More generational theft – White House adviser thinks VAT can work

If you’re all in, you might as well go all the way in. I was personally thinking Cap and Tax and immigration “reform” would be the next big items on the Obama administration menu, but that did not stop Paul Volcker from sending up the value added tax (VAT) trial balloon yesterday.

Did not get to post last night, but Drudge had the link to the Reuters post referring to Volcker’s statement yesterday. My emphasis is in bold.

The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax “was not as toxic an idea” as it has been in the past and also said a carbon or other energy-related tax may become necessary.

Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.

So Volcker is saying introducing a VAT will help get entitlement costs and the budget deficit under control? How does adding a VAT get entitlement costs under control? Will there be any consideration at all to actually decreasing the size of the federal budget and get that under control?

This administration thinks they can implement a VAT and then point to the expected reduction in the yearly deficit figure and say things are getting better. They don’t get it, people are upset about the ever expanding size of the federal government and the VAT only encourages them to move ahead, bigger and “better.”

Even if the VAT reduced the size of the deficit – and I do not think it will – will Americans be so gullible they will be satisfied by looking at a simple graph showing a reduction in the deficit?

Allahpundit at Hot Air refers to Krauthammer’s great post on the VAT last week. (Go read it.) First, Krauthammer.

Obama’s strategy is exactly the opposite [of Reagan’s]: Expand the beast, and then feed it. Spend first — which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

AP responds…

Precisely. The One’s perverse insight was that a giant federal expansion of health-care benefits had to be passed before any major entitlement reform could happen. Had he tackled the latter problem first, declaring that America had reached a moment of fiscal emergency and demanding that both parties address the crisis, he would have done his country a world of good but in the process created two problems for himself. First, the political fallout to his party from cutting entitlements likely would have been devastating, which would have wrecked any chance at passing health-care reform aside from a modest GOP bill. And second, even if the Democrats survived the electoral backlash, they’d have a hard time trying to sell the idea of a brand new entitlement after the country had sacrificed so much to get its fiscal house in order.

Sister Toldjah and Sweetness & Light also writing on the subject this morning.

Posted in

Steve McGough

Steve's a part-time conservative blogger. Steve grew up in Connecticut and has lived in Washington, D.C. and the Bahamas. He resides in Connecticut, where he’s comfortable six months of the year.


  1. Dimsdale on April 7, 2010 at 5:28 am

    How does taking the credit limit off a license to spend control costs?


    Lefties should not be allowed to run a lemonade stand, much less our government.

The website's content and articles were migrated to a new framework in October 2023. You may see [shortcodes in brackets] that do not make any sense. Please ignore that stuff. We may fix it at some point, but we do not have the time now.

You'll also note comments migrated over may have misplaced question marks and missing spaces. All comments were migrated, but trackbacks may not show.

The site is not broken.