debt and deficits

I have had it up to my eye balls with the way that Local, State and the Federal Governments budget and spend money. The system which is used to determine the operating budgets is flawed from the very beginning! FROM THE BEGINNING! So, how do you fix a system that is so very flawed? I say, start at the beginning.

So, let's have a gander at the first "real" step taken towards forming the federal budget: the IRS testifies before the House of Representatives, as to the estimated tax revenue for the following year. I call this the first "real" step because the tax revenue should be the maximum budgeted amount! But, even if it is, it is only the estimated tax revenue and not the actual tax revenue as it has not been collected. So, here we are, with an estimated income for the federal government. What should we do with it? You see, if the estimate is strictly adhered to as the maximum budget total, the economy can shift and render that estimate rediculously high. This is a deficit.

So, again I ask, what should we do with the estimate? What good is it?

My answers are: Nothing and None, respectively.

So, what can be done? Well, if you can't count on the estimate being accurate, what can we use in place of the estimate that would better serve our purpose? Why, the actual taxes collected, of course.

WHAT?!? You say! Yes, use the real numbers! But in following this path, there is a price to be paid. It will not be easy to swallow and, like most good medicines, it will probably work. In order to facilitate a move from estimate income to actual income, the federal government will have to go on credit for an entire year. In the process, banking all taxes for the purpose of funding the government the following year. In doing so, the government, at the end of the year will know how much money can be budgeted for the following year.

Yes, this is over-simplified. No, the tax collection year cannot coincide with the government's fiscal year. There would probably have to be at least one quarter separating the end of the tax collection year and the beginning of the government's fiscal year, possible even two quarters. This is something for Congress to figure out.

Once, the federal government is only spending money it actually has, Congress can actually address the national debt. How should they do this. My immediate thought is to have a mandatory %10 of the federal budget set to pay down the debt. By mandatory, I mean Constitutional Ammendment! This way, our well thinking friends in DC will have no choice. The %10 would be mandatory so long as there remains debt. Once the debt is gone, the %10 would go into savings each year until the savings could fund the government for two years. At this point the %10 would no longer be mandatory. The savings, however, should only be spent in cases of war and national emergencies. Acceptable uses of the savings monies should be in the Constitutional Amendment.

This leaves us with high taxes. Well, death and taxes do seem to be universal constants. I favor the National Sales Tax. No matter what method, once government spending is under control, I would hope that lowering taxes would be, at least, a little easier.