Lugar's proposal more than a decade ago would have eliminated the Internal Revenue Service and implemented a national consumption tax.

He suggested that people and corporations pay a tax based on their purchases. Canada has had a similar tax for a number of years.

"When I was running for president in 1995 and 1996, I proposed a fair tax," Lugar said during a stop in Kokomo last week. "No one would second the motion."

Lugar said a number of members in the U.S. Senate and House currently believe that's the direction the nation should take.

"A fair tax eliminates the IRS altogether and implements a retail tax of 23 percent," he said. "The tax is paid at the final destination. It is easily collected and easy to track."

Lugar said a fair tax would liberate capital that is required for job growth and business expansion.

"I don't predict it will be adopted in three months," he said. "But is a proposed program that makes a significant difference.

"There would be no corporate or individual income tax," Lugar continued. "Capital will be available and people have to decide whether or not to risk it."

The flat tax is just one of the proposals Lugar hopes to see on the agenda for a newly formed committee tasked with reducing federal spending by $1.2 billion before Nov. 23. The group of 12 is comprised of lawmakers in both parties from both houses, and it is expected to hold its first meeting this week.

Commenting on the talks to lower federal spending, Lugar said he is working with Sen. Pat Roberts, R-Kansas, and Sen. Debbie Stabenow, chairwoman of the Senate Agricultural Committee, to include a new farm bill in the talks.

Lugar said it's important that both sides work together, adding that before the recess, work in the Senate had ground to a near-halt.

"Under current circumstances, it's rare the Senate has a debate on any bill," he said. "We may not have passed more than a half-dozen bills this year, aside from minor legislation."

Lugar said all of the talks revolve around cutting spending in the federal budget. He said there has been little in the way of committee activity.

He hopes a new farm bill can be presented to the group of 12 lawmakers working on a proposal to reduce government spending.

"I favor cutting farm subsidies, which most farmers are in agreement with, and to end the sugar subsidy," Lugar said. "Americans pay twice as much for sugar as anywhere else.

"We hope a farm bill will be incorporated in the legislation from the group of 12," he said. "This is a chance to make changes, save money, cut subsidies and start toward cutting $1.2 billion."