That’s the question I was asked today. 12 Ideas.
A Spending Conversation on X
What Do I Propose?
The short answer is fiscal discipline by Republicans and better tax code and trade policy.
Currently, the inevitable Congressional result is more of this for more of that. Democrats and Republicans are both in on it.
Mish Top 12 Ideas
Proposal #1: Stick to Medicaid guns. Repeal the Obama handouts to states 100 percent. Cut Medicaid funding by 25 percent. Give states a block grant. Watch the states clean up Medicaid fraud fast.
Proposal #2: Cut military spending by 25 percent. Give the money to the Pentagon as a block grant with the note “Spend it wisely”. Stupid programs would be cancelled. Unneeded bases would be canceled. Pet projects like the Golden Dome would never get started. And might I suggest we do not need more tanks because neither Canada or Mexico will attack us, and I don’t want the US to attack them either. We can close bases in Europe too, or make Europe pay us to defend them.
Proposal #3: Dramatically reduce the tax code by slashing all deductions. SALT gone. Charitable deductions gone. Mortgage interest (phase out over 10 years). Note that Trump is adding deductions and making the code more complex while moaning about the number of pages in the tax code and wanting to get rid of the IRS. The way to reduce the need for the IRS is to simplify the tax code, not make it more complex.
Proposal #4: End child tax credits and earned income credits, Make able bodied people work. To encourage people to work instead of receiving tax credits, make the first $35,000 in income tax-free for everyone.
Proposal #5: End all tariffs and subsidies except where genuinely needed for national security. Steel, autos, movies do not qualify. Microchips and rare earth elements would.
Proposal #6: Re-enact the USMCA, apologize to Canada and Mexico, join the TPP now called the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Following Trump’s withdrawal of TPP, the remaining members struck a new deal. These countries now have easier access to each other’s markets than what the US enjoys. I will do a separate post on this.
Proposal #7: SNAP (food stamp) modifications – No snacks, candy, chips, soda, on food stamps. Instead, to promote cleanliness, allow soap and cleaning supplies.
Proposal #8: Lower the corporate tax rate to 10 percent but make it 20 percent on income earned overseas. Some manufacturing will return to the US and all of the games played by drug manufacturers including the entire trade deficit with Ireland related to drug production (a massive $86 billion) would immediately return to the US. I will also discuss this in a separate post.
Proposal #9: Allow immediate corporate writeoffs of expenses, but only for expansion in the United States.
Proposal #10: Lower the individual tax rate and set the automatic deduction at $35,000. To make up for revenue lost, have a modest VAT but no tax on food, medicine, or shelter, the latter up to a base rate indexed for inflation. I have previously proposed a national sale tax, exempting food and medicine, but John Mauldin and Erica York at the Tax Foundation convinced me a VAT was a better idea.
Proposal #11: Heavily tax all executive stock options and pay over $1,000,000 with more of a focus on options and free shares that constitute shareholder dilution.
Proposal #12: Balance all of the above proposals to the required levels to stabilize debt levels while ensuring the middle class gets the biggest benefit from tax policy changes. I am willing to phase all of this in over time, if necessary, to reduce the likelihood of economic shocks, as long as it gets done.
Five-Point Synopsis
- I dramatically simplify the tax code, eliminating much of the need for the IRS.
- I encourage people to work by changing how Medicaid works, by tax code, and elimination of credits.
- I encourage business expansion in the United States via expense writeoffs and a lower corporate tax rate in the US than overseas.
- I reduce trade barriers by rejoining USMCA and joining the TPP replacement.
- I raise revenue at the extreme high end while lowering taxes for the middle class.
I am open for discussion and welcome other ideas. Trump is seriously on the wrong path on most of this.
Related Posts
May 22, 2025: Scott Bessent Has a 3 Percent Deficit Target, How’s He Doing?
Let’s check in on the Treasury Secretary’s 3-3-3 plan.
May 22, 2025: The One Big, Irresponsible, Deficit-Increasing Bill Passes the House
Did anyone really think Republicans would be fiscally responsible?
May 23, 2025: Trump Commands Apple to Make iPhones in the US or Pay 25 Percent Tariff
An increasingly erratic Trump is clueless about what it would take to move iPhones production to the US.
May 25, 2025: Trump Complains About the EU’s VAT, What’s the Real Story?
Do value added taxes (VATs) constitute trade barriers?
Addendum
I failed to mention how to get this done.
It would have to start with Trump. He would have to hold a fireside chat with the nation, explaining why he is doing what he is doing. He needs to convince the middle class they would be better off and why.
By cutting defense spending and Medicaid, he would show Democrats it’s not all one sided. So does exempting the first $35,000 in income.
Instead we have the same old same old which is more spending on this in return for more spending on that plus constant bickering.
Trump has show zero leadership on reducing the deficit.
Addendum II
John Mauldin replied
I like all but the taxing exec pay. Just philosophical on that issue. I would have a MUCH higher VAT and get rid of SS taxes. That would really help the lower income working class.
