A Speculative Short Story about How the US Federal Budget Could Be Balanced and the Deficit Eventually Eliminated

Congress Complains

"No more taxes!" cries the Republican member of Congress. "We've got to draw the line somewhere. If the Democrats won't cut enough spending, we'll have to make them do it, by de-funding the government."

Another Republican asks "Isn't there some way to force Congress to make the needed cuts? Cities, counties and states do not allow an unbalanced budget."

The first Republican responds "What we need is a balanced-budget amendment, like most states have. But this requires a change to the US Constitution. Dont we Republicans (plus some Blue Dog Democrats) have enough of a majority to pass a law that says we can only spend so much? Lets have laws that prevent any more new appropriations while theres not enough revenue to cover them!" from passing the bills that keep our base happy, such as war spending, subsidies for oil and for ethanol."

A Surcharge on Revenue

The Democrats hear this Republican talk and decide to propose a special bill that requires all existing revenue sources to be surcharged enough so that revenues balance expenses.

To everyones shock and surprise, the surcharge bill passes in the dark of the night, when Congress was too sleepy to realize what they were doing. As passed, the bill delegates to a committee of Congress the authority to study each current tax source and add on a percentage surcharge. The new legislation requires the committee to keep putting on these surcharges, one after the other, to the income tax, gas tax, inheritance tax, capital gains tax and so on, until the total surcharges on all the taxes bring in enough money to cover the federal deficit.

The President could veto the law, but he doesnt. With an impish grin on his face, he congratulates Congress on a job well-done, and signs the bill into law.

There is a move to revoke the surcharge law, but somebody unearths an obscure precedent to lock-in this surcharge law for a while, during this national budget emergency.

Dodging the Surcharge

The Republicans then look at accomplishing the same budget balance with legislation to do percentage cuts to all the federal expenses, but they can't pass such a bill because war funding and oil subsidies would have to take the same percentage cut.

The only option left is to totally revoke specific revenue laws and pass replacement legislation which restores the original revenue, without the surcharge.

But too many legislators resist passing these replacement laws. And, it becomes clear that the replacement laws themselves will eventually become subject to review by the surcharge committee, after the committee has processed all the revenue bills that were in effect already.

As time goes by, government revenue steadily increases as the surcharges take effect. There are some frantic negotiations to do some cuts in return for holding off a specific surcharge. At one point, a larger income tax surcharge is proposed for the most wealthy citizens. New taxes are considered, on luxury items, corporate aircraft, on large corporate bonuses. Republicans scream in pain.

Eventually, members of the corporate upper class are compelled to turn over much more of their millions.

Things start to spin out of control when the surcharge committee, having finished surcharging the last revenue law, discovers that the budget still isnt balanced, and then starts over, putting a surcharge on top of a surcharge.

Waking Up from the Dream

OK, this is a dream story. Relax, Republicans and rich people.

But there is some historical precedent for a surcharge.

Lyndon Johnson imposed a war tax to fund the Vietnam War. That was a 10% surcharge on the income tax. Johnson's successor, Richard Nixon, extended that surcharge.

What might be the end result of such a surcharge scenario if it were actually attempted? Would Congress simply pass a balanced budget amendment? How about a simple rule that says any and all new expenditures must be matched by either new revenue or a surcharge on old revenue?

More likely, Congress would quickly fix the annoying problem by passing legislation to prevent any use of surcharges at all, and go back to their bad old ways, and a balanced budget would remain a dream.


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