Republicans, democrats, house and senate and it turns out that it means that you are the easiest dog in the room to kick. Okay, so if i were a member of congress and i said i wanted tax system that is this or that. Its your job to draft that the macs. At. Regardless of what happens . Yes. And i think all of us appreciate that responsibility to try to take it seriously and we tried to deliver what the bosses are asking for. You have also penned a book, we are better than this how government should spend our money. In this book you write that the readers may be disappointed by the modesty of the substantive recommendations. Is that correct . What it means is that when i set out to write the book it began as another book about tax and budget the with the emphasis on this because that is my specialty the more i worked on it the more i realize that texting is easy but spending is difficult, figuring out what the government should be doing the typical. Taxing isnt the purpose of government and yet sometimes we behave as though it is. The purpose of government is to spend money. And are we spending it wisely, appropriately, those are much more difficult westerns so you tell me how much money we need and i can raise that money for you easily enough. Its easy but spending is hard to figure out. Okay lets start with this. This year last year, next year our tax system is too complicated. It is complicated. But its complicated because that is exactly what Congress Wants. You have to be very clear about who owns the tax system. And Congress Wants that complexity because they run a sort of industrial plan through the tax code with hundreds of breaks with Different CompaniesDifferent Industries and we did the same with individuals where we have also of social spending that was baked into the tax code. And so its all of that its not a question of how many tax rates brackets that we have a calculator can do that for you. But its about all the other programs that we put into the tax system in order that we can accomplish this. But of course we never take the time to review any of this or think about what are all these folks talking about is this a useful way to spend money. That is where the source of complexity lies. And again, washington is paralyzed on the tax matters in part because no one wants to give up what they have and also because we are using that as a way of arguing indirectly about what is the appropriate size of government. One of the themes of the book is lets talk about what is this. And its not just big payoffs but big economic payoffs and we are essentially starting ourselves as a country by virtue of not making the kind of investments that only government can make or not offering the kind of insurance and we argue about taxes and we are putting the cart before the horse. Okay Government Spending is an example . Yes there are easy examples like infrastructure roads and bridges. Highways airport controls, other airports, all of these are examples of oldfashioned infrastructure and today we are spending approximately zero. So if you take the where and the terror and the depreciation on existing infrastructure and you compare that to what we are spending we are spending essentially nothing to improve the transportation of a structure, the internet and structure, any of the physical plants and you can imagine. Education is another example and these data assets in the United States it is ourselves. We are the drivers and the soul of the country. And we dont invest in ourselves as much as we could be because we have made Public Education so expensive that its ironic to think that Public Education is expensive but it is in several important ways. And we are one of four countries which is the trade association. Of those 34 countries there are four of them its been less on educating poor kids then rich kids and we are one of those four. He spent more on the Public Education of rich kids than poor kids and that is a most perverse policy that you could ever imagine. And when you get to college levels, we have loan programs and the like. The result is that we are graduating students with enormous sums of data and its heartbreaking to see students at this law the law school or any other law school graduating with 150,000 of debt or even more. And that can constrain the kinds of opportunities that they can follow it take away their freedom of exploring different career paths. Thats a terrible version to ask young people to assume before they even really start with couriers. Social security, food stamps. I think the you have to break that category. Social security is income security for seniors. You do not give back what you pay. If you are of modest means you get a better deal than what you put into the system if youre affluent you get a worse deal. Its a Security System for seniors and today it and medicare accounts for 70 of all of the transfer payments that we make. The programs where there is a check with someones name on it. About 70 is owing to the nearest in the one of medicare and Social Security. So the bulk of what goes to families in need of help. Because they are just plain poor the bulk of that is going for children or disabled individuals and its very little with healthy adults under the age of 65 years old who are down on their luck, and again as a percentage of our income, our National Income and gdp with 29 out of 34 in what we spent on social spending or income security for adults under this age and yet we are the richest and largest economy in the world. We cant afford to do better than kerry had. We spent a lot in our military. Is that an investment . Its carefully agnostic. It is true that we spent a few minutes amount. We have spent as much as the 14 countries combined. 