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Tuesday, December 10, 2024

The Federal Debt Crisis

This is the first part of a two-part post about the U.S. Federal debt and fair taxation.  I will try to keep this part brief.  

Like a slow-moving train wreck, the United States is in a government debt crisis.   The debt crisis has been developing since the Reagan administration of the 1980s.  Federal debt as a percentage of GDP ranged between 30% and 40% from 1970 to about 1985.  Debt increased from 1985 to 1992 before settling in a range between 50% and 70% of GDP.  A sharp increase occurred in 2009-2010 after the banking crisis of 2009, establishing another plateau about 105% of GDP from 2010 to 2019.  Following the Covid pandemic, debt/GDP increased again to a new plateau of about 125% of GDP. 


Image Credit: CDCData.com

The reasons for the increasing debt are clear.  Debt began rising during the Reagan administration due to deliberate policy choices regarding taxation.  Under Reagan, Republicans enacted a series of tax cuts intended to limit the size of government by limiting government funding.  The strategy was called “starve the beast”.  By the end of Reagan’s presidency, however, deficit spending resumed its upward trajectory, driven by higher military spending and lower taxes.  President G.H.W. Bush negotiated a plan with Democratic congressional leaders to restore a balanced Federal budget, but was stymied by members of his own party, led by Newt Gingrich.  During the Clinton administration, moderate tax increases briefly reversed the trend of increasing debt, but were in turn reversed by more tax cuts during the G.W. Bush administration.  Still, overall, increasing debt was roughly matched to increasing GDP until the financial crisis of 2009.  The government then embarked on a massive spending program to avoid economic collapse, driving debt/GDP to over 100%.  A relative plateau of about 105% debt/GDP continued, despite a new Republican tax cut in 2017.  In 2020, the Covid pandemic caused another major economic disruption, and the government launched more spending to mitigate the economic consequences of the disaster.  The Payroll Protection Program enacted under President Trump, largely a handout to businesses and employers, was nearly one trillion dollars alone.  Debt/GDP took another step change, to about 125%.  Stimulus spending under President Trump in the CARES Act and the PPP totaled about $3.1 trillion.  Early in his presidency, President Biden followed with the family-oriented American Rescue Plan Act, which added $1.9 trillion in non-productive spending.  Unlike the later Infrastructure Act or climate-oriented Inflation Reduction Act, there was no increased productivity associated with CARES, PPP and ARPA.  The stimulus spending prevented a deeper recession by increasing liquidity in the economy, but contributed to inflation and worsened the debt-to-GDP ratio.

Measures of Government Debt

There are two different measures of Federal debt, and economists are divided in terms of which figure is more significant.  The Treasury Department reports Debt Held by the Public in 2024 at $28.2 trillion (T), exactly equal to forecast GDP for the year.  Treasury also reports Intragovernmental Debt of $7.1 T, for a Total Public Debt of $35.3 T, or 125% of GDP.  (Intragovernmental Debt largely consists of holdings in the Social Security Trust Fund which have been loaned to the Treasury and spent.)  The chart above, from ceicdata.com, uses the broader measure of government debt.  By contrast, in an opinion piece, Penn-Wharton Business School uses Debt Held by the Public as its measure of federal debt, disregarding Intragovernmental Debt.  I’m skeptical of this approach, because intragovernmental debt has very real obligations attached to it, and defaulting on intragovernmental debt would necessarily default on those obligations (i.e., social security payments).  That’s politically untenable, and isn’t going to happen.

Another element of government debt is debt issued by state and local governments.  This debt is generally ignored in discussions of government debt, but it also has an impact on the economy.  In the United States, many government functions are performed by the states rather than the federal government.  This is in contrast to the majority of other developed countries.  The difference can be seen in taxation statistics from the OECD, where the United States is an outlier in terms of Federal taxation.  US Federal taxation is about 50% of the OECD average.  Federal-level taxation is not directly comparable between the USA and other OECD countries, because in the USA, a number of government functions and the associated taxation are performed by the states.  But when looking at total taxation, the United States is still low, at about 75% of the OECD average, and among the lowest-taxed of the 38 OECD countries.  

So, in the United States, figures for government debt should include debt issued by state governments.  The most recent estimate of state & local debt I could find was for 2021, at $3.3 T.  In total, then, including intragovernmental debt and state debt, government in the United States has issued about $38.6 T in debt obligations.  This places the US debt/GDP ratio at about 135%.  

Why Does Debt/GDP Matter?
A higher debt/GDP ratio increases the cost of running the government, increases the risk of default, and impairs the economy.  Interest payments add to the cost of providing government services, and high payments may be difficult to maintain in the event of an economic crisis.  

At high levels of debt to GDP,  government borrowing consumes capital available for private lending.  This limits investment in business opportunities, home-buying and personal consumption.  High levels of debt impair economic activity and growth.  An economic model by the World Bank identified a debt-to-GDP ratio of 77% as a tipping point, with progressive impairment to economic growth for debt above that level.  According to the model, at debt/GDP of 100%, U.S. GDP growth is already impaired by 0.4%.  

For about a century, US government debt has been generally regarded as the safest in the world, although that perception is gradually changing.  Thirty years ago, US government bonds were presumed to be a “zero-risk” investment for the purpose of theoretical calculations of investment risk and return.  But in 2011, investment rating companies began gradually cutting the debt rating and outlook on US Treasury obligations.  All rating agencies now attribute risk to US bonds.  Egan-Jones, Standard & Poor and Fitch currently rate US Treasuries below a triple-A rating, while Moody’s and Dominion have a negative outlook on their ratings.

A lower debt rating means paying higher interest rates.  For decades, U.S. taxpayers have benefited from borrowing money at minimal interest rates, allowing the government to build infrastructure, pay for defense, improve social programs, and make society better without raising taxes.  But as the debt rises, interest rates will rise as well, compounding the problem of repayment for future taxpayers.

Rising debt implies rising interest payments, placing pressure on the Federal budget.  The Treasury reports, “As of August 2024 it costs $1049 billion to maintain the debt, which is 17% of the total federal spending in fiscal year 2024.”  A large debt increases the burden on taxpayers without providing additional government services.  We are teetering on a point where paying down the debt may become difficult or impossible without invoking inflation or some other means of reducing debt by cheating the bond-holders.  