And thanks for the shoutout.
John Mauldin
Addendum III
I was questioned about steel not being a national security issue. What I meant was a security issue requiring tariffs or subsidies, which I have written about before.
We make steel and can get it from Canada, Japan, and the EU, all allies. I supported the purchase of US Steel by Nippon. Oddly, letting Cleveland Cliffs buy US Steel would have created a US monopoly, making steel a security issue where none would exist if Nippon bought US steel.
For discission please see Biden and Trump are Both Wrong on US Steel Nippon Merger
BOTH major political parties and their entrenched Deep State are incorrigible. They are literally addicted to spending. There is no way to get the federal train back on the track without some sort of disaster or revolution. The US and indeed the entire global financial system is in uncharted waters.
“Expect the Unexpected.” — Heraclitus, circa 500 BC.
THE INCOME TAX
Taxation is an attribute of Sovereignty. That over which the taxing entity is not Sovereign is not a suitable object to tax. A State cannot tax federal assets, nor can a state tax purchases made by the Fed government. The current term is ‘immune’. Fewer people associate with it.
The Sovereignty of the Citizens is identified in the Preamble of the Constitution. It is We the People who created government for our security and pleasure. Courts now use the word immune.
All states are required to maintain a Republican government. Citizens are Sovereign in a Republican govt. Ref. Article IV, Section 4.
A Constitutional Right [such as Trial by Jury] cannot be destroyed by Amendment. If Sovereignty of Citizens can be destroyed by the 16th Amendment, it is a coup. If a judge enforces a coup, it has violated the oath of office and voids jurisdiction and is impersonating a government officer. It additionally conflicts with Article VI, clause 2 supreme law mandate.
The 16th Amendment attempts to nullify specific Constitutional mandates regarding Direct and Indirect taxes. If Constitutional Rights can be destroyed by amendment, the Constitution would be a worthless piece of paper.
The 5th Amendment secures life, liberty, and property as a Right of the people. Liberty, also in the Preamble as a purpose for the Constitution, has been adjudicated to include the Right pursue a Livelihood. Such Rights are not suitable objects for taxation.
A trial by jury cannot be conditioned by a fee or a tax. If otherwise, it could be conditioned out of existence; the Constitution would be a worthless scrap of paper.
§7201 and §7203, used in tax process/prosecutions, have been used in gambling, horse racing, admission charges, and others. They cannot allege violation of a “known legal duty” as required in valid income tax process. Ref. Sansone v US, 380 US 343, 348 [1965].
If there was a valid income tax on Citizens, it would authorize seizure of 100% of a Citizen’s earnings. [There is an excise tax on non-resident aliens on the privilege of being allowed in the U.S. Ref. 26 USC §871.]
An unaware sworn signature on a tax form, over the label of “Taxpayer’s name,” is accepted by a corrupt court to assume the individual is legally responsible for a tax and the IRS does not have to allege violation of a “known legal duty” for valid process. Ref. 26 USC §7701(a)14. Scratching out ‘taxpayer’ and inserting “not to be assumed a taxpayer” has terminated interviews.
The IRS has been weaponized by the SCOTUS with the recent case of Moore v IRS via the precedent of assessed taxes on non-received value. After the 87,000 new armed IRS agents gradually introduce the methodology, the increased value of your home, or the junk pile behind your barn (initially, if you are a selected ‘social terrorist’) will be administratively taxed. Protesting, in the corrupt courts, as Trump has found out, will virtually bankrupt anyone.
IRS computer printouts of claimed income tax values without adjudication evidence are used by states to assess claimed taxes. The values are hearsay and subject to objection and challenge —but maybe not if the individual submits to an administrative review of the states’ assessment. Administrative reviews inherently Taxpayer liability and applications for review [Petitions] impose liability.
The courts are ingenious on shifting the Burden of Proof to the accused who must then prove there is no possible way the tax might be valid. Such a proof is impossible. Ref. Sherry Peel Jackson v IRS; Springer v US, SCOTUS, 1881. Court cases that evidence Constitutional defenses will have Opinions ignoring wins to avoid setting precedents.
Lawyers who have aggressively defended tax cases faced bogus criminal charges and jail or have had licenses suspended.
You must be what is identified as a “sovereign citizen”.
Article IV, Section 4. “guarantees” that every state will live in a “Republican” form of government secured by the federal govt where Citizens are Sovereign and are to be protected from “invasion.” However, you must sleep with one eye open.
I’ll quote Robert Prechter from I don’t know twenty years ago. Regarding fixing out of control spending and a balanced budget- “anyone could do it, but they won’t”. I’ll quote someone else I like- “The only obligation the government has is interest on the debt. Everything else is a political promise, and a choice”.
Not bad. I don’t like a couple of your points, but I’d be willing to take some crap to prevent this ship from sinking.
All this should have been done to help America. Great ideas ! I love the Medicaid proposals!
Start with term limits, healthcare is a massive balloon going to hit the next few generations so end the subsidies to big pharma.
