“The right solution is to do a lot of things, not just one. First and foremost, as Samuelson advises, look for spending cuts. Raise the retirement age. Pare back wasteful subsidies. Follow through on the cost-control mechanisms that the health care law introduced too tentatively. Look hard for savings in defense.
Then, however, combine these savings with higher revenues, again from different sources. A simpler income tax would help. Capping the deduction for employer-provided health insurance would raise revenue and strengthen the incentive for cost control in health care at the same time. Bring in a moderate carbon tax. And introduce a VAT — which, though imperfect, would do less economic harm than an equivalent rise in income taxes. To combine what is necessary with what is politically feasible can best be done by using all of the above.”