Top presidential economic advisor Paul Volcker said Wednesday on the FOX Business Network that U.S. corporate tax policy is in need of an overhaul.

The corporate income tax, for instance, is “a mess,” according to Volcker, a former chairman of the Federal Reserve Board in the 1980s.

In an interview with FOX Business Network’s David Asman, Volcker said soaring federal budget deficits will have to be addressed both by reducing government spending and raising some taxes.

Defense spending is one area he cited for potential cuts, while energy-related taxes could be used to raise revenues, he said. Volcker said a carbon tax is a possibility, as is a gas tax that would bring the price of gasoline in the U.S. more in line with prices in Europe.

Volcker is chairman of the administration’s Economic Recovery Advisory Board.

Elsewhere, Volcker defended President Obama’s proposal not to extend Bush-era tax cuts to families making more than $250,000 and individuals making over $200,000.

“There’s been a skewing of income away from average families to people with incomes beyond the imagination,” said Volcker. “It’s been the biggest income redistribution in history away from those families to a very small coterie of very rich people.”

Volcker, widely credited with taming inflation during a recession in the 1980s, said this recovery is more difficult than the one he oversaw three decades ago. The economy last decade became “distorted,” he said, as consumption in the U.S. outpaced production. That led to easy borrowing and other economic imbalances, all of which fueled the recent financial crisis.

 “You don’t have the bounce back we had in the 1980s. The basic economy needs some readjustments that weren’t needed then,” said Volcker.

Volcker, who served as Fed chairman under Presidents Jimmy Carter and Ronald Reagan, offered no specific solutions for reviving the battered federal mortgage giants Fannie Mae and Freddie Mac.

Instead, he said any institution created in the future to replace Fannie and Freddie should not be a hybrid of private and public ownership.

As for a replacement for Larry Summers, a top Obama economic advisor who announced on Tuesday he would stepping down by the end of the year, Volcker said whoever it is needs to be “an honest broker”  that will bring the president unvarnished views from the business community.

Finally, Volcker sought to dispel the perception among some in corporate America that Obama is “anti-business.”

“He is not a wild-eyed leftist radical,” said Volcker. “The perception is wrong.”