I've been looking at the study too. Interesting. Of course, this study describes the problem and does not posit a solution. It also does not include the detail needed to estimate the cost of the solution I favor - tax reform with tax rates set to adequately fund the spending that actually exists in each of three areas: domestic defense and non-defense discretionary (paid by a VAT), entitlement spending - including health care reform (paid by expanded Business Income Taxes - which replace Corporate Income, lower rate Personal Income and Payroll taxes) and Net Interest/International - including the wars, foreign aid, IMF bad debt funding, the transition of military retirement to a funded program, repayment of the Social Security Trust fund and possibly either retirement of the debt - including that held by the Federal Reserve (paid for by high personal income and inheritance surtaxes). Each of these spending totals can be aggregated, each tax base constructed and a rate applied that could have the budget in balance in the near term, with debt retirement in the long term (with the term adjusted by the rate specified on personal income surtaxes). Determining what goes where would be an interesting exercise. If the numbers look ugly in one area (like the VAT or the Business Income Tax) it is important to know that and then decide what spending items move (or get cut). This investigation prompted me to go hunting through the President's budget on the OMB web page. A big chunk of today's budget woes is the TARP. As long as we can keep borrowing cheaply and are repaid with interest, this is Monopoly money. It is only when TARP buys assets and cannot recover their value that these items should be considered an obligation that the taxpayers will actually be accountable for. In a prior discussion, I asked whether the models TPC had could estimate what would happen if the Mortgage Deduction were ended and the Child Credit were increased by like amount. This was not in the model, however it can be calculated from the Special Analysis of the Budget. Interest currently runs about $88 Billion a year, while the Child Credit runs $28 Billion. Therefore, if you got rid of one and increased the other, it would mean a $4,000 annual refundable credit. This would benefit larger families - who need larger home - much more than it would benefit smaller families. If you ended the deductibility of property taxes, you could increase the child credit by another $1,000. If the base credit is $2,000 ($1,000 for the existing credit and $1,000 to account for the loss of exemptions for each child), you suddenly have enough for a $500/month credit per child. That's enough for a new bedroom, all things being equal. There are a lot of people living in substandard housing. If these people were suddenly given large tax benefits sensative to family size, the first thing they would spend them on would be housing - either rental or purchased. Considering that rich people will likely continue to buy vacation homes regardless of the loss of tax benefits they would experience, this is a win for home builders, although it would be a loss for those who chose to remain childless or to limit family size. Of course, if they were doing their duty to the species, we would not have a Social Security crisis - since demographics would be fine. I made one last calculation based on info from the Special Analysis. If you consider the Debt to be backed by the Personal Income Tax (excluding excise taxes and corproate income taxes), then for 2008, each taxpayer owed $9 for each dollar in tax paid. The estimate for 2009 is $14, primarily due to the TARP, et al. Of course, since this debt is backed by financial assets with the implicit, if not explicit, promise that this debt will be repaid, then the debt per tax dollar ration is still probably 9 to 1 (this includes debt held by the Government, which if the United States were liquidated, would have to be repaid). The moral implications of this are interesting, since 40% of the population owes nothing, while others owe quite a bit. The same people, of course, likely hold quite a bit of the debt as well (so there is no need to drink your lunch).