Congress Faces Revenue Challenges for New Budget Process
Congress is exploring new revenue streams to manage the national debt and support President Trump's budget goals, proposing various strategies including taxing retirement savings and federal asset sales.
The Congress needs new revenue in order to pass a budget and unlock the reconciliation process -- whether in "one big beautiful bill" or two -- if it is going to accomplish President Trump's agenda without bleeding massive and ongoing amounts of deficit spending.
The national debt is currently more than $36 trillion. We pay interest on that debt, an expenditure which is growing rapidly. And we need to pay that debt down not raise it with higher debt service. We also need new expenditures -- a massive increase in procurement in the Department of Defense for example -- expenditures that, if not at least partially offset by cuts to ongoing spending or new revenue, will see the debt cross $40 trillion in the president's second term. Here are four suggestions for the GOP budgeteers:
- Utilize Retirement Savings: Americans are thrifty. They have socked away more than $37 trillion in retirement savings in 401(k) plans and traditional IRAs. Those savings have never been taxed. They will be taxed upon withdrawal. Congress could open a one-time window that allows those savers to convert those funds to Roth IRAs for a one-time flat tax to receive immediate revenue.
- Sell Federal Assets: Sell federal land and federal spectrum rights. The U.S. has a lot of land and spectrum. Auctioning some of it could increase productivity in the country and generate significant revenue.
- Implement "Sin Taxes": Impose a federal tax on marijuana and online gambling sales. This could outweigh the lost revenue for states by placing the first dollars of taxation into the federal treasury.
- Reduce Federal Workforce: Enact a 10 percent reduction in the federal civilian workforce. Congress could authorize the president to make necessary cuts to ensure a balanced budget.
These four sources of new revenue could yield trillions in one-time revenue and billions in ongoing revenue without raising income taxes. Creativity is essential for Congress to address the financial challenges ahead.
