Do you want to change the world?

November 28, 2010

How to Pay Off the National Debt

© 2010 James F. Kainz

Within Ten Years:
(1) Pay off $4 trillion of the national debt.
(2) Have consumers choosing electric/hybrid E85 passenger vehicles that get 100 miles per gallon of E85 fuel and 700 or more miles per gallon of gasoline.
(3) Be free of dependence on foreign sources of fuel.


1. Begin to pay down the national debt by taxing derivatives. A 0.5% tax on the buyer and seller of each transaction would raise substantial revenue. There are over $600 trillion of derivatives in circulation currently, and the tax could pay off the existing $13 trillion national debt within the lifetime of most people alive today. This would avoid passing the debt on to future generations.

2. Initiate a 5% stake for the federal government in companies accepting Small Business Administration loans for new business start-ups. In addition to paying back the full amount of the loans, the businesses would grant a 5% ownership interest to the Small Business Administration (SBA) as compensation for providing the venture capital. The program is already a success at creating employment and tax revenues for the country. It should be significantly expanded, and retaining a piece of the new company would contribute to the social benefit of the operation.

3. Loss of freedom is a fair sanction for criminal behavior. Warehousing humans is a societal waste of resources. Prisoners should be offered the opportunity of doing community service while doing their time. It would be administered by prison personnel and selectively granted to some prisoners at the discretion of the authorities. Reduction of the cost of incarceration should be one of the objectives.

4. End the oil depletion allowance. It is an accounting lie. No out of pocket expenditure is incurred, and it constitutes a double charge off for tax purposes. Not only are true costs being deducted, a fictional phantom is engendered by legal definition. It was created during World War I to stimulate exploration at a time of national emergency—an emergency that no longer exists. Now it destructively diverts market resources to oil away from alternative energy sources, which are disadvantaged by this subsidy. Renewable energy does not enjoy a level playing field against this institutionalized bonus for petroleum because of the preferential tax treatment.

5. Federal budgets should be in surplus four years out of every five. The only exceptions should be for recession, war, or disaster. Deficit spending should be rare and only used when truly justified. This principle should not be enshrined as a constitutional amendment; but, rather, as a pledge to voters signed by candidates to elective federal public office.

6. American military troops based overseas should be reduced by 75% within five years to reduce expenses. Staffing fixed bases in Germany, Japan, and South Korea with tens of thousands of soldiers is an outmoded method of exercising power. Those expenditures could be better used for communications, mobility, new weapons systems, and readiness. Better to keep those forces within the United States, ensure that the money contributes to our economy, and make the troops available for use in potential conflicts.

7. Cheap transportation is essential to economic prosperity. The target for miles per gallon of gasoline on new cars sold in the United States should be raised from 25 in 2010 to a range approaching 700–1000 by 2020. This is achievable if consumers stop buying gasoline-only powered vehicles and buy electric/hybrid engines that utilize E85 for fuel. Most trips are shorter than forty miles and could be completed on battery power alone. For longer distances, the fuel would be mostly non-corn ethanol with a small percentage derived from oil. A forty-fold increase in miles per gallon of gasoline would reduce our dependence on oil, free us from foreign suppliers, and stimulate the economy simultaneously.