Half baked idea

Having gone through a round of brinkmanship on the budget without accomplishing much, we should consider how to approach the underlying problem. While people always think they are paying too much in taxes, that is not the root cause of the current struggle. After all the budget didn't decrease spending very much, since increases in defense spending offset most of the drop in domestic spending. The problem is that people don't want their taxes funding certain spending.

Here is a proposal to address that. Congress could create a National Endowment for Defense and Security and a National Endowment for Poverty Reduction. Taxpayers would then be able to donate money (minimum $200) to the endowment of their choice and get an 80% tax credit. The endowment money would be invested in 10-year TIPS or equivalent and the interest from those securities would go directly to programs for that area, bypassing the appropriations process.

This would mean that taxpayers can choose to direct their tax dollars. So if a person didn't want his money going to poverty programs, he could donate to the National Endowment for Defense. Or if they object to defense spending, they could donate to the National Endowment for Poverty Reduction.

Notice this doesn't decrease their taxes, it actually increases revenue. But it does decrease the amount of money that Congress has available to appropriate. Most people would not donate and simply allow Congress to allocate their tax dollars. But those who want to direct their tax dollars can pay up and know what purpose their money is supporting.