In the United States, we keep seeing more expensive political campaigns, more corporate welfare, more military interventions, more income inequality, and more debt. Our government has been a great success . . . at growing more government. The number one problem for the people of the United States has been identified as the government of the United States.
I would not be running for President if I did not have a solution. The Balance and Credit plan will cut government spending dramatically while growing the private, voluntary, social safety nets at the same time. How can we cut government spending without decreasing services to the people who need them? Two modest changes to government fiscal and tax policy will change the incentive structure and the way government works.
1. Balance the budget, and keep it balanced. It is not as hard as it may sound. Democrats have already published proposals that would cut the deficit in half, by targeting spending that goes to special interests that support Republicans. Republicans have already published proposals that would cut the deficit in half, by targeting spending that goes to special interests that support Democrats. Just combine these cuts with those cuts, and the budget is balanced. There would not be a single cut that is not already supported by half the government. The problem is not fiscal, it is political.
2. Change all charitable contributions from taxable income deductions to 100% dollar for dollar tax credits. This would make it so donations to charity do not cost anything to the taxpayer. The taxpayers would decide how much of the tax liability to send to the IRS, and how much to donate to the charities of their choice.
As taxpayers send more of their money to charitable organizations, less revenue would come into the IRS. Because the budget must be balanced, there would need to be equivalent cuts in the Federal budget. But then we would know where to make cuts. If taxpayers are donating funds to educational organizations, then government educational spending can be cut. If people are donating to hospitals and healthcare organizations, then government healthcare spending can be cut. As long as the private charitable organizations are at least as efficient and effective as government programs, beneficiaries will get the same or more services, as government continues to shrink.
This plan puts government agencies in competition for funds with each other and with the private sector. This will change the entire incentive system for Federal agencies. Currently, if a government agency were created to solve a problem, and if the agency succeeded to dramatically reduce that problem, then they would get their budget cut. If the health of Americans dramaticaly improved, if students began to outperform previous generations, if welfare programs succeeded in making people self-sufficient, then all those agencies would see their budgets dramatically shrink. No wonder we see no progress. Under the Balance and Credit plan, government agencies will feel great pressure to be efficient and effective, or lose taxpayer funds to private sector social programs. Government programs would be run on evidence and effectiveness instead of politics and money. Imagine Federal government agencies with a customer relations perspective!
The Balance and Credit plan empowers women and minorities. Black taxpayers and their supporters can prioritize private social programs such as programs to rehabilitate and reintegrate the formerly incarcerated, rebuild out inner cities, and promote business growth in the black community. Women can choose to fund programs that support their social priorities. Hispanics can choose to fund the educational programs for their communities that actually work to make the next generation independent, self-reliant, with greater economic opportunities. The Balance and Credit plan would be the plan of limited government and greater individual economic freedom, and also the plan of women’s liberation, Hispanic education, and Black Lives Matter.
As chief executive, the President has control over the operations of the executive branch, including Federal spending authorities and the IRS. On taking office, I will deliver a budget and the Balance and Credit plan to Congress for passage. While Congress considers and debates, I would put in immediate spending caps on all Federal agencies to limit spending to available revenue. I would also implement the Balance and Credit plan by executive order. Because Congress may be structurally incapable of balancing the budget and addressing our debt problem, the check and balance of Presidential power may be required. I believe that if it is contested, that the court would find the Balance and Credit plan, similar to Reagan’s 1981 hiring freeze “not only constitutional and legally permissible but, as asserted by the president, they are essential to the well being and general welfare of the American people at this time.”
This type of massive reorientation of a government power structure can only be described as a revolution. I can only see three possible ways to knock out of power the wealthy special interests who control our government, through armed insurrection, massive civil disobediance, or by voting for a candidate who can bring change.
I don’t see anything nearly so terrible resulting. May make government agencies perform better by adding some incentive to make more people satisfied with their performance.
Libertarians tend to be self-reliant individualists. That may be what I like most about Libertarians. It may also be what keeps us a small minority. We recognize that we all have needs for food, shelter, safety, and meaningful work. We prefer to keep the power to decide for ourselves and provide for ourselves.
Most people see themselves as part of social groups that help each other provide for their needs. They are black, white, Hispanic, Asian, Christian, Jew, Muslim, Atheist, straight, gay, poor, middle class, rich, teacher, banker, union worker, veteran, trial lawyer, doctor, business man, Democrat, Republican, conservative, liberal, socialist. It is how they define who they are. Most people choose to give up some of their power as individuals to the group to help them provide for their needs. As Libertarians, we should celebrate the ability of people to provide for themselves without force or violence, whether it is by free association as a group, or by self-reliant individualism.