The subsidies to pharma are nothing compared to the subsidies to lazy worthless people.
Mish,
My suggestion is to remove defense/military spending from the calculation of GDP. The way things stand, cutting defense in any meaningful way invites an immediate recession.
Budgets at all levels for the military have to be utilized, or the next years allocation of funds may be cut. There is no incentive for saving, only growth at any cost.
An example of this is trumps trillion dollar budget for the military. He knows that his tariff mess is causing a decrease in economic activity. By shoving money at defense contractors he can mitigate or dodge a recession.
Tax artificial people (corporations) at the same rate as regular people. Tax capital gains at the same rate as wages. What is the deal with passive income being taxed at less that labor income.
Okay, perennial AA counsellors, a moment of reality please. How do you cure drunk and disorderly behaviour that is profitable to the tune of the tens of trillions of dollars? A: you don’t. Or you get in line with Ron Paul, and still don’t, but you have the satisfaction of feeling virtuous.
The plan is money printer go BRRRRRR, deal with crises as they arise, and retire filthy rich like all the smart members of Congress. Everyone else is a sucker.
On point 11, I would also add to it with a proposal to highly tax company share buybacks. They should be reinvesting it back into the business or returning it back to shareholders.
I fear you would only be encouraging more arbitrage … people who sell the goods they buy with SNAP at discount prices in return for cash.
Host countries already contribute to the presence of bases.
In this case, the chance the other nations would pay is vanishingly small.
They would be glad to see the bases and the Americans go.
Americans are not going to defend Canada or Mexico, let alone Montenegro or Estland if push comes to shove. Canada and Mexico feel threatened by America, and so should Europe. Those bases are not there to defend anyone, just to exert control and enable global meddling and mischief.
I have for decades believed that we would reach the point that American would use its military as mercenaries for hire, just to have something to export.
Big problem here – How are you going to expand a ponzi scheme by pulling out pyramid blocks from the bottom?
Nice list, Mish. Save it for when the system crashes & burns and the rebuilding can start. I hate to be a buzz kill, but you certainly know that nothing substantive will be done proactively. If it could, you would see short term-limits pass, which is a necessity for your ideas to be taken seriously.
To illustrate this fact, look no further than the response of Patel, Bongino & Bondi to the release of the Epstein files. If you can’t get so-called Patriots to do the right thing in response to children being raped and abused, there is no hope – https://youtu.be/b6nvVbRgU9A?feature=shared.
Those that believe a white knight will save the day are living a fantasy. If the Deep State can get to Patel, Bongino & Bondi, they certainly can get to Trump or anyone that might have good ideas. Sadly, it will take a Revolution, which requires those with the means (and no family they care about) to risk it all to lead the masses. The alternative is to wait until the masses have nothing left to lose.
The Belgian economist Robert Triffin back in the ’60’s explained that the U.S. (as the nation printing the world’s reserve currency) would need to incur trade deficits to finance growing world trade with a growing money supply. After Nixon took international trade off the gold standard, the way the U.S. has financed these trade deficits is with structural fiscal deficits. During the latter half of the Obama years (after the big GFC stimulus) the two deficits were fairly close. After Covid, all hell broke loose, and it’s been bigger and bigger deficits ever since.
My point is that if you want the domestic fiscal budget balanced, you’ll need international trade to balance as well, or there won’t be enough interest-bearing paper to go around to make the math work. That pretty much sets a floor on how far you can go to balance the U.S. budget. Our deficits have far exceeded that floor today and every year since the pandemic ceased to be a problem. Why? We’re hooked on the fiscal heroin. So are the countries we trade with. They love perpetual trade surpluses with the U.S. and the interest income we pay them. At today’s high interest rates, they are getting pretty fat at our expense.
Mish, we are like the drug addict that has an infinite supply of fiat paper to feed our habit. Getting off the drug will mean a huge bout of withdrawal pain. By the way, cutting Medicaid, SNAP and other relief for the poor is absolutely the worst ways to cut the budget because it will make the withdrawal pain much worse.
First start with the premise: the withdrawal pain will be massive through the transition to a balanced budget. Some budgets (like health care, particularly for mental health) will actually need to be increased during that transition.
Cut the military and intelligence budgets by 50% and you’ll start to get most of the fat and deter U.S. meddling abroad. You’ll have the added benefit of fewer wars. Let other countries (East Europe, Taiwan) mend fences with their neighbors as best they can.
One thing that I can 100% guarantee is that if you increase taxes BEFORE you cut spending, spending won’t be cut. Proposal #10: Lower the individual tax rate and set the automatic deduction at $35,000. To make up for revenue lost, have a modest VAT but no tax on food, medicine, or shelter, the latter up to a base rate indexed for inflation. I have previously proposed a national sale tax, exempting food and medicine, but John Mauldin and Erica York at the Tax Foundation convinced me a VAT was a better idea.
And we should NEVER give the feds another revenue stream unless they extinguish an existing one. Trade a VAT for no income tax but never a lower income tax. Because over time both will be increased!!
