To Stop the VAT – Cut Federal Spending

Democracy and Power:  104 Future Debt Burden

A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz

 

To Stop the VAT – Cut Federal Spending

The greatest threat to democracy and freedom in America is our enormous and growing debt.  Government debt has destroyed a multitude of powerful societies – Spain, Holland, France, Ottoman and others just since the 16th Century. 

Over a year ago, Glenn Hubbard, former chairman of the President’s Council of Economic Advisers for George W. Bush, said, “We must change how we conduct our politics and economics…or we will inevitably go the way of all once-great nations and suffer an irreversible decline.”

[Read: http://www.freedomworks.org/blog/teda/america-is-very-close-to-a-destructive-tipping-poi]

Since Hubbard’s warning, Obama has increased our total debt by a third. Presently, President Obama is calling for a Buffet Tax on people making over a million dollars.  This is adolescent, political theater –  or election-year sound bites. The tax will not reduce the deficit or the debt, and Obama knows this.  Worse and more dangerous, Obama’s budget calls for added debt and never proposes a balanced budget.   The President knows his spending and budget proposals will force MORE taxes on America – in order to forestall a financial catastrophe. 

There is strong evidence that President Obama has always planned to force America into adopting a Value-Added Tax (VAT), which is in addition to our income tax. Obama’s adviser, Paul Volcker, raised the feasibility of the VAT in 2010.  In response, Obama obliquely stated a consumption tax – which is a VAT – would be considered.  In 2011, Obama appointed Alan Krueger to be head of the Council of Economic Advisers.  Krueger is known to favor a VAT.

In Forbes, Brian Wesbury claims our present tax system cannot collect enough revenue and America will be forced to adopt a VAT.  A VAT will tax every product sold.  For example, when a farmer sells his wheat to a baker there is a tax.  There is also a tax on the sugar the baker buys.  Even a small tax on every transaction becomes a big tax to the consumer.  Hence, every American will pay additional taxes.

Governments love the VAT.  It is easy to regulate and raises a ton of money.  Almost every country in Europe has a VAT along with a plethora of other taxes.  The VAT has impeded economic growth in Europe, and will retard economic growth in America.  Unemployment and economic stagnation will continue and America’s economic and political hegemony will decline.  Wesbury explains

Raising even more tax revenues at the federal level will harm the competitiveness of the U.S., reduce growth, and lead to even fewer jobs and higher unemployment. The only way to head this off, and save the American system, is to reduce spending as a share of GDP.

To stop the VAT and our economic malaise, the federal government must cut spending.  Representative Ryan and the Republicans have a plan that reduces increased-spending, which will slowly balance the budget.  On the other end of the spectrum, the President’s proposed budget maintains our current, high levels of spending – substantially higher than historical averages – and ignores the politically toxic issue of increased taxes. 

Reprehensibly derelict of their duty, the Senate Democrats have not presented a budget in three years.  Except for Ryan, America’s political leaders have forsaken their most basic duty of establishing a sound and sustainable fiscal order. 

Wesbury is absolutely correct.  Continued government spending will compel additional taxes.  A VAT will be forced upon every American and our exceptional system of self-government will forever be altered. 

The only way to head this off, and save the American system, is to reduce spending as a share of GDP.

In order to stop the VAT, Americans must become aware of the enormous rate of federal spending that will force the VAT upon us.   Next, we must be realize there is only one alternative – cut spending.  Finally, we must act quickly because time is of the essence. 

America must cut spending immediately.  Ryan’s budget and Freedomworks’ Tea Party Budget cuts spending by $10 trillion in 10 years.  These are no longer mere intellectual exercises.  They must be implemented or America will eventually become a failed nation.  As Hubbard stated:

“We must change how we conduct our politics and economics…or we will inevitably go the way of all once-great nations and suffer an irreversible decline.”

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