Future Outlook

Our current budget trajectory is unsustainable, which is not seriously recognized by either political party.  A 2023 article on the Wharton Business School  website states: “We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP…Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation).”  The 2024 budget deficit is $1.8 trillion; the CBO estimates that under current policies, the deficit will increase to $2.9 trillion in a decade.   The Wharton article contains tables showing expected future debt-to-GDP ratios under a range of interest rate assumption.  In all cases, the U.S. debt-to-GDP ratio exceeds 200% within twenty years.

President Trump, in his second term, has asked Elon Musk and Vivek Ramaswamy to develop plans to improve government efficiency and lower government spending.  It remains to be seen how much spending can be reduced, and how much Congress will resist spending cuts to currently approved programs.  My suspicion is that actual reductions in spending will be trivial compared to the size of the deficit.  Further, Donald Trump has promised to lower taxes, and cancel the resumption of taxes scheduled under the Tax Reduction Act of 2017.  These tax cuts will only increase the economic damage due to our high debt level, increase the risk of default and accelerate the date on which the debt produces an American economic collapse.  

It is worth noting that both Federal and total U.S. taxes, as a percentage of GDP, are among the lowest in the industrialized world.  Benchmarking according to other western industrialized countries, our inability to balance taxation and spending in the Federal budget is primarily a result of low taxes, not excessive spending.  We already tax payrolls, personal income and corporate income, but there is a category of economic activity which is entirely untaxed – unrealized capital gains.  Enacting a tax on unrealized capital gains would help greatly to balance our spending and revenue.  That will be the subject of my next post on Federal debt and taxation.
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References
https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/
https://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrades
https://tradingeconomics.com/united-states/rating
https://en.wikipedia.org/wiki/Debt-to-GDP_ratio


https://www.pandemicoversight.gov/data-interactive-tools/data-stories/6.4-billion-in-pandemic-funding-was-received-by-recipients-in-foreign-countries-See-the-details

Total pandemic spending  $5 T
https://www.usaspending.gov/disaster/covid-19

Total pandemic spending $4.6 T
https://www.pandemicoversight.gov/about-us/pandemic-relief-program-laws

Trump Pandemic Spending
Total pandemic spending under President Trump was about $3.0 trillion.
Coronavirus Preparedness and Response Supplemental Appropriations Act,
March 2020;  $8.3 B
https://en.wikipedia.org/wiki/Coronavirus_Preparedness_and_Response_Supplemental_Appropriations_Act,_2020
Families First Coronavirus Response Act;  April 2020
https://en.wikipedia.org/wiki/Families_First_Coronavirus_Response_Act
https://www.kff.org/coronavirus-covid-19/issue-brief/the-families-first-coronavirus-response-act-summary-of-key-provisions/
   $3.471 B
https://www.pandemicoversight.gov/about-us/pandemic-relief-program-laws  $15.4 B
https://www.cms.gov/files/document/accounting-federal-covid-expenditures-national-health-expenditure-accounts.pdf   $192 M
The CARES Act, passed under President Trump in March 2020 cost  $2.2 trillion. 
https://en.wikipedia.org/wiki/CARES_Act
Estimates for spending reported for the Payroll Protection Program and Health Care Act (April 2020) vary widely, from $484 billion to $953 billion.  Presumably the higher figures represent later estimates and better represent the full cost.
https://en.wikipedia.org/wiki/Paycheck_Protection_Program_and_Health_Care_Enhancement_Act
PPP $484 B
https://www.aeaweb.org/articles?id=10.1257/jep.36.2.55
PPP  April 2020     $800 B
https://en.wikipedia.org/wiki/Paycheck_Protection_Program
PPP     $953 B

Biden Pandemic Spending
The American Rescue Plan, passed under Biden, cost about $1.9 trillion.
https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_2021

https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
Federal spending in 2023 was $6.1 T, compared to $4.4 T in tax revenue, for a deficit of $1.7 T, or 38% of tax revenues.
https://www.cbo.gov/topics/taxes
https://www.whitehouse.gov/wp-content/uploads/2023/03/ap_17_receipts_fy2024.pdf
Federal tax revenue for 2024 are forecast to be $5.0 T (White House) or $4.85 T (CBO).
https://www.cbo.gov/publication/59946
Federal spending for 2024 is estimated at $6.5 T, for a deficit of $1.5 T. 

https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-does-federal-debt-reach-unsustainable-levels
Penn-Wharton Business School, U. of Penn., Budget Model website, Jagadeesh Gokhale and Kent Smetters. Mariko Paulson, 2023
“We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP.”
“Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation).”
“What is important is that a large broad-based future corrective change in fiscal policy happens in any form to stabilize the debt-GDP ratio, and that such a correction action is anticipated by financial markets. Otherwise, forward-looking financial markets would unravel much sooner…to cause a sovereign debt crisis.”
Penn-Wharton uses debt held by the public as its measure of federal debt, disregarding intragovernmental debt.  I’m skeptical of this approach, because intragovernmental debt has very real obligations attached to it, and defaulting on intragovernmental debt would necessarily default on those obligations (i.e., social security payments). 

https://www.stlouisfed.org/open-vault/2020/october/debt-gdp-ratio-how-high-too-high-it-depends
This St. Louis Fed blog article uses total Federal debt to GDP as its measure of indebtedness, but doesn’t specify any measures of when debt is too high.  The answer seems to be “it depends” on various institutions.  Alternatives to hard default are presented, but each of these cause other economic disruption.

https://www.investopedia.com/terms/d/debtgdpratio.asp
“World Population Review has reported that countries whose debt-to-GDP ratios exceed 77% for prolonged periods experience significant slowdowns in economic growth.”
The U.S. has had a debt-to-GDP of more than 77% since Q1 2009. The U.S.’s highest debt-to-GDP ratio before that year was 106% in 1946 at the end of World War II.”

