and most importantly, fiscal discipline. And I know how improbable and even oxymoronic the words Congress, the American people and fiscal discipline are in the same sentence…

Nevertheless, here goes:

We all are familiar with individuals who have been ‘blessed’ with the inheritance of a trust fund.

I propose that we create a 'public trust fund' for the American people.

‘Running the numbers and doing the math’ is something that any actuarial accountant worth his salt can do to arrive at the specific amounts and details. Being a ‘big picture’ guy and ‘idea’ man, I’ll leave the details to the accountants and only elaborate the basic principles. So, please do not hold my feet to the fire over amounts used by me to illustrate the idea, ok?

I also realize that while the idea is simple, successful implementation of this idea would be complex. So, if complexity puts you off, you may want to pass on this post right now.

So, starting whenever, we institute a new tax!

Hey, liberals like it already but conservatives are running for the door!

Now stay with me fiscal conservatives, I promise this is a tax you CAN live with and tolerate.

It’s an investment in ourselves tax…Matter of fact, it’s not accurate to think of it as a tax, so view it for what it in fact is, an investment in our children’s future and a gift from those alive today to those yet to come.

One that will fundamentally alter the economic circumstances for ALL future generations.

A big, bold claim I know, so each of you judges the worth of the idea, fair enough?

It is the idea of compounded interest and capitalism taken to the max…

For purposes of discussion, say the new tax is 1% of all gross income. Making it based in gross would eliminate the possibility of evasion. Everybody would pay into it and Congress couldn’t play fast and lose with how much was being collected.

All monies collected would go into a version of Al Gores ‘lock box’ (groan, groan, ok the man had one good idea in his life, come on).

The lock box would HAVE to really be a lock box because the only way to make this work is to create a fiscal sanctuary that Congress AND The American people simply COULDN”T get into. AND as you’ll soon see, as time passed, the temptation to ‘raid’ the lock box would become irresistible.

To make this work a Constitutional amendment would be needed, making this a constitutionally created program, it would have to be literally woven into the constitution.

Congress would have to cooperate and the only way they’d actually do that is if the public and media embraced this idea and demanded that Congress implement the idea.

Full transparency and a special, ‘unanimous vote condition’ would be written into the legislation creating the tax fund and its eventual distribution.

This means that in order to change anything, Congress would have to get a special, unanimous approval from BOTH houses AND then it would have to put the proposed change through the state amendment process, which requires 3/4 th’s of the states legislatures approval.

Just the unanimous voting requirement would keep Congress from raiding the fund because as we all know you can’t get 100% of the people to agree to anything… There’s always at least one cantankerous cuss who’s NOT going along with the group, either out of spite or principle.

Once the needed protection was set up for the fund and a real lock box created we would then start the new tax. Eventually, the amount of money collected would build to an astronomical amount. That means it would need to have built-in safeguards to ensure that it keeps growing untouched until the time was right.

Again the actuaries can run the numbers but the day would come in say, 50yrs. but whenever, when the payout phase could begin.

Payout would be set up so that the amount taken out of the fund on a yearly basis could never be as much as what is being put on a yearly basis into the fund. This would ensure that the fund would continue to grow. The payout in Phase 1 would initially go to eliminating the debt. It would again be written into the constitution that once debt elimination began, Congress could NOT add to the debt.

Boy, they’re not going to like that requirement.

Once the debt was eliminated, Phase 2 would begin and payout would go to reducing taxes.

For every dollar paid out from the fund, taxes would have to be reduced by one dollar. In time with the fund increasing on a yearly basis, taxes would be greatly reduced. Yet Revenues would grow because the economy is growing due to less ‘tax-drag’ upon it.

To eliminate Congress simply raising taxes to end-run around the requirement, an overall cap would be placed upon Congress as to how much it could raise taxes. Say to 10% of whatever amount the fund was paying out. Probably a yearly cap as well as an overall cap would be best.

The only exception to this would be in times of war or national emergency and then it would take a 3/4’s vote of Congress, with mandatory yearly renewal of any increase in taxes over the spending ‘cap’.

What I’m basically proposing is using access to a national ‘trust’ fund to impose spending and taxing limits upon Congress. I’m also proposing to gradually shift taxes from the income tax to the trust fund. The country still needs revenue for public projects, and necessary and worthy programs.