Proposal #6: Re-enact the USMCA, apologize to Canada and Mexico, join the TPP now called the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Following Trump’s withdrawal of TPP, the remaining members struck a new deal. These countries now have easier access to each other’s markets than what the US enjoys. I will do a separate post on this.
We should never, ever apologize to Mexico or Canada. Particularly the former given the blind eye they have turned to the drug trade. Trade agreements need to provide a net benefit to the US not to some academic notion.
There is a problem with cutting health care people are not realizing. Your still gonna pay. Once benefits are cut does not matter medcare medicade Obama care these people will go to the emergency room. Hospitals have to treat anyone who shows up. Citizen or illegal. The hospitals will pass that cost on those with insurance and even more to those who self pay.
Personally i liked obama care. Even thought most years i i paid full price. Felt like i had someone somewhere representing me cost wise. Honest questions if asked about coverage.
Not so. That is what they said when folks were added to Medicaid under the Obamacare expansion. Emergency room visits would go down and the cost curve was going to bend. It did not happen. In Idaho Medicaid expansion was supposed to cost just over $400M and it now is over $1.3 billion. These new Medicaid participants are seen as a cash cow by providers because they don’t see the bills, the taxpayers get them.
Emergency rooms ONLY have to treat items for an EMERGENCY. Also, there is no follow-up care. If you need surgery you won’t get it at the hospital unless it’s a life threatening emergency. You don’t get free follow-up Dr. visits, free prescriptions, free physical therapy, etc.
Mish. Run for POTUS and I will vote for you. Brilliant ideas.
I am imaging the TV commercials on the Medicaid cut in funding.( remember I agree with you)…….Liberal Dems will say not only do they want to kill your grandparents but they want to kill their grandparents back in Honduras too!……
Yes #2 is the give and take but since when do Democrats do give & take anymore?
I do see your additional comment on steel, steel is national security.
I would go to 5% or exempt on Corporate Income tax. If you bring the jobs back to America, I have no problem with zero corporate income tax. Govt would be collecting some of that tax from American worker.
#11 Who pays the new tax on executive stock options, corporation or individual and would it matter?
Add #13 68 or 70 is max someone can run for POTUS
Max age for any federal election or appointment 65
Max wage 12 times the corporations lowest paid employee, no need for min wage law
Max personal wealth $2B anything more confiscated by treasury
All political donations (bribes) unlawful, publicly financed campaigns
All political speech considered under oath lies treated as perjury
Medicare for all
I like that list
Raise corporate taxes, and let deductions and exemptions for investment in US capital and labor lower taxes. Treat artificial people (corporations) the same as regular people. Treat corporations like a family unit.
First of all i think we need to be more concerned about the small one line sneaky rule of law eroding changes they have in this bill or the budget wont matter.
I would say start with a balanced budget. Each department gets a basic operating expense.
Then say congress sends 800 million to Ukraine or say fema gets 50 million for a hurricane. Well those cost get added to the following tax ()year divided by 328 million or whatever tax payers. Maybe on a graduated scale on income. Each tax payer gets note your share of the cost of 800 million to ukraine amounts to (xxx ). Your share of the cost to fema for hurricane bobs relief is (xxxx)
Imo this will keep politicans feet to the fire and also make the american voter responsible. It easy to spend money when its not yours( politicians) and its easy to let people spend money when you dont see your paying for i( voters)
I think we should go back to pre regan tax brackets. The whole trickle down economics might just be the original big lie. Hasn’t worked since the 80s or we would not be in this predicament. Even the current budget is corporate trickle down.
On a similar topic
Your gonna pay. Expect your state and local taxes to go up to cover the short fall from the federal government. .
On another note for those of you who think ca is expensive tax wise and texas is not. Maybe google fidelity view points. Sun sand and sticker shock. Does the sun belt deserve its reputation for cheaper living.
.
I agree with your ideas. I would add:
1. ALL welfare benefits (Medicaid, food stamps, WIC, housing assistance, Obamacare) stops after 2 years. Individuals need to learn fiscal responsibility and not have children they can’t afford.
2. Increase deductions for social security and eliminate a salary cap. SS is paid on 100% of income. Also increase retirement age to 70 for everyone under 50.
Yes, raising the SS retirement age to 70 while life expectancy in the US is declining would definitely save money, but be quite unpopular.
Life expectancy is an unknown due to the Covid vax/covid injuries.
It had already been dropping slowly but steadily in the US as far back as 2014. The COVID aftermath has seemed to only accelerate the trend.
If you are self employed the defacto retirement age is north of 70 right now. Only government employees and select others can retire at 65. 401 Ks were the great abandonment of workers.
I retired in my 40s. I started saving, saving, saving in my early 20’s. Retiring early was my priority. I did without a lot of things to achieve this goal. It was worth it as I now get to travel.
Do you have kids?
No. I chose to not have children over 30 years ago. I didn’t want to bring a child/children into this world. I knew the world was changing for the worse that long ago.