https://www.thebalancemoney.com/current-u-s-federal-budget-deficit-3305783
“For every percentage point of debt that exceeds the 77% tipping point, the annual real GDP growth rate of a developed economy will be reduced by .017 percentage points for each 1% the debt-to-GDP ratio exceeds the tipping point.”
Reference:  World Bank Group. "Finding the Tipping Point - When Sovereign Debt Turns Bad."

https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny
Debt held by the public -- $28.2 T
Intragovernmental debt -- $7.1 T
Total Public Debt – $35.3 T

https://tradingeconomics.com/united-states/gdp
US 2023 GDP -- $27.4 T

https://www.statista.com/statistics/216985/forecast-of-us-gross-domestic-product/
US forecast 2024 GDP -- $28.2T

https://www.ceicdata.com/en/indicator/united-states/government-debt--of-nominal-gdp
chart of Federal Debt as percent of GDP

https://www2.census.gov/programs-surveys/gov-finances/tables/2021/2021alfinsummarybrief.pdf
State and Local debt was $3.3 T in 2021.

https://www.statista.com/statistics/312660/us-state-and-local-government-debt-outstanding-by-state/

https://www.statista.com/statistics/217500/revenues-from-social-insurance-tax-and-forecast-in-the-us/
Revenue from payroll taxes in the United States amounted to about 1.61 trillion U.S. dollars in 2023.  Payroll taxes are increasing at about 4% per year.

https://www.statista.com/statistics/216928/us-government-revenues-by-category/
Individual income taxes $2.176 trillion; payroll taxes $1.614 trillion; corporate income taxes 0.420 trillion; other 0.229 trillion.    Total 4.44 trillion in federal revenue.

https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
In fiscal year (FY) 2023, the government spent $6.13 trillion, which was more than it collected (revenue), resulting in a deficit.

https://www.oecd-ilibrary.org/taxation/data/revenue-statistics/comparative-tables_data-00262-en?parent=http%3A%2F%2Finstance.metastore.ingenta.com%2Fcontent%2Fcollection%2Ftax-data-en
https://data-explorer.oecd.org/vis
OECD data tables.

https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny
Federal debt held by the public is $28.3 trillion; total Federal debt, including intragovernmental debt, is $35.3 trillion.

https://www.statista.com/statistics/188105/annual-gdp-of-the-united-states-since-1990/
2023 US GDP is $27.4 trillion.

Sunday, November 3, 2024

One Hundred and Twelve Radical Policy Ideas

This is a duplicate posting of a post on my political blog. Wonky Thoughts includes topics of economics and policy, so the post belongs here as well.  We are advancing far too slowly in a number of political, social, environmental and technical areas, and radical policies are needed to promote progress.
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This is a list of radical policy proposals, mostly at the Federal level.  These proposals reflect my view that the United States Federal Government is the finest institution on earth.  I believe that the U.S. government should do more to establish justice, promote the general welfare and secure the blessings of liberty for ourselves and our posterity.  I believe that as a society grows more prosperous, its government should grow as a proportion of the economy and national activity.  Since the United States is the wealthiest society in the world, its government should be the largest, proportionally, as a percentage of GDP, but it is not.  There are persistent attempts to limit government and stymie its mission.  I believe that the idea of “small government” as proposed by conservatives is false and detrimental to the general welfare of the country (see my earlier post, “The Problem of Governing Least”  https://debatablypolitical.blogspot.com/2022/01/the-problem-with-governing-least.html). 

What qualifies as a radical policy proposal?  I chose three criteria for determining ideas that made the list.  First, the ideas had to represent a sharp break from long-standing policies or practices.   Second, the ideas had to make a meaningful positive impact on some aspect of American (or global) life.  Third, the ideas are politically controversial and highly unlikely to be realized in my lifetime. 

Theories of progress across various fields all note a pattern.  A system becomes established, and gains are made incrementally according to the rules and standards of that system.  Eventually, however, problems increasingly accumulate as the previous paradigm no longer represents current conditions or information.  After a period of stagnation, a new paradigm is needed, requiring radical change in how people think and how the system works.  Discussion of this notion of punctuated change include Joseph Schumpeter’s idea of Creative Destruction, Thomas Kuhn’s “The Structure of Scientific Revolutions”, and M. Hammer and J. Champy’s “Reengineering the Corporation”.  In the biological world, Stephen J. Gould makes an analogous point about punctuated equilibrium in evolution. 

 Martin Luther, nailing 95 radical theses to the door of the cathedral.  Artist unknown.

Inefficient, failing institutions persist of their own inertia, long after the need for change is apparent.  At these times, radical or revolutionary changes are needed to break out of the prior constraining mold and make new progress.  For American society and government, that time is now.  We are stuck in a rut of doing things badly, simply because that’s how things have always been done.  We cannot progress without undoing some of the constraining parts of our system, including modifying the constitution.  But it may take years before that conclusion is generally recognized. 

This post is a list of proposals for radical change.  The intent of these proposals is many fold:

>  To improve fairness for all citizens in representative government, taxation, accumulation of wealth and treatment under the law.
>  To improve prosperity for working generations.
>  To take responsibility for our government debt, our climate and the health of the environment, instead of putting these burdens on future generations.
>  To have more empathy for those citizens struggling to find prosperity, and for potential immigrants seeking a better life in this country.
>  To achieve progress in improving the efficiency of government, the justice system, transportation, public safety, public health and science.

“The creative personality is always one that looks on the world as fit for change and on himself as an instrument of change.  Otherwise, what are you creating for?  If the world is perfectly all right the way it is, you have no place in it.  The creative personality thinks of the world as a canvas for change and of himself as a divine agent of change.” – Jacob Bronowski, “Law and Individual Responsibility”, Silliman Lectures at Yale University, 1967, In The Origins of Knowledge and Imagination, p. 123.

“Go do something meaningful.” – Philanthropist Eugene M. Grant

Some of the following ideas, particularly the political reforms, could be implemented right away (but won’t).  Many of the ideas require more funding than is currently possible, given the level of government debt.  Therefore, proposals to bring in more revenue must happen first to pay down the debt, and ambitious programs requiring funding must wait until funding is available.  New blog posts on the government debt crisis and taxing unrealized capital gains will be published soon.

