12/15/2014 11:43 am ET Updated Feb 14, 2015

Restoring Lost Purchasing Power With the ShopAmerica Gift Card

Imagine if a simple, free, government initiative could noticeably raise almost everyone's standard of living, at essentially no cost to anybody... and reduce the federal deficit at the same time.

It's called the ShopAmerica Gift Card and here's how it would work.

Today social security checks, tax refunds, unemployment checks or (in the case of government employees) paychecks and pensions are direct-deposited. But now suppose that instead of direct deposit for the entire check, you could choose to exchange some or all of any check at a contracted website, where participating qualified sellers offer gift cards that would enhance the value of the check you'd be swapping. Example: If you want a new fridge, and you have a $1000 tax refund due, you can go online and have that tax refund electronically swapped for a $1100-plus gift card to a store or manufacturer selling refrigerators.

That 10 percent enhancement example is not hypothetical: when the government distributed "stimulus checks" in 2008, major retailers offered to exchange them on-site for gift cards at a 10 percent premium despite all the advertising, time, paperwork and training involved in promoting and executing that exchange at their stores, by hand.

The premiums would depend on the industry (food stores would offer smaller premiums due to thinner margins), the size of the exchange transaction, and how long the buyer is willing to wait to redeem the card. Timing also matters because sellers want to encourage off-peak traffic.

Once the government uses the critical mass of all the checks it issues to jump-start this new marketplace, private companies would join in, not just as ShopAmerica Gift Card providers but also as offerers of the Card to their own employees via direct paycheck deductions. Human resources departments like to offer perks that increase morale and retention -- especially perks such as this one that don't require a budget on their end. Since steering employees towards healthy choices is all the rage in corporate American "wellness programs" now, it is also likely that many employers will further enhance the value of the Cards with employee incentives that further enhance exchanges with approved providers, such as health clubs.

Given sufficient promotion, in a few years, either through the government and/or their own paychecks, most people in the country could have access to the ShopAmerica website, which would likely cover a wide range of goods and services.

Benefits to Consumers, the Government and Sellers

The benefit to consumers is obvious: anyone planning to spend money at the same place over time (like supermarkets) or on a large single purchase gets a much better deal than by paying with cash or credit. If the average enhancement is 10 percent, and applicable goods and services end up accounting for a third of all spending, the resulting 3 percent increase in purchasing power recoups more than half of the median household's purchasing power lost since 2000.

For the government, this is a way to stimulate the economy without increasing the deficit. The government will actually make money on this by selling the rights to run the site to the highest bidder -- Google, Amazon, EBay, Facebook etc. Those companies would pay a lot for the exclusive right to attract (and sell advertising for) those eyeballs.

The ShopAmerica Gift Card also offers sellers obvious benefits:

• They collect a large, dedicated, prepayment unencumbered by credit card fees -- which is of course is why they would offer the enhancement;

• There is no expense to them in marketing the gift card, just posting it to the site. .(Currently, when you see gift cards for sale in stores, you can be sure that the sponsor is only receiving about 80% of the face value. Remember, there is expense to marketing anything through stores--not to mention that people purchase them with credit cards sometimes, which itself creates an added expense.)

There could also be some second-order benefits as well. For instance, extra security would be needed for gift cards issued from the website because the sheer volume of this e-marketplace would attract hackers. The extra security needed for this initiative might provide the impetus for retailers to upgrade to a more secure generation of card-readers, as retailers already have in Europe.

And the ongoing debate about charging out-of-state online sellers sales tax might be amicably settled with a small voluntary fee applied to out-of-state transactions for buyers living in states with a sales tax, the fee being forwarded to the state. Online retailers willing to pay this voluntary fee (or who already pay sales tax) would get more visible listings on the site. Along with state support, this would assure the support of in-state establishments and large online retailers already required to assess applicable sales taxes, because it somewhat levels the playing field.

While the ShopAmerica Gift Card could be introduced as legislation, the entire proposal requires no mandates or taxes. That obviates the need for Congressional approval -- absent legislation, a simple executive order could ignite this initiative. And we know how the President likes his executive orders.