Eswar Prasad

So I'm completely with you, Scott, that we need to have a serious conversation about entitlements, about dealing with not just discretionary elements of government spending, but these other core elements.

And perhaps we also need to think about

a different tax system where, for instance, a value-added tax system on consumption, I think, would be much more efficient.

It would broaden the tax base without necessarily raising taxes.

And I think we could keep much better incentives in place.

There is an issue about revenues, and I think a lot of that can be addressed by simplifying the tax system.

I mean, every year, you know, April 15 brings a nightmare for practically every American citizen because our tax system is so convoluted, even for people who have just a single income.

stream of income.

And many of the elements that are in our tax system simply do not help in terms of either economic efficiency or raising taxes.

Plus, of course, you have a very large number of loopholes.

So I don't think we even need to raise taxes.

Like I said, we can think about an alternative tax structure.

which is much more simplified, that can leave better incentives in place, and that could potentially increase revenues as well.

On the expenditure side, I think, you know, without dealing with non-discretionary spending, we're not going to make much progress.

And here, of course, the paradox is that we are talking about increasing military spending, not all of which is necessarily

productive and of course if you have an administration that you know wants to project america first through military strength rather than economic strength you get a lot of expenditure being misallocated to uses that i think are not really good for the productive part of the economy so there's a whole range of very difficult issues to talk about in the context of the public debt

And much of the conversation really ends up being about laying off a bunch of federal workers, about cutting some discretionary spending, cutting Medicaid spending, all of which I think has some effect.

But these are swamped by everything that has happened on the tax side where you've had

much more generous tax breaks for those who are already well off, and additional measures to even more complicate an already complicated tax system.

So I think simplification is really one very important element on the tax side, at least, that could get us to a better place.