Most ideas for reducing the deficit involve pain and sacrifice: Cutting benefits for senior citizens. Trimming spending on schools. Raising taxes on business or the wealthy.
How about a suggestion that involves some fun? Richard Banks of the Yahoo! Contributor Network offers one up: To raise money for Uncle Sam, why not start a national lottery? “The allure of the lottery sparks an interest in every American,” he writes. “A surefire way to get out of the national debt crisis is to start a Federal Lottery Fund.”
Yahoo! News asked users on our Yahoo! Contributor Network to submit their outside-the-box ideas for how to balance the books. We’ve chosen some of the most interesting responses to highlight over the course of this week. We also asked key lawmakers to weigh in on those ideas. And as we go along, we’d like you, our readers, to tell us what you think: by a comment on our Facebook page, by an “@ reply” to us on Twitter or by your vote on our Ask America site. (You can also join the Yahoo! Contributor Network yourself to start publishing content on Yahoo!)
Monday’s idea, from contributor Brad Sylvester, was a national sales tax. Tuesday’s, from contributor W.E. Linde, included tough entitlement spending cuts as well as an end to outdated subsidies. On Wednesday, contributor JC Torpey suggested a sharp decrease in spending on the wars in Iraq and Afghanistan. Thursday, contributor Mark Whittington suggested privatizing the federal government and even leasing the moon. Then lawmakers responded to Linde’s suggestion, to Torpey’s suggestion and to Whittington’s suggestion.
But it’s Friday, so enough of the spinach. Contributor Banks argues that starting up a national lottery could reap many millions for Uncle Sam while allowing people to do something they like to do. “The more people want the prize, the more revenue goes back into the Federal Lottery Fund,” he writes. “This solution has been proved on the state level, adding millions of dollars a year to some states’ education funds.”
Banks is right: Lotteries have proved plenty lucrative for many states since New Hampshire became the first to create one in 1963. Over the last two decades they’ve become an extremely popular way of raising funds. Today, 43 states, plus the District of Columbia, host everything from basic Lotto to MegaMillions. This year alone, 11 more states began selling tickets to PowerBall, bringing to 42 the number that profit from the popular jackpot game. It’s no surprise why: People like to play. Half or more of all Americans participate in a lottery in any given year, according to the Washington-based Tax Foundation; the average American now plunks down more on the lottery than on movie theaters or reading matter.
But what’s doable at the state level may be much tougher to pull off nationally. There’s a long history of proposals to create a national lottery to help bring down the deficit: From the mid-1970s to mid-1980s, 10 different bills were introduced backing a federally run lottery. By 1985, interest in forming a lottery to close what was then considered a sky-high deficit of $185 billion was so intense that Congress ordered up a report from the Congressional Research Service to study the political and economic implications of doing so.
Those proposals eventually died out, even as lotteries spread throughout the individual states. Though the idea periodically returns, the problems cited then were much the same as those that have held sway with Congress ever since. Liberals generally dislike the idea because lotteries tend to weigh heavily on the poor, functioning as a very regressive tax. Conservatives don’t like giving the government a new source of funds that gets around the need to increase taxes. And many on both sides believe that the federal government should not be in the business of encouraging gambling.
Despite today’s vastly higher deficit, there is little sign of congressional interest in returning to the issue.
Sen. Chuck Grassley of Iowa, the longtime Republican head of the Senate Finance Committee, argues that a lottery would do nothing to solve the country’s economic woes. “The federal government should only support policies that enhance the economic pie, that creates more for more people,” Grassley told Yahoo! News in a Q&A. “A lottery simply takes money out of one pocket and puts it in another. It doesn’t expand the pie.”
Nor does the idea win favor from Rep. Marcy Kaptur (D-Ohio), a 14-term congresswoman who sits on the House Budget Committee. “I don’t think we can gamble our way to a balanced budget,” Kaptur told Yahoo! News in a Q&A. “Usually lottery tickets are purchased by lower-income people; many are taken advantage of. I’d rather a revenue-raising system that is fair to all.”But unlike Grassley and most Republicans, she argues that the government will have to bring in new revenue as part of any comprehensive solution to the deficit. And she knows one place she’d turn to for funds. “I would rather put a transaction fee on the real gamblers: the derivatives traders and hedge funds who have done so much damage to the economy,” Kaptur said. “If you want to talk about gambling and a lottery, that’s where the real lottery is, in the markets in Chicago and New York.”Along with the lack of congressional support, there’s an additional obstacle to creating a national lottery today that wouldn’t have been a problem had Congress started one back when the idea first arose: With so many states now dependent on lotteries for a chunk of their revenues, they would fight fiercely against any move by the federal government to get into the game too.
“There’s a limit to how much people will spend on lotteries,” says Alicia Hansen, a researcher with the Tax Foundation who has studied state lottories. If Uncle Sam started one, too, many who buy tickets from state lotteries would simply shift over to the feds, leaving the states with bigger budget problems. “State lawmakers would be very unhappy,” she says.Here’s one other thought to ponder: Back in that original 1985 report, the Congressional Research Service estimated that Americans would each have to spend $2,041 on lottery tickets, on average, to eliminate a $184 billion deficit.Today’s deficit, at $1.3 trillion, is now seven times larger.
Every American, on average, would have to spend $8,402 on lottery tickets to clear it up.That’s a lotta Lotto.