Wednesday, January 05, 2011

How about ‘taxing’ government? Where’s the Budget?

Drastic times call for drastic measures. Let’s get on with some serious government reduction! I have two ideas that could both be used by Congress to mandate reduction in the size and cost of government.


The first idea is to establish and charge a ‘Deficit Tax’ on all of the spending of all departments and agencies of the Federal Government.

I heard what, at first, sounds like a wacky idea this afternoon on XM-Serius Patriot Radio. The host suggested that all agencies of the federal government be ‘taxed’ at a rate similar to what taxes are being charged to corporations on all of its current spending allocations. Let’s play with that idea a while.

Hypothetically, let’s use 33 1/3 % as a ‘Deficit Tax’ rate for every department and every agency of the federal government. This ‘tax’ would be imposed on the current budget allocation made to each department under the most recent approved budget. For example, say the overall budget for the U.S. Department of Education was $60 Billion dollars. Starting immediately, that department would be ‘taxed’ $20 Billion dollars [ .333 x $60 Billion = $20 Billion ]. The $20 Billion would be mandated to be applied to reduce the federal deficit. The U.S. Department of Education would then be required to reorder and restructure its operation to operate with the remaining allocation of $40 Billion dollars. This ‘Deficit Tax’ would remain in place until the federal deficit was eliminated. This would give each director and manager an incentive to priorities programs and eliminate waste or duplication.

Personally, I see no need for the Department of Education at all and its entire $60 Billion allocation could be used to reduce the debt and deficit. Like families and businesses in general the bloated government would now need to tighten its expansive belt and cut to bare bones necessities like everyone else.
I see no sacred cows. If we applied this procedure across the board government would be reduced 1/3!  


The second idea would be to adopt Zero-Based Budgeting and require every Department and agency of the Federal Government to begin to phase in the use of Zero-Based Budgeting in their year to year planning.

Here is one definition of Zero-Based Budgeting:

“The budgeting process is an essential component of management control systems and has been an effective system by which management can successfully plan, coordinate, and control. The process involves the creation and implementation of the broad objectives of an organization [ such as reducing the federal debt & deficit, eliminating obsolete, ineffective programs, identifying and eliminating redundancy and waste ]  the detailed objectives, and a short-term and long-term financial plan. The philosophy and procedures used to implement zero-base budgeting in industry and government settings are quite similar, only slightly differing with the mechanics to fit the specific needs of each organization.  
“The basic process of zero-based budgeting is to justify budget requests every budgeting cycle, regardless of prior period budgets. The following sections address the specifics including the history, implementation, drawbacks and solutions, and behavioral impacts of zero-based budgeting.”
In other words, every time a budget is submitted, justification must be made for every program and expenditure. It would force each department director or manager to justify the reason for his or her department’s existence and justify each of the programs of the department or agency.


I think that the combination of these two ideas would one, curtail the obscene spending, and two, would force directors and managers to really look hard at why their department exists. Furthermore, if any department, such as EPA or Energy or Education cannot substantiate a constitutional reason for their existence then those Departments or Agencies must be eliminated. Overall, I would like to see the trend turn from government expansion to government contraction and/or elimination.

The 111th Congress failed to submit a budget last October as required by law. One of the first priorities of the new Congress would be to develop a budget. The two ideas presented in this article could be incorporated into the process if the members of Congress are serious about their promises to cut the deficit. I don’t really think they are, but I hope they prove me wrong.


  1. 'Tax' Government: It is just a way to force government to trim its 100" wasteline!

  2. The first resolution to propose an amendment to the Constitution in the new Congress is a balanced budget amendment, H.J.RES.1 .