The problem with this approach is that an economically efficient outcome is very unlikely. In principle, a government's spending has three motivations: 1) it can provide something more efficiently than the private sector, 2) it can ensure quality in a way that the private sector can't, or 3) the private sector alone doesn't have an incentive to provide enough of the item in question. These days, the first motivation is rarely relevant, except in small countries where some industries may offer the most benefit to society as publicly run monopolies. But the second often is, as in the case of airport security. And the third covers a huge variety of "public goods" such as infrastructure, scientific research, and vaccinations, all of which have benefits for society beyond the benefits that an individual purchaser would receive.
If we rely on charity to fund all these items, we may simply end up with too little of them. Imagine, for example, a United States with a stripped-down Justice Department, a bare-bones military, and only tiny agencies to deal with issues like highway safety, air traffic control, food safety, and the disposal of nuclear waste. All these would rely on individuals' goodwill to continue providing services that protect the entire population.
Charity would also have to fund long-term investments like the National Science Foundation and the National Institutes of Health. These organizations dispense just under $38 billion a year in grants for research in the physical, chemical, biological, and social sciences, or about $121 per American. Many projects they fund are too fundamental to have immediate applications for business. Yet these same projects lay the groundwork for waves of innovation in the future. They are not crowding out research in the private sector, either; rather, they are complementary, as additional publicly funded research leads to more research in the private sector as well. Left to their own devices, would Americans support a science charity to the same degree?
In fact, every American would have a strong incentive to contribute nothing and free-ride on the contributions of others. After all, they would still receive the same benefits from things like national defense and technological innovation. Government solves the free-rider problem by coordinating all of us to pay for public services collectively. Without government fulfilling this role, public services may simply disappear.
To rely on charity would diminish the potential of the United States to grow, and it would create new risks that could push the country back through economic time. That the United States has done so well despite much lower spending than many other wealthy countries is a testament to the strength of its private sector and the ingenuity of its people. But there is a limit to how much you can cut.
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