We all know it’s coming, but I’m reasonably sure Volcker missed a memo instructing advisors not, repeat not, to mention this publicly until, oh, say, the day after Election Day 2012.
As it is, look for Gibbsy’s spin tomorrow to be, “B-b-but he was Reagan’s Fed chairman!”
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.
Krauthammer’s column on the VAT came out a few weeks ago, but if you missed it at the time, now’s your chance to catch up. Perfection:
Obama set out to be a consequential president, on the order of Ronald Reagan. With the VAT, Obama’s triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan’s strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes — then ultimately you have to reduce government spending.
Obama’s strategy is exactly the opposite: 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.
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. No, the only way to get O-Care done was to add it to the entitlement basket first and then wait for dependency to work its magic so that, when the crisis finally hits full force, it’s already a fact of life. That was a fantastically reckless thing to do but he wanted his agenda passed at all costs. And I do mean “all costs.”
I’ll leave you with James Pethokoukis’s piece this morning gaming out a way that the Democrats might try to sell the VAT to the public. Essentially, it’d have to be the fiscal equivalent of comprehensive immigration reform: If the public’s going to be asked to accept the bitter in the form of amnesty or new taxes, it had better get the sweet of border enforcement or fiscal responsibility in the same deal.