On Thursday, I appeared on Canada’s Business News Network to discuss our budget woes. Also on the show were Joe Minarik of the Committee for Economic Development and Bill Beach of the Heritage Foundation.
The first part of the interview focused on taxes. In a nutshell, my view is that spending restraint won’t be enough to get our budget under control, and therefore tax revenues will have to rise above their historical level (of about 18 – 18.5% of GDP). But our existing tax system is inefficient and will not scale well to higher levels of revenue. Thus any effort to raise more revenues must be coupled with fundamental tax reform. For example, we ought to re-examine how tax expenditures have made swiss cheese of our tax system.
The second part focused on the risks of our growing debt. I view that debt as a serious problem (no surprise). But I remain optimistic that the United States will eventually get its act together to deal with it. I am just not sure when.