So you are in fact “spending your children’s inheritance .” I applaud you. Travel 🧳 well and safely. Did we cross paths in Morocco 🇲🇦? Or was it 🇨🇱 C? Happy trails.
So how is that positive for the majority? That is how cultures die. That is exactly how and they America and the West is dying. And why immigration illegal or legal of other cultures will replace Americans
We have to the increase the retirement age, and 70 sounds like a good number. So everyone under 5, has plenty of time.
One AI/robots/automation takes everyones jobs, there will be immediate retirement, regardless of age.
Empires Rise and Fall. Politicians promising a load of things that end up being just Unaffordable to maintain. Also Endless spending on Wars around the World to try to keep the Empire in charge. The Debt obviously is never going to be overcome.
So, Political Corruption from all sides ends up finally sinking the Ship. The big question is about how long can the declining Empire keep stumbling along?
What does it matter how long this empire stumbles along? Do you think the next empire will be any different?
the only way their will be change is replace leaders and politicians with an AI that truly cannot be bribed and doesn’t require money, power or human recognition.
No libertarians have been elected to office because the “dictator solves all problems above” will never be approved by 80% of the people. I didnt see in your list increasing taxes on the wealthy to compensate for 60 years of their tax avoidance (Uncle Warren? .. pay up!) Much easier to get 75% of the (poor) population to vote for higher taxes on the wealthy than to placate a few thousand super-rich. Where are the rich gonna flee to? We’re the 4th lowest taxing country in he world!
You misunderstand. Politicians need the money of the wealthy, so on that basis alone, politicians are not going to take it away from them through taxation, because then there will be less for themselves.
I favor the flat income tax that was proposed by Steve Forbes when he ran for president, simple post card and minimal need for IRS agents.
As for the medical costs, here is a thought:
The Bill To Permanently Fix Health Care For All in [Market-Ticker]
all the ideas are decent. but it’s more a dungeons and dragons game. so far into the fantasy world. face the reality. pax dumbfuckistan is a world wide war mongering democracy. the people here have been voting for non stop war and debt taxation and rounding up their own citizens into the world’s largest gulag system. reality will set you free.
I’d also have to include the failed supply side economics, growing out of the deficits. The problem with economics is that banks don’t lend deposits. An increase in bank CDs adds nothing to GDP. Drive the banks out of the savings business, which doesn’t reduce the size of the payment’s system.
The FED’s Ph.Ds. are good mathematicians, not good accountants. They don’t know a debit from a credit.
Of the several uses to which savings may be put, e.g., financial investment (the transfer of title or claims thereto, buy backs, etc., creating a leakage in the circular flow of income), all exert a greater or less dampening influence on the economy except real investment outlets.
The increase of debt in the late 1920’s had a less expansive influence than the absolute figures would suggest. An increasing proportion of the debt was represented by brokers’ loans and other types of financial investment.
12 GOOD IDEAS. If your plan is to chipaway it the debt.
To blow things wide open, we first have to educate all the voters that sold their votes to the highest bidder. (The Democratic Party)
The US Government is bankrupt and therefore the entitlements programs they can’t pay are bankrupt.
Send them all to the US Debt clock ( National Debt Clock )
So they can see the size of our debt, the debt per tapayer and the ratio of dept to GDP and the new debt so far this year that is $2 Trillion with 4 months to go.
Then slash spending and raise tax rates. Take the politics out of the picture and make this about Accounting, Finance and Survival.
I agree with about 90% of the proposals. Others I would haggle over.
We have 750 bases overseas. Cut some of them out. They increase both the trade and the Federal deficit.
overseas warmongering imperial footprint also has the biggest contingent liabilities. amerikans on saudi land…… 9.11.01, and the idiotic wars afterward is a perfect example.
I like all of these proposals. And add, We’ve got to penalize Con-gress. There is no way they want cut anything. Bush1 spent $ on Iraq war that we didn’t have. Obama then said “war is over, so let’s spend that $somewhere else” , when we didn’t have it to begin with. Hat tip to one of the above readers on “cannot run for re election if deficit is larger than when you took office.”
Also need to do away with the internal budgetary thinking of govt. they essentially spend every last $ they are allocated wether needed or not. Because the next budget always starts with “we spent this much , so we need at least this much next year”. They are inherently going to spend more to get funding floor set back up the following year. Maybe add some sort of bonus for departments that don’t spend all of their allocations. Some sort of incentive for them. Feds use taxes on citizens as incentives or disincentives. Somehow need incentives or disincentives withing those halls. Reelection doesn’t seem to work.
Agree on simplifying the tax code. While we are at it, there is no reason that machines could not take over 99% of the work that the IRS and tax filers do.
Cut spending ten percent across the board. Then cut another ten to get rid of woke and wasteful spending.
Donald couldn’t stand a 3 day weekend to relax. Chairman Mao ZeDON, backs down on EU border taxes for today. He only cares about being in headlines. End of story. That is just like Hitler. 2 great actors craving headlines. The rest is eyewash.
