Obama's Volker Proposes Unprecedented "European-style" VAT Tax

In the wake of President Obama and Democrats in Congress passing their unpopular $2.6 trillion health care takeover, it seems the unprecedented levels of spending and debt are finally concerning some in the administration. Unfortunately, the response was to consider far-reaching new taxes. Reuters reports today, “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.”

But why are the debt and deficit breaking records in the first place? The answer, of course, is the unprecedented spending by the Obama administration. It began last year when the administration pushed through its debt-financed $862 billion stimulus bill, continued with Obama signing appropriations bills that increased spending over prior years by tens of billions of dollars, and has now culminated in a $2.6 trillion health care spending bill that will only increase government outlays on health care by hundreds of billions of dollars.

Last month, CBS’ Mark Knoller reported, “The latest posting from the Treasury Department shows the national debt has increased over $2 trillion since President Obama took office.” And the AP reported, “The government ran up the largest monthly deficit in history in February, keeping the flood of red ink on track to top last year’s record for the full year. The Treasury Department said Wednesday that the February deficit totaled $220.9 billion, 14 percent higher than the previous record set in February of last year.” The AP also noted, “The Obama administration is projecting that the deficit for the 2010 budget year will hit an all-time high of $1.56 trillion, surpassing last year’s $1.4 trillion total [which was also a record]. The administration is forecasting that the deficit will remain above $1 trillion in 2011, giving the country three straight years of $1 trillion-plus deficits.” And Knoller added, “In the 2011 federal budget released last month, the administration projects the National Debt will soar ever upward to over $25 trillion in the year 2020. The total debt will amount to more than 100 percent of the national economy as early as 2012.” Meanwhile, CBO projected that under Obama’s latest budget, by 2020, interest payments on the debt would approach $1 trillion a year.

These are staggering numbers, and they are deeply troubling to many Americans. Back in 2006, then-Senator Obama was among them. “Increasing America’s debt weakens us domestically and internationally,” he said at the time. “Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership.”

But today his administration is moving forward with ever more spending plans and then announcing that the cure for the debt problem they have exacerbated are unprecedented new taxes in the form of “a European-style value-added tax,” as Reuters deemed it, and a new tax on energy Democrats are hoping to push through in their cap-and-trade bill.

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Tags: Democrats, Obama Administration, Paul Volcker, VAT Tax, increased taxes, European socialism
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