Ramesh, like you I read Ross Douthat’s thought-provoking piece with interest, but in my case with much less enthusiasm. It may be worth highlighting what I think are the most obvious problems with what he has to say. To start with, Ross appears to favor sharply scaling back the mortgage-interest tax deduction, an unattractive notion at most times and particularly so in an era of sharply increasing marginal tax rates. It’s also an idea that apparently takes no account of what such a change could mean to already-ruined real-estate values. Now, it is true that if we turn to the Conservative Lives of the Saints, we will find that, in a process that began under Thatcher, Britain’s Tories phased out the mortgage-interest tax relief. However, that was at a time of falling marginal tax rates. Moreover, the size of the tax relief available at the time was, to start with, relatively modest. In addition, in the U.K., capital gains on the sale of a principal primary residence were (and remain, as they are in Germany, Canada, and many, many other countries) entirely tax-free, a sensible policy that encourages both saving and affordable home ownership. It should be adopted here. Looking elsewhere at what Ross has to say, we find this:

This isn’t just a corporate welfare problem. The same pattern is at work in our entitlement system, which is lurching toward bankruptcy in part because of how much Medicare and Social Security pay to seniors who could get along without assistance. Instead of a safety net that protects the elderly from poverty, we have a system in which the American taxpayer is effectively underwriting cruises and tee times.

Translation: We should means-test both Medicare and Social Security – a retrograde and destructive idea seemingly purpose-built to stifle (particularly among the middle classes) the sort of rebirth of savings culture that this country should be doing everything in its power to encourage. Are there easy answers to our current financial fix? Of course not, but, to the extent we need to increase revenue (and we do) as well as cut spending, the answer must be higher taxes on consumption rather than on enterprise, income, and thrift.