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Saturday, September 23, 2023

Retroactive Public Goods Funding: A New Way to Fund Our Nation


What is Retroactive Public Goods Funding?

History can teach us a lot about what not to do, when trying to solve the biggest challenges facing the nation. And that’s our credit card and transfer system.

Is it efficient and fair? Yes.

It’s complicated? Check.

Long payment delays? Yes.

Sucks for businesses and small businesses? Yes.

Small businesses, especially.

Et cetera, yes.

But now that Donald Trump is in office, retroactive public goods funding has some new legs, some new purpose.

What is Retroactive Public Goods Funding?

The Trust-Based Budgeting Tool and Retroactive Public Goods Funding

What it does, in a nutshell:

“The TRB Budget is a budgeting tool that can help new administrations in establishing their policy agenda. It is designed to help a new government develop a long term fiscal framework.

Are there any benefits of Retroactive Public Goods Funding?

It’s a little-known fact that there are federal laws that require the federal government to provide funding to pay for public goods that states and municipalities build or manage. These funds are called retroactive public goods funding, and these laws are part of the requirement for federal matching funds in the highway trust fund.

These funds are distributed to states and municipalities after federal matching funds have been approved. In many cases, these funds are applied towards maintenance and improvement of existing highways and bridges.

How Much Do These Funds Cost?

These retroactive public goods funding mechanisms can actually save taxpayers billions of dollars.

Is the government financially viable with Retroactive Public Goods Funding?

When government starts taxing health care, telecommunication, and other currently non-taxed “freedoms,” people will be taxed the old fashioned way: by the use of these services. But not for too long.

People will demand their money back for any services they previously had in a totally free market (it’s your money, and you need to spend it). People will complain loudly, until people realize that it’s easier to have these services paid for, than to go to doctors or the ER or a hospital, and they stop using them.

When it stops being financially rational to use certain services, most of the population, with the high level of income earners, will opt out, and be in a perfect place to demand their money back. They’ll make this argument to the government, but with more emotion.

What is the cause of the U.S. deficit today?

As it is, the CBO sees that the national debt will increase by about $4.7 trillion over the next decade, largely due to the “sequester,” or automatic across-the-board cuts that began on January 2. Since the sequester already went into effect on January 1, the numbers are likely to climb more rapidly.

Yes, the current debt is currently $14.6 trillion, but that’s a lot more than the $10.5 trillion that was owed by 2000. How did that happen? And what can we do about it?

There are two fundamental reasons that the deficit is going up. First, we spend too much money (meaning that we spend more than we make in revenue). Second, we have a tax system that is grossly inadequate. The point is that the GOP tax bill that became law last December will make the deficits much worse.

How can we improve the U.S. economy?

First, we should spend on scientific research at a level higher than that of a few countries. For example, the U.S. National Institutes of Health spends just $31 billion for research in 2015.

Second, we should invest in innovation and develop products and services that the rest of the world wants to buy.

And finally, the federal government should start working to address three structural imbalances in the economy: the distribution of labor (too few people want to move from rural areas to cities) and innovation (the most promising technologies stay in the research stage for too long).

The latter is where many federal policies hurt the country.


I received an excellent learning experience by participating in the crowdfunding campaign for my new book, The Marshall Plan for Cyberspace. The campaign launched on September 5, 2017 and closed on September 29, 2017. I spent a fair amount of time reading the comments, responding to people’s questions, and thinking of better ways to spread the word.

On the last day, the campaign ended with 66% of the goal funds raised. I believe that indicates to me that the majority of the potential readers are convinced about the need for this kind of book, or at least the ability to find it online.

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