There’s a convention of states movement currently trying to have enough states pass a resolution to call for a constitutional convention mandating a balanced budget. They have already succeeded in a number of states but process is slow but there is hope.
Others have written about how a Constitutional Convention could be dangerous. We don’t know that the convention will limit itself to the balanced budget amendment and not come up with whacky ideas that further write our rights. Look at what happened in 1787. They met to discuss the Articles of Confederation and came out of the meeting with a whole new document. It was a coup. Not that what came out of the 1787 coup was bad, but here in 2025 look at all the sociopaths and psychopaths out there from places like CA, IL, Seattle, Portland, etc., who might go to such a new convention.
Was not aware of that, but isn’t there a way to have the convention stick to that subject alone without all hell breaking loose.
Unfortunately, there is no way to confine the limits.
This is a very interesting read, and shows why ALEC is pushing for one:
https://www.cbpp.org/research/states-likely-could-not-control-constitutional-convention-on-balanced-budget-amendment-or
Whatever a convention comes up with would have to be ratified by the people in the states. (experience = state legislatures.)
Historic bit: In 1787 the Articles of Confederation Congress approved the admission of Kentucky as the 14th state of the union. A day later word came that the Constitutional Convention had approved a new U.S. Constitution. The Articles of Confederation Congress deferred further action on Kentucky statehood until a new Congress could take it up. As a result Vermont was admitted as the 14th state, and Kentucky as the 15th state.
been following them since they started. would be the best way to have a orderly and peaceful secession, which is for sure in the cards in the near future as the feds go bonkers and bust.
A Convention of the States appears to be the only way to effectively rein in federal over-spending. The fear mongering regarding how such a convention could “runaway” and alter the existing Constitution is pure fiction. Anyone who takes a few minutes to review Convention of States legislation in any of the states that so far have called for a convention would quickly learn that there are strong safeguards in place. One example is that delegates to the convention would be legally obligated to stick to the limited areas approved by their state’s legislation. They would face criminal prosecution of they strayed. Additionally, any proposed amendments coming out of a Convention of the States must be approved by the legislative bodies in 38 states (three fourths). Clearly, any whacky or dangerous proposed amendments will never get close to the 38 state approval level that is required.
“any whacky or dangerous proposed amendments will never get close to the 38 state approval level”
Do you realize that a mentally ill man is POTUS and was voted in by a 1% win over his opponent. I could see 38 states giving us ANYTHING, no thank you.
Politicians aren’t modest, they all want to be Alexander the great. Given this fact, modesty in government is unlikely. More likely, is sovereign defaults, screeching special interests and some variation of bankruptcy, like a currency crisis.
Agree. I noticed in his original list Mish mentioned Defense spending but not the other 2 of the big 3 – Medicare and SS. Maybe that has something to do with his focus on ensuring the middle class gets the most benefit from the tax policy changes.
Also not on the list: getting rid of the central bank otherwise known as the Federal Reserve (which is neither a federal agency nor which has any reserve). If there is no central bank to print money and buy up government debt, then Congress will be forced to raise funds directly through selling Treasuries or taxation instead of through the insidious process of inflation, which most people don’t understand.
Nice suggestions but I doubt they will ever be implemented. Cutting programs involves pain to the citizens of the USA. People do not like pain. If your elected representative votes for ‘pain’, he will be voted out office….quid-pro-quo. Program cuts, hence ‘pain, will not be coming until the time that there is no other way out and the cuts & ensuing pain will be forced upon us. Prepare accordingly.
UAW and other unions are for Trump. Most business people understand that first u raise prices, before settling with lower ones to make a deal. Anti Martingale is positively dynamic. It’s a compounding system when u win. China increased their defense budget in an Anti Martingale betting. Dystrophy, a degenerative DOD invites troubles, not liberty !! Taxing the rich never worked. The rich will hide their assets offshore.
Well, this much is certain. To close a $2T budget deficit, we’re going to have to do something pretty radical. In general, I’d be on board with most of these changes. The fix has got to include cuts beyond the waste & fraud and the tax code has to be simplified. Corporate Ameria only pays 20% of all taxes. That needs to be closer to 33%. There are way too many loopholes for everyone. BTW, the VAT is just a tax / tariff, so let be clear about what’s really going on. I do like the idea of a modest baseline VAT / tariff of say 10% on everything imported into the US.
1) Does the EU have 19%/20% VAT on most consumer goods: yes the have.
2) Does the EU have tariffs on cars, agri and farming: yes the do.
3) Did the EU bureaucrats imposed many regulations on themselves: yes the did, choking liberty, like the Chinese bureaucrats.
4) Does the EU have a large trade surplus with the US: yes they have. So, f**k them and especially f**K the Irish.
5) Did the EU increase defense spending: yes they did !!
Proposal 5) tariffs force co to produce onshore in the US. Without tariffs they will not come. Capish. Defense spending should rise. Cut waste, social spending and pet projects. Defense spending are more important than steel, autos, pharma and rare earth. Cutting defense spending is idiotic.