Here are one hundred and twelve ideas for radical policy changes needed for American progress.
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Constitutional Reform
The balance of power established under the U.S. Constitution in 1789 has changed, due to the addition of states and population growth.  These changes have led to a permanent situation of disproportionate power given to small states, which exercise disproportionate control over two and one-half of the three branches of government.  See my blog post, “The United States of Minority Rule”, https://debatablypolitical.blogspot.com/2024/08/the-united-states-of-minority-rule.html.

 1.  We should change the rules for representation in the Senate to address the imbalance of power between large and small states.  Two possible fixes are proposed.

A.  Change the representation of States in the US Senate, giving more seats to larger states, and fewer seats to smaller states.  For example, give one seat for every 2.1 million people (the population of New Mexico, the state at the 30th percentile in population), rounded, with one Senator for states with fewer people.  That would leave 18 states with one Senator each, increasing with population to 18 seats for California, for a total of 167 Senators.  We should reapportion Senate seats after each census, as House seats are reapportioned.
B.  Alternatively, redistrict state boundaries, creating 50 states with an average population of 6.7 million people each.  Keep Senate seats at two per state, but redistrict state boundaries every 30 years.  Establish a schedule for reapportionment of states. 

 2.  Require the Senate to vote within 30 days on all Presidential judicial nominations.  If the Senate fails to confirm the first two choices the 3rd choice is appointed without confirmation.

Statehood for All Citizens
The United States should have equal rights for all citizens.  Currently, citizens of Washington D.C. and US Territories lack the rights given to citizens of states.  These proposals address that issue.

3.  Admit Washington DC as a state. 

4.  Administer a referendum in Puerto Rico requiring either a transition to statehood or independence. 

5.  Add Guam, American Samoa, and U.S. Mariana Islands as counties of Hawaii for statewide voting purposes.  If Puerto Rico becomes a state, add the US Virgin Islands as a unit of Puerto Rico.   Otherwise, add the U.S. Virgin Islands to Florida.

Elections
6.  Implement Top-4 open primaries and ranked-choice general elections nationwide.

Recent decades have been marked by increasing political division and toxic partisanship.  Top-4 open primaries and ranked-choice general elections are two powerful methods to assert democracy and counter extremism promoted by our current system.

The Republican party has used closed primaries as a tool to enforce party discipline and punish Republican legislators who oppose certain extreme partisan policies.  High-profile Republicans who were primaried or chose to retire in the face of extreme party opposition include John Boehner, Eric Cantor, Paul Ryan, Kevin McCarthy, Liz Cheney, Fred Upton, Jeff Flake, Bob Corker, Fred Thompson, Peter Meijer and Adam Kinzinger.  Many state legislators have also been primaried for the simple act of cooperating with Democrats on legislation.  Closed primaries allow a small cadre of partisan extremists to control access to the ballot, and enact an extreme political agenda.
Republicans have increasingly employed false-flag and spoiler candidates as a way to deceive low-information voters and unethically win elections.  Ranked-choice voting greatly reduces the effectiveness of these tactics.

Ranked-choice elections are a better expression of democracy, because at the end of the process, the winning candidate must carry the assent of the majority of participating voters.

 7.  Pass a Federal voting reform act.

Establish nationwide standards for voting hours and early voting.
Establish a standard for less than one hour of waiting time at polls.  If polls are in non-attainment of the standard, the Federal government must take control of the local voting process for two years.
Implement nationwide vote-by-mail.  Replace signature verification with a code sent by text to a verified phone # or email.  Leave signature verification as a last-resort option for those who decline phone or email verification.  Establish standardized process for curing ballots.
Standardize universal voter registration.
Standardize voter photo ID, with government responsibility to provide IDs to everyone. 

8.  Standardized re-districting nationwide.

Standardize non-partisan appointment of re-districting authorities.
Implement a standard formula to prevent gerrymandering.

Government and Government Efficiency

9.  Set a maximum age of 72 to serve as President, a member of Congress or the Supreme Court.

10.  Establish a government efficiency commission to review parts of Federal and State governments for current relevance and efficiency.

The commission should provide recommendations to Congress and State legislatures every two years.

11.  Require audit, review and remediation of all government services that cause lines and delays.

Examples include DMV offices, TSA screenings, customs and immigration at border crossings and airports.  Require remediation of all government services which externalize costs by placing the burden of waiting on the people they serve.  Remediation can include both increases in staffing and infrastructure investments.  Audits should be required to ensure compliance.

Supreme Court Reversals and Codifications
12.  Codify Roe v. Wade, guaranteeing the nationwide right to abortion.

13.  Overturn Citizen’s United ruling.  Set limits on PAC donations, total funding and spending, whether for candidates or issues. 

Restore limits on corporate political activity set by McCain-Feingold in 2002.
Break up PACs with existing endowments over a limit, dispersing the assets into non-political vehicles by judicial ruling, if original donors no longer exist. 

14.  Grant authority to Federal Agencies to set regulations, restoring the standard of Chevron v. NRDC.

Tax and Economy
The United States is in a government debt crisis.  The crisis is not rooted in spending, but in over 40 years of deliberate under-taxation intended to restrain the growth of government.  The US has a Federal tax rate that is 50% of the OECD average tax rate (as a percentage of GDP); and a total tax rate that is 75% of the OECD average.  Federal debt in 1980 was about 30% of GDP, today federal debt is 123%.  Total government debt, including intra-governmental and state debt is now about 135% of GDP, a level which economists consider unstable.  That level of debt is competing with private investment and impairing economic growth.

Unrealized capital gains are a major source of economic output which is untaxed, or at least not taxed in timely fashion.  Indeed, up to $10 million in assets are given a step-up in basis at death, so that no tax is ever placed on this share of the economy. 

