Tuesday, April 12, 2011

Four Modest Proposals For Cutting the Deficit

This Wednesday, President Obama plans to turn his attention towards cutting the Federal budget deficit.  While details are sparse, expect the usual partisan sniping about how we cannot raise taxes or how we cannot cut the "Big Three" (i.e. Society Security, Medicare/caid, defense).  Cutting the deficit is simple, in theory:  you either increase revenues or decrease spending.  Unfortunately, if you take tax increases and cuts to the Big Three off the table, there is a limit to what you can do.  Yes, you can cut so-called discretionary spending, but this is a tiny piece of a big budget pie.  The 2011 deficit is projected to be around $1.4 trillion, so the $38 billion that was cut from the budget in the latest deal doesn't close the gap very much.  If you really want to cut the deficit with the current political constraints, you will need to get creative.

That is where I come in.

The key component of the Money By The Numbers plan is to increase non-taxation revenue.  What is that, you ask?  That is money that the Government earns from sources other than taxes.  The Federal Government owns a lot of assets which are significantly under-utilized.  By thinking like a business, the Government can put its assets to better use, and get a better return on investment.

1. Naming Rights:

Sports franchises started doing this to great effect.  By allowing companies to buy the right to affix its name to stadiums, teams have created millions in extra revenue.  The woeful Mets were able to extract $400 million from Citigroup for the naming rights to their new stadium, and this deal was done at the height of the financial crisis.  It is insulting that taxpayers pay for these stadiums but don't get any of the revenue.  The Government ought to get into the act and name its own assets. 

Imagine what the Federal Government could get for the naming rights for national parks (the Home Depot Grand Canyon), aircraft carriers (the U.S.S. Coca-Cola), or even the White House (the White House presented by Glidden Paints)?  With all of these prime assets, the Government easily could raise billions of dollars.

2. Advertising:

Mount Rushmore, El Capitan, the Washington Monument.  What do these places have in common?  They attract millions of people each year.  Assuming each person has two eyes, that's a lot of eyeballs.  Imagine how much a company would pay to stick its logo on one of these iconic symbols?  We're talking Super Bowl type of exposure here!

3. Product Placement:

When the President signs a bill into law, he usually uses some non-descript pen.  When a Congressperson delivers a speech, she usually has a plain glass of water at her side.  When the defense department releases footage of a tank speeding through the desert, the tank has some generic markings.  I'm sure Bic pens, Poland Spring, and Lockheed Martin would pay handsomely to put their logos front and center so the American people can see them.

4. Sponsorships:

Budweiser:  the official adult beverage provider to the Inaugural Ball.

This is just a sample of the type of revenue-generating ideas that we need to consider if we aren't going to raise taxes or cut spending.  Sure, they may seem crass to some, but isn't crass more palatable than higher taxes?

1 comment:

  1. Naviplan for the financial planning about the business and how gonna it spend and also thinking about the investment in taxes and all. By thinking like a business, the Government can put its assets to better use, and get a better return on investment. This is an such a great blog for investing and revenue generation. This is just a sample of the type of revenue-generating ideas that we need to consider if we aren't going to raise taxes or cut spending.

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