The mission of our government has been to grow by blocking the ability of people to provide for themselves, as individuals or groups. This makes people need more government, and gives the central government more power.
The political efforts to limit government are doomed to fail unless we have a plan to simultaneously give people and groups the power to provide for themselves, to meet their own needs, to control themselves, their property, and their environment, without infringing on the rights of others.
This is the essence of the Balance and Credit plan.
more…
Of course, this charitable tax credit idea is a non-starter, so I don’t think we need to worry about collapse from its enactment.
pf, complete collapse of the institutions of civil society. A hard landing vs the soft one you generally advocate.
How would it be worse than what we have now?
maf, yes, that makes sense. Sounds like you propose to cut 6.5% x 2. If so, can you be more specific?
Current spending is only 13% over available revenue.
Democrats are more than happy to make real cuts to special interests that support Republicans.
Republicans are more than happy to make real cuts to special interests that support Democrats.
It is not really a fiscal problem, but a political one.
Tom,
Don’t read too much into my words. I used resistance as equal to pushback.
I had thought this kind of idea was pretty standard LP lore seeing how it was entrenched in past platties
mc: I can’t imagine that anyone would send any money to the government, under this plan.
me: Agreed. Love the sentiment from MAF, but his plan contradicts itself if MC’s correct. MAF says he wants to balance the budget yet this plan would likely explode the deficit.
maf: 1. Balance the budget, and keep it balanced. It is not as hard as it may sound. Democrats have already published proposals that would cut the deficit in half, by targeting spending that goes to special interests that support Republicans. Republicans have already published proposals that would cut the deficit in half, by targeting spending that goes to special interests that support Democrats.
me: I’m not sure this all adds up. I’m also not sure what timeframe MAF’s plan balances the budget. I don’t see specified cuts from either the Rs or the Ds.
I suggest a crisper presentation. Ds advocate spending cuts of $x, Rs advocate spending cuts of $y. The MAF plan is $x+y, and it balances the budget by Year Z, assuming revenues remain neutral. (Again, that won’t work if charitable contributions become credits.)
My guess is that neither the Ds or Rs actually advocate cuts, but rather slowdowns in the rates of increase in their least favored programs.
Nice try. Try again.
The balance and credit plan is not designed to eliminate or even reduce corruption. I am not suggesting any changes to the current system for certifying a charitable organization. The plan is designed to reduce the power of both government and multinational corporations, by giving more power to individuals. Power corrupts. I would expect that changes in the level of corruption would follow the change in power. Less power to government and more power to individuals would likely lead to less corruption in government and and more corruption by individuals. It will not lead directly to a perfect society, but could move things dramatically in the right direction.
It removes the power of the federal government to borrow money.
It removes the power of the government to spend unlimited money as it chooses in the name of social programs.
Perhaps most importantly, the balance and credit plan creates the infrastructure for a competitive market on a nearly level playing field between Federal government agencies and private voluntary social programs. I would expect this to lead to greater efficiency and effectiveness by both.
““I wonder if the people proposing this idea are merely pretending …””
“I don’t see any reason for such “wonder.” The proposal seems to me to obviously be offered in good faith, not as some kind of pretense.”
Except that anybody with an IQ above that of a donut has to be aware that any such proposal is made with a backdrop, and in a context, of the corruption which has gone on before. Nobody, but nobody, should ever have allow the Clintons to set up any “foundation” that accepts ANY money from outside the country, and in fact very little from inside. Clearly political influence was and is being curried.
“To the extent that e.g. Clinton have gotten away with disguising personal profit centers as “charities,” I’d rather more people were able to get away with that than that a Lois Lerner be empowered to decide what’s a non-profit and what isn’t.”
I guess you are assuming that these two possibilities are mutually-exclusive. Quite the opposite: I think BOTH things will happen, SIMULTANEOUSLY.
Long ago, I proposed that ex-presidents (and their families) should be legally prohibited from earning more than $400K per year. Or tax it at 95+%. (What the president makes, as a salary, while in office). None of this world-tour nonsense. How many Islamic dollars do you think Obama will get starting January 21, 2017?
“I wonder if the people proposing this idea are merely pretending …”
I don’t see any reason for such “wonder.” The proposal seems to me to obviously be offered in good faith, not as some kind of pretense.