15.  Tax Unrealized Capital Gains.

A.  Set the tax equal to the progressive tax on ordinary income.
B.  Assess the tax every 5 years from the date an asset is acquired, and re-set the cost basis when the tax is paid.
C.  Exclude illiquid assets, but charge a higher rate on excluded assets.  Assess the tax at the time the asset is sold, at the time of inheritance or transfer to another party.  There should be no exceptions for charitable donations.
D.  Eliminate capital gains tax on primary residences.
E.  At the time the tax on unrealized gains is implemented,  enact a one-time wealth tax (including unrealized gains) of 1% on more than $10 million in assets for married couples, 3% on more than $100 million, and 5% on more than $1 billion.
F.  Eliminate tax-free step-up in cost basis for heirs inheriting appreciated assets.
G.  Reduce the excluded amount on estate tax from $13.61 million per individual ($27.22 million per married couple) to $2.0 million, which was the excluded amount in 2008.  Assess a tax percentage equal to the tax on unrealized capital gains, and more for unrealized capital gains on illiquid assets which have not been previously subjected to tax.
H.  Review and reduce the number of 401c3 charitable organizations qualifying for tax-free donations, eliminating politically-oriented organizations and charities with limited societal benefit.    

16.  Provide corporate tax deductions based on how many good jobs are created, and tax companies that do not provide enough good jobs in proportion to their profits.

Corporations have a responsibility to society to provide employment with good pay.  Society has a fair expectation that businesses provide those jobs, in exchange for the privilege of operating where the government has created a landscape for profitable businesses.  Incentives should be given to those companies which fulfill the responsibility of creating good jobs.
Companies fail to provide good jobs on both ends of the spectrum.  McDonald’s and Walmart create many minimum-wage jobs, but society subsidizes these companies by social programs addressing the poverty of those employees.  On the other hand, Goldman Sachs produces enormous profits with very few employees, and paying those employees exorbitant salaries.  All three companies are failing in their social contract to support the society that supports the company.

A.  Define “good jobs” as jobs paying between 2x minimum wage to 10x minimum wage (while noting that the current minimum wage needs to be raised, proposal #77).  Jobs paying less than 2x minimum wage or more than 10x minimum wage do not qualify for tax benefits.
B.  Each “good job” should provide a corporate income exclusion for tax purposes equal to 20% of the annual wage of the “good job”. 
C.  Corporate taxes should set a standard taxable profit for each good job, based on national statistics.  These profits are subject to standard corporate income tax rates.  Companies earning profits in excess of the standard profit should be assessed additional tax on a progressive scale, up to 50% of corporate income.

17.  Require Congress and the Federal Open Market Committee to coordinate monetary and fiscal economic policy measures. 

Establish a Federal Taxation Agency that specifies how much tax must be raised each year, and Congress is left to decide how to do it.  Currently, the monetary policy folks (the Fed) ignore fiscal policy, and Congress and the President use fiscal policy as a ratchet only in one direction, for stimulus, and never for tightening.  Coordinated policies would be more effective and cause less economic disruption in managing the economy.

18.  Set an automatic trigger for tax increases to reduce government debt.

If US government debt, including intra-government debt and state government debts, exceeds 120% of GDP on a 5-year rolling average, income tax schedules are increased by 5% per year until the debt/GDP ratio is under 120%.   Higher rates must prevail until debt/GDP is under 100%.

19.  Study and identify cost drivers for disproportionate increases in costs for health care, medicine and education.

                Require implementation of combined market & government actions to reduce costs.

20.  Tax churches as ordinary businesses for income and property.

21.  Remove the salary ceiling on payment of FICA and Medicare taxes. 

22.  Tax investment income equally or more than wage income for FICA and Medicare. 

Climate Change
23.  Place a carbon tax on fuels, proportional to relative CO2 emissions, increasing the tax until emissions goals are met.

The United States has released a disproportionate share of greenhouse gases in the past, bringing the the world to the brink of a climate crisis.  Therefore, the United States should take responsibility for its past actions and take a leading role in reducing carbon emissions ahead of the rest of the world. 
The fuel tax could be imposed at the production site, the transport system, or at the end user.  I don’t care.
Tax goods which produce significant carbon emissions in manufacturing, apart from fuel usage.
Implement trade agreements with other countries requiring an identical carbon tax, or impose tariffs equivalent to the carbon intensity of each imported product.
Provide tradable tax credits for CO2 sequestration that achieves permanent sequestration.  Disallow credits for CO2 industrial use that does not achieve permanent sequestration.

Education
24.  Provide government-paid tuition for college and vocational training for up to four years.

Community colleges, state universities, and technical and trade schools should be eligible for government-paid tuition.  A stipend for living expenses should also be provided.

Social Welfare
25.  Provide federal government-paid breakfast and lunch to all school children.

Implement meal delivery for needy students during summer and school holidays.

26.  Establish guaranteed basic minimum income for all citizens. 

Similar to the Alaska PFD, the universal basic income should be funded by a sovereign wealth fund, and distribute dividends on an as-needed basis.  An additional stipend should be given for the first two children.  See proposal #77 on minimum wage.

27.   Repeal Daylight Savings Time

Time changes to and from Daylight Savings Time are known to cause higher accident rates, a variety of health risks, lost productivity, fatigue and sleep disruption.  Sleep experts recommend year-round standard time for better health.  

Repeal Daylight Savings Time, and institute year-round Standard Time

28.   Implement a program of reparations for descendants of enslaved people and Native Americans, proportionally determined by DNA analysis.

29. Establish a national commission on homelessness.

Focus on subdividing the problem, separately identifying people down on their luck, those suffering from addiction, those suffering from mental illness, those who are simply independent spirits, those who are predatory on others, etc.  Propose subdivided solutions for different parts of the problem.

Social Security
30.  Replace the current Social Security system with a national pension based solely on age and health. 

We should provide for the well-being of the elderly, not because of their earlier contributions to the economy, but because we honor and respect old people.  Social Security awards benefits depending on work history, and fails to cover those who did not have conventional, paid employment.  There are many citizens who are unable to work, or have no work history because of a lifetime of caregiving to others.  Also, various government employees are ineligible for Social Security, and receive inadequate or no pension benefits.  These citizens deserve support in their elderly years, too.

31.  Tax wealthy elderly citizens to fund pensions for poorer seniors.

Elderly Americans hold a disproportionate amount of the nation’s wealth.  Americans over the age of 55 hold ten times the wealth of Americans under the age of 40.  However, there is a bi-modal distribution of wealth among the elderly.  Half of retired Americans are very wealthy, but the other half are impoverished.   Currently, payroll taxes on young workers trying to raise families, to fund Social Security.  Instead, we should increase taxes on very wealthy elderly citizens as a function of age, with an additional 5% of tax on income beginning at age 70, increasing by 5% every five years, and use the proceeds to fun either Social Security or a national pension. 