Why would liberals go along with limiting Congresses ability to tax and spend?

Ah, because of the carrots I offer :-)

Once taxes fall to a predetermined level, say 10%, the payout enters phase three…

Before I describe the third phase of the payout from the ‘lock box fund’ lets reiterate where we are; the debt is paid off, so the country is debt free. Over time, taxes have been reduced to an easily sustainable level, say 10% of income.

Ok, phase three payout.

The fund now starts paying out to eliminate the remaining personal taxes. Starting from the bottom up…So those most in need are benefited first. But over time, everyone benefits with the greatest amounts going to those paying the most into the system. While they wait longer to receive those benefits, they are compensated with a commensurately greater reward.

Eventually the ‘trust fund’ grows to the point of essentially eliminating personal taxes.

Incidentally, no one said anything about eliminating business taxes, though they also should be limited to a set amount, I favor a flat tax but that’s another discussion.

Eventually we will have almost completely eliminated taxes from income and thus it is time for the fourth phase and, with an even bigger carrot. Remember, the trust fund has continued to grow…

The fourth phase of the payout is individual revenue enhancement. Again, we start at the bottom with a yearly payment equal to the taxes they would have paid per their income prior to the phase 3 payout implementation of the trust fund.

It’s important to consider the range of individual responses to this program. Basically one of three categories of response is possible. People either work less, the same or harder. That's their choice but in any case, the amount of revenue enhancement is set by the amount they started initially receiving.

As time goes by, more and more people start receiving income from the trust fund, the longer you wait the greater the amount when you do start receiving revenue from the trust fund so again there is compensation and again the longer someone waits, the more able they are to forego the revenue in any case.

Eventually, in say a hundred years(?), the trust fund has grown to the point where the fifth and final phase can begin. And boy, is this carrot a whopper, the biggest of all!

The trust fund starts creating individual trust funds that start at birth…for everyone. Because one child has no inherent right to more than another, (we’re all created equal…) the amount placed into every child’s trust fund is the same. With the yearly amount growing as the fund continues to grow. This would continue until the child reached its majority. Then the funding would stop for the individual and the fund would be available for access by the new adult.

Details like the unfortunate death of a child could be easily worked out, with whatever amount going to remaining siblings, if no siblings existed, then perhaps it would be returned to the public trust fund for distribution to all.

How much, and in what manner the individual trust fund could be accessed would have to be worked out. Common sense would seem to indicate that a mandatory amount should be required to remain so as to continue to grow for retirement, etc.

Depending upon the use envisioned, the individual might be required to withdraw funds according to a formula. Obviously there would have to be exceptions built in for things like medical emergencies.

Well, there you have it.

It may be idealistic but as I pointed out before, it appears to me to be based in sound fiscal principles. It already does work for individuals lucky enough to inherit. Think of Paris Hilton…or not. But you get the idea.

The only thing I see as a real obstacle to implementation of the idea is simple human cussedness. As the saying goes, people can ‘f’ up a wet dream, but we got it right once 217 years ago. I don’t see why we can’t get lucky one more time.

One thing is for sure, with the emergence of certain future realities: artificial intelligence, robotic manufacturing, the eventual discovery of fusion based power (the suns’ source of atomic energy, environmentally clean) resulting in such low energy costs as to be essentially ‘free’ energy. The incredible mineral resources out in the asteroid belts waiting for future exploitation...then using the moon (no environmental degradation) for heavy manufacturing with products shipped down to Earth as we now do with China, productivity will rise to the point of absurdity and we will HAVE to find a new operating paradigm in economics.

To reiterate, the main idea is to create a public trust fund that in time can be used to good purpose. The specifics of how we administer it are details that would need to be worked out. That's a case where many heads are better than one.

So, let the criticism begin and hopefully there’s enough worth in the idea that those more knowledgeable can figure out what needs improvement and actually make it work.

(BTW, not one person on Wizbang responded to the idea. I guess I'm ahead of my time;-)

So, until someone convincingly explains why a public trust fund won't work as well as a private trust fund...I'm going to adopt the 'Lone voice crying in the wilderness' pose.

Hey, it worked for the Prophets! Then again, there's also that bit about a prophet never being honored in his own land...or was it time?

Anyway, I've done my part, you have to decide whether you're gonna drink or just complain about being thirsty.