How President Obama will stick it to the middle class

Via James Pethokoukis at the Reuters “Political Risk” blog:

Does President Obama have a secret plan to raise taxes on middle-class Americans — and,well, pretty much everybody else — with a European-style, value-added tax? Actually, it’s not such a big secret. Connect the dots:

1) The joint statement from the just-concluded G20 Summit in Pittsburgh called for balanced global growth — which means Americans must spend less and save more and reduce its budget deficit.

2) That same weekend, John Podesta, co-chairman of Obama’s presidential transition team and an outside White House adviser, tells a Bloomberg reporter that a value-added tax is “more plausible today” than ever, adding that “there’s going to have to be revenue in this budget.” A VAT is a kind of consumption tax.

3) Yesterday, the Center for American Progress, the liberal think tank with close White House ties, holds a conference on the rising national debt. While speaker after speaker — Paul Krugman, Roger Altman, CAP President Podesta (again), Laura Tyson — admits entitlement spending must be reduced, they also agree that taxes must be raised. Altman suggests $400 billion in new tax revenue is needed almost immediately to calm financial market fears, and a VAT would be a great way of doing it. That’s $400 billion a year, by the way, not over ten years.

4) Also, yesterday was the first meeting of President Obama’s tax reform panel led by former Federal Reserve Chairman Paul Volcker. In a two-part interview with Charlie Rose airing yesterday and today, Volcker says that if Washington can’t get spending under control, either a VAT or a carbon tax would be effective revenue raisers. “Those are two big ones,” he says.

5) As they used to say in the Soviet Union, “It’s no coincidence.” This is also the conclusion of one Washington insider with ties to the White House economic team: “Does this all add up to a trial balloon? Of course, it’s a trial balloon. And I expect the administration will propose major tax reform, including a VAT.”

Obama’s campaign promise to not raise taxes on households making less than $250,000 a year was always considered a joke here inside the Beltway. It’s the economic “consensus” — and this was true even before the financial meltdown and recession — that rising entitlement costs would eventually mean a higher tax burden for the American people.

Maybe it was a joke inside the campaign, too. Since being elected, Obama has raised cigarette taxes and has advocated raising healthcare taxes, energy and small business taxes, in addition to corporate taxes. What’s more, economic advisers like Larry Summers seem eager to get rid of all the Bush tax cuts, not just those on so-called wealthy Americans.

It was also a “joke” to any thinking person who could see right through Obama’s phony pledge not to raise taxes on anyone making “under $250K.” Being a liberal Democrat and a strong proponent of “social justice” thanks to close long-term associations with Chicago leftist radicals like black liberation theology proponent Rev. Wright and unrepentant domestic terrorist Bill Ayers, there’s simply no way he could pursue the ambitious agenda he laid out last year without raising taxes on more than just “the rich.” As John Locke Foundation president John Hood writes:

I think that Obama’s tax pledge, by the way, did not determine the 2008 outcome (which became inevitable after the financial meltdown) but almost certainly attracted enough tax-wary independents to pad his winning margin and perhaps flip a couple of the close states. Will he and the Democrats in Congress risk a political backlash by trying to pass another big tax hike during some future session? In a word, yes. It’s an inescapable element of their broader political program, and they believe it’s the right thing to do. As with health care, they believe that whatever short-run political costs they must bear, they’ll be seen as heroes in the long run by moving America closer to the European-style welfare state they consider the necessary outcome of social progress.

Which is why they must be stopped, before it’s too late to reverse course.

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