Proposal 9) 100% R&D write off in the first year. Or: 100% in year one plus 25% in each of the next 4 years for a total of 200%. It will enable small businesses to hire workers and expand.
Proposal 10) a moderate inflation is better than VAT. It’s a stealthy tax. Highly skilled and skilled workers will earn higher wages. They will move to higher income tax bracket. Tariffs, higher income tax collection and a smaller gov will fill gov coffer and will enable the gov to cut debt fast. Andrew Mellon was smarter than Mish and John Mauldin.
Don’t open the VAT pandora box. It will start low and move up to a higher bracket, to 19%/20%. We are not the EU. A good economy lifts all workers. Don’t increase taxes on the rich. They spend and invest the most.
If we enter a recession the Fed might cut rates and stay put for a while. Lower rates will enable to gov to cut debt faster.
Defense spending should…rise? So $1T is not enough to defend our borders?
And it’s better to steal indirectly through inflation than directly through a VAT? Why?
Yes and yes. 1) We won WWII. Thereafter we sent expedition forces to squash terrorists all over the world. China is a rising superstate. If the DOD degenerate China will win without firing a shot. Their Monroe doctrine is about ruling the wave and all the choke points to subdue us. Trump gets it. 2) Highly skilled and skilled workers will earn higher wages in real terms. They will lift all wages. Palo Alto and NVDA will not raise inflation. Higher oil and NG will.
More tanks for defense the kids taking them out with cheap drones will need more targets. More surface ships too, same reason.
Wow, that has such a simple and intuitive ring. It’s like the first time I heard of velcro or the smartphone. Why hasn’t this spread wider? How to get it out there? Instead we get a bipartisan project, “yet another version of what we already were getting, with a new version of election sales fakery plastered on the front.” This set of solutions resets what we blundered into: certain logical/institutional gaps in the Constitution, that left space for possible abuses, which by a sort of Murphy’s law, have gathered and intensified. But mobilized voters could fix it.
You’ve addressed this question a number of times before.
There is NOTHING that anyone can do as long as politicians require huge sums of money to run for or stay in office. Because they WILL sell themselves to the highest bidders.
So kick back and enjoy the ride until the AI overlord(s) take over, robots replace all workers and everything becomes free.
Except bots seem prone to the same temptations which game theory shows are logically present in all entities and decision structures: a world of differential advantages inherently has winners and losers, and temptations to cheat.
In a post-scarcity world where anything anyone could want is free, the power of money, status, ownership of anything or respect is meaningless.
Great points as usual.
Only a couple of points i would differ:
VAT is hugely complex and a burden to businesses, not just large but anyone that writes invoices (plumber included).It is not simply a case of schlapping on a %, filling a return and paying the tax to the overlords – it involves various rates, deduction of some but not all input vat, various rules on cross-border (inside eu) – reverse charges and other mallarky and various procedures. – a huge pain the neck. Whilst we don’t have sales tax where I live (EU VAT) a sales tax sounds far more simple.
Furthermore, I cannot understand John Mauldin’s statement that VAT would somehow be better that Sales Tax for the working classes. It is true that each value add step is taxed and therefor, potentially the (visible) portion of the last step could look lower, still bringing in the same sum to central gov, but all expenses (incl tax on value-add), including taxes, are reflected in prices at each step of a process, thus, the end user would be hit with the same tax expense, whether it is visible as a sales tax, or partly visible (VAT) where previous steps are “baked in”.
I tis true that input VAT is deducted, but the first inputs are burdened with a tax which, naturally, they will recoup and reflect in their price. Taxes will always trickle down to end customers, however you dress it up.
Add to that the complexity and huge expense of compliance (butter for the advisory industry) and I would think sales tax is hugely preferable.
If we want to reduce the size of government, red tape and unnecessary expense, VAT is not the way to go.
ON tarriffs, I agree but what you propose should be the end goal; but we need to make sure that our competitors play fair. Tariffs can be a tool to enforce agreements and stop abuse.
Living by our ideals (free markets etc) whatever the heck everone else does, will work as well as the EU does by sticking to it’s hollier than thou principles. (note: EU is not in a great place)
Not sure either, on the reason for the VAT Tax from Mish? Mish stated: “I have previously proposed a national sale tax, exempting food and medicine, but John Mauldin and Erica York at the Tax Foundation convinced me a VAT was a better idea.” But He didn’t share Why?
A Flat Tax or National Sales Tax would be a better choice imo, but I must hear and understand the theory as to why it’s not, over a much preferred VAT…
To me,a middle class 55yo white guy from blue collar it actually Sounds Fair
Encouraging states to stop fraud on our hand outs would be awesome.
As an aside, the news in France today is a video of Macron’s wife giving Macron a slap that rocked back his head. They were getting off the plane in a visit to Vietnam yesterday. I don’t know what he did but she didn’t like it.
Given the global picture, let’s hope that micro-instance doesn’t proliferate. Then it all goes like an agitated ant-hill.