Health Care
32.  Take the responsibility of providing health insurance away from employers, and make it a government function covering everyone.

33.  Implement an optional single-payer insurance system.  Have a nationwide, minimum-care insurance system as an entitlement for all citizens and legal residents.

34.  Establish a nationwide system of government-run local clinics, delivering most care through nurse-practitioners, with a doctor on-site for more severe problems.

35.  Double the number of accredited medical student positions, and allocate a higher percentage of those to American citizens.

                Ensure that there is at least one medical school in every state.

36.  Fund research into broad-spectrum cold vaccines and one-time flu vaccines.

37.  Reassess nutritional guidelines for baby formula, including maximum recommended daily intake.  Establish standards for infant weight gain, and require counseling of new parents by pediatricians on infant feeding to abate the obesity epidemic.

38.  Run government-funded clinical studies on health benefits of non-pharmacological foods (e.g., blueberries, menthol) and health-food supplements.

Transportation
39.  Redesign the 30 largest American cities.

Establish a car-free city center with parking at the perimeter, and alternative transportation within the city center.  Connect all downtown buildings with indoor concourses, with shopping and airport-style people-moving technologies.  Build express trains to suburban centers, build light-rail for near-center residents, improve local bus service in midtown and suburbs.  Build transfer stations and parking at the edge of the city center and near major suburban hubs.

40.  Implement a significant tax on heavy vehicles.

Heavy personal-use vehicles have a large impact on traffic-accident fatalities.  The baseline probability of being killed in a vehicle collision increases by 47% for a 1000-pound increase in the weight of the other vehicle.  The increase is 61% if the other vehicle is an SUV, pickup, or minivan.  Large vehicles also cause a disproportionate number of fatalities in accidents involving pedestrians and bicyclists.  Further, heavy vehicles contribute unnecessarily to carbon emissions and reduce American energy independence.  We should implement a 50% tax on vehicles weighing more than 4500 pounds, with a ramp to zero tax for vehicles less than 3500 pounds.  Exempt business vehicles making deliveries for more than 150 days per year, and farm vehicles on farms with more than $100,000 in annual agricultural sales.  Electric vehicles are necessarily heavier due to batteries, but are also necessary for climate action.  Add a battery allowance of 500 pounds for fully electric vehicles to the tax thresholds.

41.  Regulate bumper height and shape to reduce pedestrian and bicycle fatalities from large vehicles.

High bumpers on large vehicles cause 45% more fatalities in collisions with pedestrians and bicyclists.
Ban right turns on red to save pedestrian lives.

42.  Install smart traffic lights at every controlled intersection in America.

Lights should detect pedestrians, and waiting and oncoming traffic.  Lights should optimize transit through the intersection with minimum overall waiting time.

43.  Research automatic vehicle braking at red lights.

Develop automatic driving AI that will prevent running red lights.  Include equipment for a deliberate override of the system for emergency situations.  Mandate inclusion on all vehicles when technology is available.

44.  Elderly Driver Competency Testing

Test elderly drivers for sight, hearing, reaction time, attention and memory to maintain drivers’ licenses.  Testing should be done at age 70, 74, 78, 80, and annually thereafter. 

45.  Significantly increase air travel taxes to reduce demand and fund development of infrastructure in alternative transportation. 

Air traffic has exceeded maximum volume for reliable travel.  The system is fragile due to overloading of airports, designated airways, personnel, and air traffic control.  The system is subject to cascading shutdowns due to weather, technological failures or terrorism.  Alternative methods of high-speed transportation between cities must be developed (i.e., high-speed rail and or vacuum-tube trains).  Revenues from an air traffic tax can be used to research and build alternative infrastructure.

46.  Build high-speed rail or vacuum tube trains between major cities. 

Plan to reduce air traffic by 50% or more with improved high-speed rail. 

47.  Work with trucking companies and technology companies to develop long-distance roads pre-adapted to autonomous electric vehicles. 

48.  Require tug escorts for freight passage through critical infrastructure, water hazards and sensitive environments.

49.  Ban re-treaded tires.

Failed re-treaded tires litter major highways with dangerous debris, litter, and distribute environmentally damaging micro-plastics.  The externalized cost of these tires exceeds the benefit to society. 

50.  Require oil companies to disclose the country of origin for gasoline sold, on annual reports and at the pump.

Disclosure at the pump should show the source for gasoline sold by that company for the previous year.

Housing
51.  Require all new housing developments to include at least 25% multi-family housing options, and a spectrum of housing costs.

Eliminate zoning and HOA restrictions against multi-family housing in existing developments.

Consumer Protection
52.  Limit interest rates on all issued loans to no more than eight percent over the rate of inflation.

If risk to the lender is such that eight percent interest is insufficient, the borrower should not be borrowing the money.  Further, the risk of correlated defaults is dangerous to the entire economy, as we learned in 2009. 

53.  Establish a commission to investigate and intervene in industries with non-competitive fee schedules.

Examples of non-competitive fees include real estate brokerages, with a 6% standard fee for selling a home, or mutual funds and financial advisors charging 1% of assets annually.
Indications of non-competitive fees would include identical pricing across a majority of vendors, and unvarying fees over long periods of time and differing market conditions.

 54.  Make flood insurance available to every American homeowner.       

Standard homeowners insurance excludes coverage for floods.   Flooding is becoming more prevalent due to climate change, leaving homeowners vulnerable to catastrophic losses.  Insurance companies have peeled away the most profitable parts of home insurance, leaving taxpayers and homeowners on the hook for the most damaging events.
Require insurance companies to either include flood insurance with standard homeowners policies, or to contribute to a Federal flood insurance fund.
Tax new and existing buildings in 500-year flood zones to help fund federal flood programs.
If funding is insufficient, additional funding can be allocated from a carbon tax.
Provide $1 million in free federal flood insurance to residents living outside of 500-year flood zones.
Provide federal flood insurance at actuarial cost for homeowners in 500-year flood zones, partly subsidized by homeowners’ insurance companies.

