Dear Maximum Leader Hood here commits counter-revolutionary thinking which fails to adhere to the dialectic of the struggle.
On the topic of the big Bowles-Simpson Commission on fiscal reforms there is a divergence from accepted Party norms, both on the topic of a value-added tax and any eventual economic recovery. To wit:
- Look, I hate going Euro as much as the next beer-drinkin’ football lovin’ V-8 worshippin’ cul-de-sac dweller but at this late date — as of Medicare Part D — we have adopted a Euro-style welfare state without the means to pay for it.
- Our federal tax code — and hence the state codes it obscenely births — is incoherent and a dead weight of immense, shambling size. Together these two cost facts suggest any meaningful fiscal reform is an improvement on the status quo.
- Reform only comes as a bargain — the Reagan Tax Cuts proved that. What can the forces of limited government most afford to give up?
- I say it is a grand bargain which eliminates the corporate tax code, replaces it with a VAT while flattening marginal personal income tax rates and eliminating the capital gains tax.
A-ha, you say. Clearly insane to hand a hidden, cash-pumping engine like a VAT to the feds. Why do that? Because we don’t have any choice.
- Contra Hood’s assertion that government “revenue will rebound to a normal level as the economy recovers,” there is no guarantee the U.S. economy will ever return to pre-recession levels, let alone will do so in the near future.
- Fed Reserve necromancer Ben Bernanke himself said on 60 Minutes last night that it will take five years to recover the jobs lost in the downturn. And until those jobs return, government revenue will not return to historic levels.
- At a minimum then that is five years of the Fed — the Treasury and the wholly-owned megabanks — trying to monetize the U.S. economy into recovery while eating U.S. Treasuries. That, I submit, is a far greater harm than any VAT tax.
- The U.S. is ripe to swing from deflation to inflation to stagflation — repeat and reverse — all because its primary unit of value is being manipulated to feed the short-term needs of special interests. Depending on the direction of the swing, differing interests will scream louder, to the determent of society as a whole.
So big harm, imperfect fix — let’s get crackin’. Not so fast.
There is little current reason to think such a grand bargain is politically possible, primarily because the new GOP Congress is loathe to do anything perceived as “helping” President Obama get re-elected. (Incidentally, I fear the same zero-sum thinking drives the new GOP majority in Raleigh with regard to Bev.) That and K Street lobbyists have the to most to lose by nixing the corporate code and its warren of incentives, credits, bumps, phase-ins, outs, and happy endings. K Street is, of course, an utterly bipartisan enrichment scheme for former staffers and members of Congress.
In sum, if it eases your mind think of a VAT as a tax on K Street — and by extension Jones Street. It drags all the little dirty deals out into the sunlight and sends a chunk of that energy, expense, and value to, yes, the guvmint. An entity that should not — but does — require some means of dealing with future obligations it has undertaken lest it turn to habitually debasing its currency while wrecking the greatest wealth engine the world has ever seen.
Who will step up to help save it?