45 of world spending on military and there are 12 Nuclear Aircraft carriers in the world and if you think about that they are probably the most extensive movable object in the world with a flotilla of support ships and aircraft. Of the 12 we have 11 of voice if you dont know the answer to that and the answer is of course france. But the book does not suggest that this is the wrong number. I dont know what the right number is. And what i do know is that we should jolly well paid for the military that we feel that we need we should also pay for investing in ourselves and ensuring ourselves and we cant do that at a time when we are the lowest taxed country here. And theres almost no relationship tween how we conceive of ourselves and how we actually rank. The book spends a lot of time with comparisons to help the people see the truth. So we are the lowest taxed country, including state and local, in the entire 34 member relative to our incomes. And we excel but we are not overburdened with taxation. Could you have written this book when you are on the joint committee . Absolutely not. This is not a nonpartisan book. It is i tell it as i see it. It is not easily categorized and it argues that the whites have things wrong in their beliefs and that government should be smaller. Quite the contrary. We are a low tax small government country. So the political right gets that correct but the political left is also wrong in thinking that the solutions of inequality lie in higher marginal tax rate. With the book demonstrates is what makes for a progressive fiscal system, which is what we care about. But we should care about taxing and spending between every citizen in our government. And not even president bush proposed this left behind act. So once you acknowledge the spending is what drives the progress because they cannot help but be highly progressive in its effects who gets the benefit. Spending is so inherently progressive. How we raise the money is much less important than how we are spending it from the point of view of addressing inequality. And so that turns out to be the secret of Northern European countries. In germany has the same market before Government Intervention but its a much more equal society and yet at the same time its a more progressive tax system. And the reason is its just bigger. And the bigger government Collections Fund more Government Intervention and it explains why university in germany is free and why their students are graduating without mountains of debt and because they have a larger government that is investing in ways that help all of the citizens they end up with a substantially more equal society. So you take a step back what the book is trying to do is address the question of what should fiscal policy, taxing and spending, which of the fiscal policy be in an age of inequality and what the book answers is that it has to be a larger base because we are the smallest government of any large economy with an even larger base, it doesnt have to be super high rates on the rich more revenue. We have spent those revenues wisely by investing in ensuring in all of us. Starting with the spending and then come up with the tax system . Exactly. Its not that difficult and we have done this for decades and we can argue like all academics about this feature or that feature. And we are such a low tax country compared to others because we look at all taxes, state and will sales taxes, put them all together and its not difficult to find ways to raise the revenue. I gave a specific point in the book but i dont want to dwell on it that much because its just too easy. What is hard is convincing people that government is useful and can be an instrument for making us an ourselves not just by leveling down but going all positive returns to make up all healthier and wealthier and wiser generations from now than we are today. The budget process on capitol hill is on automatic pilot. Yes, and you know, the book should be called the blame congress. Congress is the problem it really is. And we have spent so long that we forget that the reason the government doesnt work is because congress doesnt work. Congress is not for philips own mandate. They dont revisit important spending programs and they are invisible to certain people at every turn they are a functional enterprise and tactical people who want to get things done whether they are conservatives or liberals, they can find Common Ground and lead us to a much more productive economy in which we all participate. But that requires a better class of legislators and what we have today. Is the balanced budget important . There are very few things that you can say about economics with great certainty, but this is one of them. The balanced budget is part of this for several reasons and one is that the economy keeps growing. We should care is how much data we have relative to income. And this first trillion Dollar Corporation in the world talks about this. So the right question about our National Debt is not how many dollars it is but how does it compare to our income. And because our National Income grows, if we have this on the 2 per year it means that we end up with National Debt of about two thirds of annual income which is perfectly sustainable. And the other point is that sometimes once in a while things go horribly wrong in the bottom just falls out. At that time government deficit spending leads to better economic outcomes. And we can see the difference between success and the United States has had coming out of the Great Recession compared to europe which tightened its belt out of this misguided idea that deficits were the First Priority rather than go. The balanced budget wouldve led to the Great Depression. And revenues collapsed because that is what it means to be an economic free fall. And when they are usually 18 and a half precent they were down to 14 and a half precent gdp. And it leads to lower tax revenues and we chase it all the way down to the Great Depression and it was secretary paulson at the end of the Bush Administration and the Obama Administration and they understood this and they acted appropriately and they recognize that what wouldve been a Great Depression to decimate. Another common phrase is to close the loopholes. What does it mean enact. Im all in favor of it and what it means is that the tax code is filled with rules that are not germane to collect contacts in a fair and orderly way. And the idea is that these are spending programs and congress has chosen to run through the tax system. They show up as a reduction in tax revenues. And there are a handful of places where the rule is wrong and should be fixed in those places are either out of inertia or because of powerful political interests of fixing them in which Fund Managers get taxed at Capital Gains rates and not his annual income. Its a nonsensical rule. But the fact is that its not that large of a number in the grand scheme of things. I think of the loopholes i think beyond this type of an