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Junk Bonds

Here's an idea: Uncle Sam should stage an IPO. And here's how it would work:

The Federal Government would create two new types of securities: "GDP Shares" and "Revenue Shares". Each quarter, the GDP Shares would receive dividend payments totaling 0.063% of GDP. The Revenue Shares would receive quarterly dividend payments equal to 0.360% of Federal revenues. Both the dividends and any gains on the sale of the shares would be exempt from all Federal, State, and local taxes.

For FY2012, based upon the GDP and Federal revenues projected in the CBO's 6/30/10 Long-Term Budget Outlook (LTBO) "Alternate Fiscal Scenario" (AFS) case, these percentages would cause $10 billion in dividends to be paid on the GDP Shares, and another $10 billion to be paid on the Revenue Shares. (By way of comparison, Exxon Mobil currently pays dividends of $8.9 billion/year.) The $20 billion in total dividend payments in FY2012 would amount to 0.719% of Federal revenues, or 0.127% of GDP.

It's certainly a novel, even amusing, idea. But do we really want Washington getting new tools for getting its hands on other peoples' money?