Pakistan Geography

Taxing the rich more would result in a more equitable income distribution, higher revenues, less financial and economic volatility, and faster growth.

If balancing the budget were the only goal

of government, it could achieve this balance

simply by closing down its operations completely,

ceasing both tax collections and expenditures.

Obviously, the more challenging

task is to balance the budget in a manner that

allows government to also meet its broader

responsibility to enhance the well-being and

security of its citizens.

The problem we need to fix is simple. Americans have an appetite for government benefits that greatly exceeds their appetite for taxes. For more than a generation, we have squared this dishonest circle by borrowing vast amounts of money. As more people age, this gap between what we want the government to provide and what we are willing to pay for is going to widen to an unsustainable level. Over the next 75 years, benefits under entitlement programs will exceed government revenue by $40 trillion. The federal budget deficit, if unattended, will reach 24% of GDP in 2040--well beyond Greek and Irish territory. At that point, the measures it would take to close the gap are so punitive--we're talking tax hikes of 70% or spending cuts of 50%--that it is inconceivable that we will make them. If by some chance we were to make them, they would put the economy in a death spiral.

Yet while the problem seems insurmountable, it really is not--at least not at this point. The greatest service the co-chairs of the deficit-reduction commission have done in their draft proposal is to make that plain. Whatever you think of the ideas floated by the chairmen--and I actually like most of them--they demonstrate that with a series of phased adjustments, most of which are sensible policy anyway, the U.S. can put its fiscal house in order; pay for a generous set of programs for the elderly, poor and sick; and still maintain a very competitive tax system.

The...