Macron’s grandhusband under the blonde wig?
She could have simply “Flicked Him” with the same results, No?
Good program over all. It’s interesting that John Mauldin likes having a VAT tax to replace SS. I am not a fan of VAT taxes because they often are hidden to the buyer unlike a sales tax where you see how much you are paying. Now comes the “but”. But I do recognize that a VAT is a very good way for a government to raise revenue. That uncontestable and is why VATs are so popular with governments and not because it gives exporters an edge. That part is an emergent property of the VAT and not its “raison d’être”. Scott Bessent is well versed in economic history and actually taught courses in it a Yale for a few years so he knows how governments raised money in the past and what worked and what did not work.
In the past taxing peasants didn’t raise much money because they didn’t have any like today. Taxing the income of the rich is better but causes a lot of resentment and since they have a lot, they can hide a lot of it also. In the past the best way to raise money was not to tax income or wealth but to tax to the hilt what the wealthy buy and use.
Human nature does not change and wealth is just a way to get status and as primates we crave status above all. Once you have status you must show it not so much to the lower classes but especially to your peers and the only way to do that is conspicuous consumption to show that you are in the club and to stay in the club you have to show that you are rich enough not to be bothered by a tax on something you bought. Look around Dubai and you see it in spades.
An import tax on luxury products imported from trade from India and the Indian Ocean paid for 40% of the Roman Empire’s military budget during the Imperial period for example. The Italian city states had heavy taxes on luxury products and by them financed their governments. Those taxes did not hinder economic activity and since those cities were run by the rich they were taxing themselves because they saw the utility.
Today if you want to raise a lot money then put a very high VAT on luxury product sales and keep income taxes at a reasonable level. Take lessons from history because frankly when it comes to money and there is nothing new under the sun for centuries and perhaps Millenia.
I could buy into that theory. How do we keep the VAT from bleeding into the Non-Luxury Products is one of my biggest concerns.
Well that and “Whom” Gets to Decide what qualifies as a “Luxury Item” of course. Looking for lots of trouble down the road with that one imo!
I consider VAT to be a Worm Tax. One that slithers it’s way, where many unsavory, but powerfully folks pay for, into places it doesn’t belong, and away from places it does. The people who make the rules should never be the ones most effected by those same rules…
“Deficits don’t matter.” – Dick Cheney
Never listen to Dick Cheney.
Paraphrase of what I think was LBJ’s thought: we are the USA, we can never run out of money, so we can fund a war (with some new debts in the face of JFK’s tax cut) and invite everyone into the prosperity tent, to more pie with a boosted welfare state.
What we see now is a sort of cartoon-ized version of that thought. Plus the entitlement (and fears) that so many of us, as recipients of some bit of it, have come to feel.
never take Dick Cheney on a hunting trip
I don’t think I’ve seen anyone suggest eliminating the step up provisions in inheritance. I don’t think there should be a tax on inheritance but when the assets are sold the tax should be on the original cost basis. There are huge gains out there that are completely avoiding being taxed. The step up provisions make since when there were much smaller exemptions.
This is a reasonable line of thinking too
“What should we do” is the wrong question. Everyone’s got an opinion and none of them matter.
The question to ask is what checks and balances exist that will force a solution, and what form must that solution take given the incentives involved?
So far Congress doesn’t have the will to cut the deficit, and no recent President has wanted to risk the required political pain prior to their lame-duck final 2 years.
So far as I can see, historically only the bond market has shown the ability to rein in out of control government spending. Borrowing is vital to the economy. Rising rates focus the public mind on economic policy in a way that abstractions like deficits and debts never do.
Rising rates force federal interest payments up, and that constrains the discretionary spending that Congress needs to buy re-election votes. No one in Congress is going to want to be stuck in a situation where they have to cut off the “free cheese” to their sponsors!
From the late 1970s through the late 1990s, the balanced-budget approach currently advocated by fringe Republicans was actually the mainstream attitude of both parties – because the bond market demanded it.
Now, what spending and tax adjustments would persuade the bond market that the U.S. will remain a going concern and not go full Zimbabwe?
To escape the tyranny and discipline of the bond market (which enriches lenders…) a government has to balance the budget and stop persistently borrowing. Hey, what a concept!
Except you already have 36 T that has to roll over.
Higher rates has never stopped CONgress from spending, and since Govt is the biggest borrower, it’s ludicrous to believed the Fed can reduce inflation by raising rates.
Evidently you weren’t an adult in the 1980s and 1990s when rates did exactly that – stopped Congress from spending.
There is an upper limit on interest costs as a share of Federal Tax revenue, beyond which the presumption tilts towards Federal bankruptcy and “no re-elections for you”.
Phase out all tax credits, exemptions, deductons, and subsidies, wherever they exist. Phase out the GSEs and get rid of the FHFA. Gut 90% of all regulations and permits at all levels of government. Disallow stock buybacks, stock options, and other such giveaways to corporate executives.