55.  Ban rebuilding after disasters in zones with high probability of recurring climate-driven destruction, including flood plains and certain barrier islands.

Justice
56.  Require timely prosecution of cases, taking away the discretion of judges, prosecutors and defense attorneys to indefinitely delay trials. 

Standards for timely trials should also include limits on delays for hearings and stages of the trial.  No more than one year should pass from the date charges are filed until a case is heard.  Also set limits on trial length, depending on the severity of the charges.  Set standards for civil cases as well.  Increase numbers of judges, staffing for investigations and court resources until the standards are met without impairing quality of the proceedings.  Jurisdictions failing to meet standards should be placed under federal oversight and operation of courts until standards are met.

57.  Establish 20-year term limits for Supreme Court.

Expand the Supreme Court to match number of circuit courts (currently 15), with additional expansion in the event that new circuit courts are added.  Among competing proposals, the bill proposed by Senator Wyden allows for a gradual expansion of the court over 3 presidential terms to minimize partisan impact.

58.  Form a national clemency court with authority over both federal and state cases, and remove the power of Presidential pardons. 

The power of Presidential pardons has been abused by presidents of both parties to unjustly absolve supporters convicted of crimes.  That power encourages partisan crimes, and should be removed from the office of the president.
Establish a special clemency court to investigate unjust verdicts, giving a panel of judges the authority to investigate cases and grant pardons.  Alternatively, allow the clemency court to bring recommendations to the Chief Justice of the Supreme Court, with the power of pardons to be vested in the Chief Justice.

59.  Standardize sentencing nationwide. 

Establish national guidelines for sentencing depending on the severity of the crime, decreasing the amount of judicial discretion in sentencing.  Implement these standards in state law across all 50 states. 

60.  Institute a national program to investigate abusive policing. 

Require the use of body cameras and audit their usage in all major police departments.  Establish a standard for release of all camera data to the public within three days of an event.  Camera data should be retained for at least one year, and made available for release by public request.

61.  End civil forfeiture of assets for minor crimes. 

Funds from confiscated vehicles and cash confiscation must go to civic charities rather than local government or police departments, to remove the motivation for policing for profit.

62.  Assign punitive penalties in civil judgments to the State.

The concept of punitive penalties is to modify the behavior of the offending entity, so there is no reason why those penalties should belong to plaintiffs or lawyers.  Punitive penalties awarded in civil cases should not accrue to defendants or lawyers, but should be given entirely to the state.  The purpose of this policy is to reduce litigation as a kind of slot machine, motivated by the possibility of large payouts for lawyers and defendants. 

63.  Restrict Lawyers’ Contingent Fees

Restrict lawyers’ contingent fees to no more than 20% of damages awarded in a civil suit.  Damages awarded by through the legal system should go to the victims, not their lawyers.

64.  Investigate and ban policing for profit by local jurisdictions through traffic fines or other fees.

65.  Require notification of all government surveillance of electronic communications, except according to a permit from the FISA court.

66.  Establish congressional oversight over FISA Court, with required reporting to Congressional committees. 

Establish a congressional audit of FISA court activities to ensure compliance with legal restrictions and privacy protection of U.S. citizens.

Immigration
67.  Provide amnesty and legal residency for all “illegal” immigrants who have lived in the United States without legal issues (including non-payment of debts or domestic violence) for five years or more. 

Legal residency includes the right to live and work, but does not include a path to citizenship or federal voting. 

68.  Provide a path to citizenship for all immigrants who have served in the U.S. Military. 

69.  Provide legal residency and a path to citizenship for all “Dreamers”. 

70.  Provide permanent legal residency and a path to citizenship for all TPS (Temporary Protected Status) residents who have been in the United States for more than five years.

71.  Offer permanent residency and a path to citizenship for any foreign student graduating from an accredited U.S. college or university with a bachelor’s or higher degree.

72.  Create a guest worker program for foreign workers needed by U.S. farms and industry. 

A cumulative five years of work service should enable a path for permanent residency and citizenship.  It’s noteworthy that presidents Reagan, G.H.W. Bush and G.W. Bush all advocated a guest worker program for immigrant labor.

73.   Double legal immigration quotas. 

Also, eliminate preferred immigration status for distant family members, e.g. cousin and uncle/aunt/nephew/niece or more distant relationships.  Prioritized family immigration status should only apply to siblings and children under the age of 25, and parents.

74.  Reform Customs & Border Patrol agency. 

Completely remove existing leadership and replace with compassionate leaders.  Reframe the CPS mission to protect potential immigrants, rather than deterring immigration.  Hold training sessions for rank & file, and remove any officers who resist the change in mission.

Scientific Research and Development
75.  Set a minimum budget for non-defense general science research and development to 1.5% of GDP.

Non-defense, non-space science spending has shrunk from over 2% of GDP in the 1960s to 0.3% today, dropping below 1.5% in 1974 and below 1.0% in 1980.

76.  Set minimum budget for non-defense space spending to 0.5% of GDP. 

Non-defense space spending peaked at over 4% of GDP during the Apollo program, but today is less than 0.1% of GDP.  Unmanned, robotic missions should receive at least one-third of the space budget.

77.  Boost defense R&D spending to at least 1.0% of GDP. 

Defense scientific R&D was 2.5% of GDP in the mid-1970s.  It declined to under 1.0% by 1994, and today is 0.4% of GDP.  As today’s world becomes more unstable, military technical superiority is more important than ever, to intimidate potential enemies rather than fight a war.

78.  Research biodegradable plastics, with the goal of requiring adoption by manufacturers within fifteen years. 

79.  Investigate vehicle predation on insect, bird and mammal populations, and develop recommendations to reduce fauna mortality.

80.  Develop concepts for near-lightspeed interstellar microprobes. 

Concepts might include linear or circular magnetic accelerators in space, and systems such as “trains” of signal receiver/transmitters to return data to earth. 

Guns
81.  Ban personal ownership or possession of military-grade weapons, including assault rifles. 

Set maximum standards for magazine capacity, rate of fire, bullet mass and shape and muzzle velocity.

Immediately ban the sale of assault weapons and ammunition, and allow a fifteen-year transition period before a complete ban.

