History tells us that true federal spending restraint is the way to nurse the national balance sheet back to health....
Looking at revenue, Jefferson and Gallatin enjoyed a gusher from import duties, which generated the bulk of federal receipts. Other federal revenues came from land sales and internal taxes, including whiskey taxes. Jefferson and Gallatin were the first advocates of “starve-the-beast” policies. Jefferson promised that he would repeal all internal taxes if elected, and he followed through in 1802. Internal taxes raised just eight percent of revenue, but Jefferson and Gallatin observed that they required a big bureaucracy to collect, imposed compliance costs on citizens, and abused civil liberties. So the Jefferson-Gallatin policy was to kill the most inefficient and odious type of tax, which is also a good lesson for tax reformers today.but i seriously doubt if that will ever happen. The national government has too many people, groups and companies addicted to the opiate of government spending and transfer payments. But spending restraint will happen. Although its better to have choices and do it now, the markets will eventually dictate that restraint will happen and force it upon the US like has and is happening in many European nations.
Unfortunately, the War of 1812 sidetracked the Jefferson-Gallatin plans on tax and debt reduction for a number of years. The Embargo Act of 1807 slashed federal revenues, and internal taxes were reimposed in 1813 to help fund the war. However, internal taxes were repealed again under President James Monroe in 1817, and they were not reimposed until the Civil War. So the Jeffersonian tax reform approach did have long-lasting influence.
Thomas Jefferson's Sequester | Cato @ Liberty