The U.S. must overhaul tax breaks and entitlement programs to help reduce the federal budget deficit while safeguarding the economic recovery, according to Harvard University Professor Martin Feldstein.
Capping “all of the expenditure programs that are built into the tax code” can lower total taxation without increasing the deficit, Feldstein, a former head of the National Bureau of Economic Research, said today in a Bloomberg Television interview with Tom Keene on “Surveillance Midday.”
“There are so many forms of government spending which, if they showed up as actual outlays in the government accounts, there would be widespread agreement we don’t need these, we can cut them back,” Feldstein said. “But they’re built into the tax law, and therefore to put a limit on them you have to raise some revenue. And folks who are allergic to raising revenue have not yet come to recognize that those are spending by another name.”
Lawmakers should overhaul Social Security by allowing a mix of government and personal retirement accounts, Feldstein said.
“What we need to do to balance the Social Security is to gradually do a transition to a mixed system in which we have the pay-as-you-go system financed by the current tax rate plus universal personal retirement accounts so that retirees in the future will get a combination,” he said.
Feldstein led the NBER, the Cambridge, Massachusetts-based group that officially dates economic recessions and expansions, for nearly three decades except during a stint as chief economic adviser to President Ronald Reagan from 1982 through 1984, according to NBER’s website. President Barack Obama appointed Feldstein in 2009 to be a member of the administration’s Economic Recovery Advisory Board.
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