To the extent that e.g. Clinton have gotten away with disguising personal profit centers as “charities,” I’d rather more people were able to get away with that than that a Lois Lerner be empowered to decide what’s a non-profit and what isn’t.
Thomas L. Knapp: You said, “I think it’s a great idea. But I’m also interested in how it would be gamed, for better or worse, by the political process of letting the IRS decide what’s a charity and what isn’t. That’s not “resistance” by any stretch of the imagination.”
I wonder if the people proposing this idea are merely pretending to forget the case of IRS corruption we’ve seen over the last 3 years, with Lois Lerner ‘taking the Fifth’ about her harassing some candidates for tax-free status. Or, are they also pretending to forget that Hitlery Clinton and her corrupt family has been managing a tax-free organizations, which was really just a slush fund to keep them in private planes, expensive catered meals, and keeping their political cronies employed while they are out of office.
Sure, it could be a “great idea”. But depending on how it’s actually run, it could be one of the more horrible political ideas America has ever seen. Who chooses? I’ll believe that this kind of system will work properly when I hear from the news that Lois Lerner has been executed for her role in IRSgate.
I think it would definitely be an improvement over the status quo.
Caryn,
What “resistance here” are you referring to?
I think it’s a great idea. But I’m also interested in how it would be gamed, for better or worse, by the political process of letting the IRS decide what’s a charity and what isn’t. That’s not “resistance” by any stretch of the imagination.
Matt,
==I can’t imagine that anyone would send any money to the government, under this plan.==
While that would make me happy, I can imagine quite a bit being sent to defense. Certain segments love their military and would love to not fund any social programs and only fund the warfare state.
As far as alleviating the charge of “selfish Libertarians”– possibly, but it would raise a potentially bigger one of “privilege” if certain charities benefiting certain groups are not chosen to be supported to the extent that progressives wish. And they will never be supported enough to satisfy the progressives. Disparate outcomes would be pointed to wherein the “privileged” people would have more money to funnel away from certain groups, if they so chose, and that these groups who might not have to pay taxes (not sure how certain limits and exemptions would apply in this scheme) would not have the opportunity to fund their preferred charities. This would eliminate one accusation only to open up ten more.
Not that (to me) this an argument against it. It is an argument against selling it as a means to solve the “selfish libertarians” accusation. That is a useless game of Whack-A-Mole.
Here is from 2002 Platform (it is in many past Platforms, I just had this one up at hand)
To speed the time when governmental programs are replaced by effective private institutions we advocate dollar-for-dollar tax credits for all charitable contributions.
In light of this, I am surprised at the resistance here. This isn’t novel. That isn’t to say it isn’t a good idea (I support it) just that we should have heard this before.
I have always liked the idea, and liked it when I saw it in past Platforms.
However,
==since they will be based on the voluntary decisions of citizens rather than the politics of government officials.===
Somewhat. It isn’t voluntary when you are told you have to give *something* to *somewhere* be it the state or a charity. That is simply more discretion not more freedom.
I’m putting rosin on the bow of my tiny violin for just this tragic eventuality.
I can’t imagine that anyone would send any money to the government, under this plan.
Not that that’s a bad thing. Just sayin’.
Assuming no other changes to the law, the definition of qualified charitable organization would still be defined under the existing internal revenue code, i.e. organizations set up under Section 501(c)(3).
Dr. Feldman,
I’m not disputing your estimate of how good the idea and its effects could be. I find the idea interesting and worth consideration.
But I’m still stuck on that simple question: Who gets to decide what is and what is not a “charitable contribution?”
” it would leave in place a giant complicated tangled mess of tax bureaucracy.” Exactly. That is why it is can easily be implemented. The plan allows taxpayers to go around the IRS, and not send a dollar of their income to the government if they choose not to. The plan sidesteps the “selfish Libertarian” argument, since the tax dollars are going to social programs that will be more efficient and effective than government, since they will be based on the voluntary decisions of citizens rather than the politics of government officials.
The plan could also lead to a very dramatic shrinking of the government bureaucracy, while building up private social safety net programs at the same time.
Good in principle, but Knapp is correct, and it would leave in place a giant complicated tangled mess of tax bureaucracy.
Thomas L. Knapp: You said, “Interesting plan, but who gets to decide what is or is not a “charitable contribution?””
The Clinton Foundatiton is simply a slush-fund for the Clinton family, to be able to fly around in luxury and to keep their cronies near when they aren’t in office. Clearly, such corruption would be well-rewarded in such a system.
This type of proposal was in earlier LP platforms.
Interesting plan, but who gets to decide what is or is not a “charitable contribution?”