Back in the 1950’s social policy became tax policy. Things like mortgage interest deductions and real estate tax deductions crept into the Tax Code as home ownership became a national policy. Over the years, special interest groups carved out perks for themselves. R&D, Railroad capital improvements, rapid amortization, and deficits started cropping up. Because all of these things are in the Code, it became a real tough exercise for Congress to balance the budget. There was no simple formula for raising revenue and no simple formula for cutting spending. As a result, deficits grew and grew. And each perk in the Tax Code and each perk in the spending side became part of society in the United States. Now our credit has been downgraded because the President and Congress did not listen to debt ratings services or as it turns out to the Tea Partiers who were villified for raising the question. So, what needs to be done. First with regard to Tax reform, a part of tax policy needs to be a reduction of deductions and credits with a massive rate reduction. That way, when receipts are down, then increasing income comes from increasing rates and its transparent. County governments have to do that all the time with real estate taxes. You can put in a simple Earned income credit for low income workers to deal with their situation, but not a refundable credit for monies not withheld. That’s welfare via Tax Code. On the expenditure side, we need to look at entitlements and delay benefits to a later age. Social Security was built on the theory that people died at age 67. Medical science and medicare have driven that up to 79.5. That means that 12 extra years of benefits are being paid without a corresponding increase in contributions. Increasing contributions is not going to happen since that tax is a regressive tax (a flat tax). So, delaying benefits or needs testing them is the next alternative.