Much has been written about the disastrous consequences of running a huge deficit and printing money to “pay” for it. The Federal Reserve Bank has far too much power in manipulating the money supply and interest rates and often attempts to fix problems with artificial measures. This generally accomplishes nothing and only creates bigger problems. The power to determine the money supply should return to congress as was originally intended by the framers of the constitution. I would also advocate a return to a tangible asset-valued currency. Rather than the gold standard, I would suggest a “mineral” standard, which would assess the total wealth of our country in terms of oil, natural gas, gold, silver, and platinum, and use that as a real basis for the money supply. This would give our money value and protect against run-away inflation. If we were mining our own energy resources as noted under the ‘Energy Policy‘ portion of this site, we would be at liberty to allow our market to set the price of oil and gas rather than foreign governments and speculators. This would obviously also contribute to monetary stability and greater economic stability as well. It would also create jobs.
In the past, federal government expenditures resulted in the purchase of durable goods and valuable services. At Fort Story stands the first expenditure of the new government of the United States after the Revolutionary War–a lighthouse. The value and wisdom of this purchase is obvious, as the lighthouse is still standing. Though it no longer serves to alert ships as to the location of the shore, it is still an important landmark and serves as a point of history and recreation for the people of Hampton Roads and visitors to the area.
I would propose that the federal budget be spent principally on durable goods and services of proven and lasting value. Money should never be spent on ‘government supported entities‘ even the name of which implies something nefarious and indistinct. Government money should never be spent on labor unions, vote-getting organizations, or pork-barrel projects designed for the sole purpose of creating kickbacks or campaign donations. The federal budget should encompass the NIH, grants, the NITECS that I have proposed, the military, and the cost of running itself. How could other services and necessary organizations be paid for? By creating more wealth. In his book, First Principles, John B. Taylor, Professor of Economics at Stanford University, argues that federal spending should never amount to more than 19.5 percent of GDP. This would reduce federal intrusion into markets and industries where it doesn’t belong (which crowds out private industry and investment); would allow for restructuring and lowering of taxation over the near term which would create jobs; and would balance the budget by allowing for economic expansion–which enlarges the tax base and invariably generates greater revenue over time than higher taxes do (see the section on taxation).
The social security trust fund should be invested–not just in the stock market, though three trillion dollars put into the stock market could only have one possible effect–in a managed growth fund so that payments would be insured and larger for all recipients.
When companies obtain patents using government grants or on government contracts, some share of the patent payout and royalties as well as a share of the eventual sale of the patent rights, should return to the federal government. Also, no company should ever be allowed to use federal grant or contract money to then turn around and advertise back to the federal government. A share of revenue generated by sales of equipment designed and built on government contracts also should return to the government which provided the funding for the project in the first place.