Thursday, October 20, 2011

Budget Fix for the Federal Government

Let's face it we cannot bind future session of Congress to the point that they have no room to deal with war,natural disaster or any other unforeseen issue that threatens the United States. Since 1974 our budgets for the Federal government have automatically increased from the prior year regardless of need. In recent years debate has surrounding cutting the budget but in reality all that has been done is a rollback of automatic increases.

2011 is no different. With the raising of the debt ceiling and all the spending that has taken place - the cuts passed only will reduce the government increase in spending to 5% over 2010. Right now the Super Committee is trying to figure out how to trim $1.2T from the budget over the next ten years. That is what our problem is. We attempt to bind future sessions of Congress to budget limitations that they can change if they don't like them. What we need is a binding element to this process; we need a Constitution amendment.

The new Constitutional Amendment would:

1. Require all budgets by the Federal Government and agencies established on a zero sum basis.
2. Congress can only budget 85% of revenues when debt of the United States exceeds 25% of GDP.
3. Congress can only budget 90% of revenue when debt of the United States is under 25% of GDP.
4. Establish a flat tax at 10% for individuals making over 2x the poverty line. Anyone making less would not be taxed.
5. Establish a flat tax on all corporations at 10%.
6. Abolish all tax credits and deductions to individuals and businesses.