William G. Gale, Fiscal therapy: curing America’s debt addiction and investing in the future
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I used to end my presentations on the economic outlook with a discussion of the US fiscal situation. But when the audience realized what dealing with the situation implied for taxes, and for Social Security and Medicare, the room fell silent. This is the challenge that William Gale confronts in Fiscal Therapy. Dealing with fiscal deficits and government debt is important, but the discussion is so discomforting that it risks turning people off. Fortunately, Gale does a better job than I did, and he kept me engaged until the end.
Gale begins by reviewing what the government spends money on and where it gets its revenue. Before he even mentions the size of the deficit and accumulated debt, and the history of how they got so big, the difficulty becomes apparent. Most major spending programs—nearly 70% of the federal budget—is spent on Social Security, healthcare (mostly Medicare and Medicaid), national defense, and interest on the debt—and most “tax expenditures” (credits, deductions, and...