example and i think about things like state and local tax deductions, all of the personalized itemize deductions that run over a fiveyear timeframe in reduced revenues in which we are not accomplishing the purposes that we think that we are. It does not help people buy their first homes, it helps affluent families by five bedroom home instead of a four bedroom home and thats a very strange kind of Government Spending program. So we need to look at the personal itemize deduction. These just happen to be bad policies. So how much should the government be spending . They should be spending just enough of gdp. One of the reasons that spending is going up to be very clear about this democrat or republican, nobody can hold back the fact that the number of americans over the age of 65 years old is skyrocketing. That means that Social Security and medicare are going to take larger and larger chunks of the National Income and that is just the reality. By virtue of that alone and the doubling of the number of americans over age 65, government has to be bigger in terms of total spending. And we could pretend that we were in 1965 that we are not, we have to deal with the reality of the aging population. 24 of gdp is about the right number. What the book advocates is not that we become friends overnight but that we spent 2 more than we are spending now and thats a lot of money. 350 billion, but it is completely affordable and advise a lot and advise of the structure and positive economic returns, building bridges and economic returns and it creates great quality jobs and not everyone in america is going to invent the next great application. Some people are not interested in that. So getting back where there are good quality jobs construction, that is a kind of thing that we can get some interest on. So we can get some significant infrastructure do better on Public Education, more in the way of pure science 2 of gdp is enough to make a meaningful impact on our lives and then we tend to ride if that is the right number are not. You dont have to do it all in one day. 2 of gdp would change our lives and some would argue this. Some could argue that this is harmful to productivity and that if we want to spend this withstood to the flat tax. The book considers these issues in detail and it is true that the tax system Corporate Tax system is inefficient and wastes money. The wonderful metaphor is to imagine the tax system as a bucket where your dollars from your pocket to the government and the government out to other individuals where the government is just us asking together and the bucket leaks. Not all the dollars they put in reaches anyone and just by virtue of how any tax effects were behavior and so all taxes have been the fact and the Corporate Tax and thats a high rate, the worst of both worlds because of all of the structural loopholes in it. Yes, we can do better, but when you look at the actual Academic Studies and the data, the tax system is not impeding growth. Under investments by the Public Center we are the largest Capital Asset and the drivers of the profitability of the enterprise that we call the United States of america and we are systematically under investing in ourselves. You write that the strand of contemporary american political thought that defines itself is narcissistic and self cleaning wrapped in a flimsy sheet of economic lingo. I confess that i wrote that. It is strong. Estimate is pretty strong because of the statements. This long sort of condescending attitude. To understand that it is necessary there is no alternative. And what is more these are people that think that the market outcomes are just because they are the outcomes that were reached in the market. And then whatever outcomes follow must be the correct outcomes. So its systematically messes the idea that luck has a lot to do with it. One of the themes of the book, and its hard for all of us to accept those of us that have achieved a lot they say i was also very lucky. I did not choose this but i didnt choose the parents that i had, but the teachers who helped me there is an awful lot in my life that happened in which i had no control over that enabled me to be successful. And to think that the market outcome is a sign of some kind of karma that has spend the still of the upon us is deeply offensive because it underestimates the actual importance in the outcomes that we all achieve and it denies the existence and further conflates marketplace freedoms with Political Liberties. Any constraint on private markets means that you have destroyed Political Liberties and the two of them are not in fact joined at the hip area at and nordics have a lot of Political Freedoms but they also have a much higher collection and pervasive situation than we do. At the other end, china is an authoritarian state nonetheless run within limits of a freemarket economy and theres a necessary connection between free markets on the one hand and Political Liberties on the other. Free markets are important, government doesnt replace market it complements markets in places they cannot reach like investing in ourselves and it overestimates the profession of markets and ignores this in our lives and they inflate two very different themes of marketplace ,com,com ma freedom, Political Liberties, since they were the same things you we are better than us. That is the name of the book we are better than this how government should spend our money many have all part of alert on the back of this book. We thank you very much and thank you for joining us. Thank you for having me. Every weekend we offer nonfiction authors and books on booktv. Keep watching for more on cspan2 and watch any broadcast programs online at booktv. Org. And heres a look at books are being published this week. Ashlee vance profiles elon musk. The cohost of nprs morning edition recounts the removal of native americans from the southeast in jackson land. Also being released is the Foreign Affairs columnist for Time Magazine looking at the role that america plays overseas in superpower. And the jefferson rule this historian examines different ways that readers have used americas founding others to promote contemporary policies. And looking at american inventors and capitalist spin who built that. Look for these titles and more this coming week and watch for the authors in the near future on booktv