Proposal to inject private price mechanisms into the public sector

By Bruce and Stacy Summers

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Most people will agree that the public sector is either inefficient or efficient at doing unproductive functions. Societies choose many non-profitable spending patterns for some very good reasons. However, societies also make spending decisions that in future years seem to not serve a purpose and would rather discontinue the allocations if that were a realistic possibility. The sad truth is that most public sector spending is difficult and more often impossible to stop once the program has started. The crux of this proposal is to show a way to inject private price decisions into the public sector so that government corruption and unneeded services can be eliminated.

The big question is how does the United States Government add private pricing mechanisms into a public entity and still satisfy those social needs determined independent of monetary considerations. The following are eight steps designed to accomplish this goal.

First, determine all government spending that is not authorized per the Constitution. Determine the exact percentage of authorized and non-authorized spending; for example, 15 percent authorized and 85 percent non-authorized. These numbers may or may not be accurate for the purpose of this example, however, they are probably close to reality. Such spending will be separated from allocations allowed per the Constitution. Congress will maintain full authority over the allowed areas. The non-authorized allocations may still be determined by Congress; however, taxpayers will have priority in determining the allocations.

Second, add an amendment to the constitution to allow for the newly created “Federal License” department listed below and to clearly set the limits on Congressional spending to what was originally stated in our original Constitution.

Third, create a federal government license department for organizations that wish to receive federal tax funding in exchange for providing federal services. They will be called federal service organizations or FSO’s. An FSO can be anyone, any group, and/or any organization which chooses to provide a service or services. The services do not need to be currently provided by the federal government nor do they need to be voted on by Congress. The only requirement to be eligible to receive federal funding is to be authorized by the license department.

Fourth, allow multiple organizations to provide each service. This is the heart of the new system. Competition will be forced into the public sector when multiple organizations are providing the same services. Let’s allow several FSO’s to compete for the services that only one department was originally designed to deliver. Think of it like an Anti-Trust mechanism for the federal government. They don’t let us run monopolies. Don’t let them run monopolies.

Fifth, the Treasury will use the percentages determined in step one for distributing funds to Congress. There will be two separate accounts for the federal coffers. The Federally authorized coffer will receive priority over the coffer for the FSO’s. For example, the first 15 percent of all tax revenue will go into the authorized coffer while all remaining revenue will go to the FSO coffer. The accounts will be separate and there will not be any commingling of the funds.

Sixth, allow taxpayers to choose which FSO’s receive their tax contributions that went into the FSO coffer. Most citizens have hobbies and interests that are affected by services provided from the federal government. Let them choose how to spend their tax dollars. People interested in education will fund education services. People interested in roads will fund infrastructure projects. People interested in environmental causes will pay for environmental services. There could even be an FSO that provides federal debt reduction services or just pure savings. Taxpayers will determine how to spend their money or not to spend it at all. This is not to say that the overall tax rate will be reduced with these changes. Taxes are still the authority of Congress and they may raise or lower the general rates. However, taxpayers could choose to send all of their FSO contributions to pure savings FSO.

Seventh, allow tax payers to opt for a general FSO allocation fund that Congress can appropriate to FSO spending. Some individuals will not want to choose to allocate all or even a portion of their tax payments to specific areas. Let them allow the Congress to determine where such spending will go.

Eighth, create a federal website devoted to show an accounting of all projected budgets, allocations, funding needs, justifications, and current funding of the FSO’s. This new arrangement would allow one medium for taxpayers to educate themselves on the FSO’s. The website would not be the only method to learn about FSO’s. As private organizations, they could advertise and promote their specific causes. The federally provided information would be the official accounting and primary location to disseminate material.

Societies will always make decisions not purely determined by fiscal matters. Sometimes monetary allocations will be made because of emotions and events particular to a certain time frame in history. This new arrangement of federal services would allow taxpayers to cease funding for unneeded services, provide competition in the public sector, and give an incentive for FSO’s to remain true to their missions. It is the framework of an eight step self-correcting spending plan that puts taxpayers in control of non-authorized tax spending. This is how we correct the mistakes of a federal service when it has gone astray or no longer needed. Please improve upon the framework and help expand the details of this proposal.