Many Feldstein critics point to his 1997 Foreign Affairs article on European monetary union and international conflict as an overbroad, fear-mongering jeremiad. I’ll admit that Feldstein wasn’t quite right about EMU, but we have seen an increase in intra-European tension as a result of diverging economic performance within the Eurozone.

But with that exception, I find Feldstein a very insightful and reliable guide to tough public policy questions, e.g., his excellent Washington Post op-ed from October of last year on “a better way to health reform.”

And now he’s written a very important op-ed for the Wall Street Journal on tax expenditures, which I hope you take the time to read. His basic argument is that cutting tax expenditures can kill two birds with one stone: we would increase overall economic efficiency by eliminating distortions and simplifying tax filing, and we would raise revenue without increasing marginal tax rates.

If tax expenditures are not cut, taxes on households and businesses will have to rise to prevent an explosion of the national debt, which is now projected to increase to 90% of GDP by 2020 from today’s 63%. When benefits for Social Security and Medicare are set aside, the rest of the outlay side of the budget is too small—7.5% of GDP—to provide much scope for reducing annual budget deficits that are now projected to average 5% of GDP for the rest of this decade. In contrast, total tax expenditures are now 6.4% of GDP.
Not every type of tax expenditure should be cut. Some provide good incentives while others increase the fairness of the tax system. But they can be reduced by one-third or more.
Tax expenditures have been cut before on a large scale. President Ronald Reagan’s 1986 tax reform reduced tax expenditures to 6% of GDP (from 9%), the level at which they remain today. Cutting them another 2% of GDP would reduce the national debt in 2020 by some $4 trillion, bringing the projected debt down to 72% of GDP from 90%.

This strikes me as a no-brainer. The only obstacles are political, and conservatives are well placed to make a compelling case against tax expenditures that seek to control and manipulate private behavior.