Taxes Must Rise if Entitlements Go Unchecked: Hubbard
If Americans want larger entitlement programs, they must be prepared to pay "much larger taxes," Glenn Hubbard, former economic official in the Bush administration, told CNBC's "Squawk on the Street" on Wednesday.
Looking beyond the "fiscal cliff" of tax increases and spending cuts that are scheduled to hit at the end of the year, Hubbard said there needs to be new budget roles to prevent entitlement programs like Social Security and Medicare from crowding out spending on infrastructure, defense and education.
"We need a budget rule that says when we change our liabilities in Social Security and Medicare we have to ask the Congress to pay for them by either raising taxes or cutting spending," the economist and dean of the Columbia Business School said. "That forces Congress to think about the mix between taxes, spending outside the entitlements and spending on the entitlements."
Hubbard added that if the country wants bigger government, we need a different tax system to pay for it.
"You can have whatever political view you want, you can even have opinions about economics," Hubbard said. "You can't have opinions about math. If we want a very large entitlement state, every American will have to pay much larger taxes."
The alternative is to look at ways to rein in government spending, particularly on entitlements.
"Where I think there's a seed of a political compromise is say let's we strengthen Social Security and Medicare but for people who really need those programs and then slowdown the rate of growth for everyone else," he said. "We can agree on that right and left."