82.  Ban handguns or make ownership requirements more stringent. 

If handguns are legal, require at least one year of weekly training to be licensed for personal ownership or possession of handguns.  Training must be at least 60% focused on classroom work regarding gun violence, 30% on safe handling, and 10% on target practice.  Prospective licensees must view at least five emergency surgeries for gunshot violence in a trauma hospital to be granted a license.

83.  Implement national red-flag laws prohibiting ownership of guns for those identified for domestic abuse or mental illness. 

Establish national database of red-flag individuals.  Implement and audit gun store compliance.  Ban sales of guns at gun shows and third-party sales, except through government-authorized gun exchange websites.  Audit compliance with gun regulations.

Business Regulation and Labor
84.  Raise the minimum wage to the level needed for an adult working couple to raise a family of four with dignity. 

It is a fundamental human right to be able to raise a family.  Every couple working full-time jobs should be able to afford to raise a family, with income sufficient to cover child care, food, housing, transportation, household expenses, entertainment and vacation.  Raise the minimum wage for people over the age of 25 to the level needed to raise a family, in combination with a universal basic income and child income stipend (see proposal #26).

85.  Make it illegal to limit workers’ hours or duration of employment to avoid paying benefits. 

86.  Limit high-end executive compensation to no more than 40x the minimum company employee salary, and no more than 10x the average employee compensation for the company.

87.  Ban executive compensation in stock options. 

Stock options are of unclear value, and would circumvent executive compensation limits.  Stock grants are permissible, if granted on a specific date and valued at market price when granted.  Stock grants are included in executive compensation caps. 

88.  Reform Patent Law to Encourage Early Integration of New Technologies

The patent system is intended to incentivize innovation and ensure that innovators receive a reward for developing new products.  In practice, and in the 21st century, the U.S. patent system is stifling innovation, impeding the integration of technology, and delaying the delivery of new products to the market.  The complexity and number of patents has increased greatly, changing how innovations are commercialized.  Patent wars and patent trolls clog the legal system and misdirect the attention of corporations away from constructive work.

Require patent holders to license the patented technology to any applicant at a mutually agreed price.  If a price for licensing cannot be agreed, the case is automatically referred to a court-approved arbitrator for binding arbitration.  The arbitration process must be resolved in four month: two months to prepare for the case, one month for hearings, and one month for the arbitrator to render a decision.  A fifteen percent tax should be placed on licensing payments as an incentive to resolve licensing without arbitration

89.  Job Creation Incentives

Enact a tax on employee layoffs for technological replacement.  Tax proceeds should be directed to training and placement programs for workers.

90.  Break up large unions into at least three competing unions in every major industry.

Government is necessary to correct failures of the free market; unions are necessary to correct failures by government to adequately defend the well-being of workers.  If government is doing its job, unions should be unnecessary. 

Union tactics are extortion, by nature, applied to companies and society to achieve union demands.  There is no systematic check on the power of unions.  Breaking unions into competing entities would provide a check on the power of unions. 

Any union should be allowed to hold only 50% of labor market share in a market, or be broken up.

Information
91.  Provide federal funding of libraries, including public computer and Internet resources. 

Set minimum operating hours in all libraries, including at least eight hours of operation on Saturdays and Sundays.  Libraries must qualify as public institutions with adequate resources to qualify for federal funding.

92.  Subsidize broadband access in remote areas of the country.

93.  Provide subsidized WiFi, cellular data or StarLink for low-income citizens.

94.  Regulate social media companies as public utilities.

Regulations should include public disclosure of algorithms, and require audited standards for free speech while providing reasonable defenses against the proliferation of misinformation. 

95.  Establish a non-profit social media company with a government subsidy.

96.  Require interoperability of social media.

Financial Industry and Non-Profit Regulation
It has been said that excessive credit is behind every financial crisis.  Put another way, every financial crisis is caused by default on borrowed money.  Placing guardrails on lending for the protection of consumers and the economy is in the clear public interest.

97.  Increase minimum margin requirements from 50% to 75% for initial stock purchases, and from 25% to 60% for maintenance margin holdings.

98.  Limit the use of leverage by hedge funds.

99.  Require mutual funds to create a tool for shareholders to provide broad direction on voting those shares, and to vote shares accordingly.

100.  Require permission and compensation to borrow stocks for short-selling.  The default in brokerage agreements should be no permission.

101.  Require non-profit institutions to disclose a line item of total financial fees paid in annual reports.

102.  Require non-profit funds and endowments to pay out at least 4% of total assets annually, on a 5-year rolling average.

Oceans and Environment
103.  Establish a schedule to eliminate commercial fishing of wild stocks within 25 years. 

Commercial fishing has eventually destroyed every fishery.
Ban bottom-trawl fishing now.
Establish incentives and regulations to replace commercial fishing of wild stocks with environmentally safe fish farming to provide needed ocean seafood.

104.  Require all single-use plastics to be fully biodegradable by 2035.

105.  Establish marine sanctuaries covering at least 30% of the US Exclusive Economic Zone (EEZ) 

106.  Establish at least three north-south oriented nature preserves extending from Canada to Mexico or the Gulf Coast as continuous migration pathways, thirty miles in width, and with animal crossways above or below all roads.

107.  Double the size and number of National Parks in the lower 48 to better serve the U.S. population, which has doubled since 1956.

BLM lands can be converted to National Parks, including areas such at the area south of Moab Utah, containing natural Arches equal to those in Arches National Park.
Increase the park service budget to improve current park service and maintenance, and increase the budget proportionally to care for the additional parks.

Foreign Relations
108.  Eliminate aid to Israel until Palestinians are given land and reparations, including all of the West Bank, and a Palestinian state is established. 

109  Recognize Taiwan as an independent country and declare that we will defend its independence from China.

110.  Admit Ukraine to NATO and defend its 1991 borders. 

111.  Use diplomatic leverage to encourage the Maduro regime to respect the results of the last election. Reimpose all sanctions and encourage other countries to observe similar sanctions until the election-winning opposition government is in place.

112.  Offer easing of trade restrictions and economic development support to Cuba in exchange for democratic reforms.