If we have another decade of big government interventionism like we’ve endured for the past 10 years under Bush and Obama, this amusing parody might turn into reality.
Archive for February, 2011
Posted in Big Government, Europe, Fiscal Policy, Government Spending, Taxation, Value-Added Tax, VAT, Video, tagged Big Government, Europe, Fiscal Policy, Taxation, Value-Added Tax, VAT, Welfare State on February 28, 2011| 20 Comments »
Sooner or later, there will be a giant battle in Washington over the value-added tax. The people who want bigger government (and the people who are willing to surrender to big government) understand that a new source of tax revenue is needed to turn the United States into a European-style social welfare state. But that’s exactly why the VAT is a terrible idea.
I explain why in a column for Reuters. The entire thing is worth reading, but here’s an excerpt of some key points.
Many Washington insiders are claiming that America needs a value-added tax (VAT) to get rid of red ink. …And President Obama says that a VAT is “something that has worked for other countries.” Every single one of these assertions is demonstrably false. …One of the many problems with a VAT is that it is a hidden levy. …VATs are imposed at each stage of the production process and thus get embedded in the price of goods. And because the VAT is hidden from consumers, politicians find they are an easy source of new revenue – which is one reason why the average VAT rate in Europe is now more than 20 percent! …Western European nations first began imposing VATs about 40 years ago, and the result has been bigger government, permanent deficits and more debt. According to the Economist Intelligence Unit, public debt is equal to 74 percent of GDP in Western Europe, compared to 64 percent of GDP in the United States (and the gap was much bigger before the Bush-Obama spending spree doubled America’s debt burden). The most important comparison is not debt, but rather the burden of government spending. …you don’t cure an alcoholic by giving him keys to a liquor store, you don’t promote fiscal responsibility by giving government a new source of revenue. …To be sure, we would have a better tax system if proponents got rid of the income tax and replaced it with a VAT. But that’s not what’s being discussed. At best, some proponents claim we could reduce other taxes in exchange for a VAT. Once again, though, the evidence from Europe shows this is a naive hope. The tax burden on personal and corporate income is much higher today than it was in the pre-VAT era. …When President Obama said the VAT is “something that has worked for other countries,” he should have specified that the tax is good for the politicians of those nations, but not for the people. The political elite got more money that they use to buy votes, and they got a new tax code, enabling them to auction off loopholes to special interest groups.
For further information on why the VAT is a horrible proposal, including lots of specific numbers and comparisons between the United States and Western Europe, here’s a video from the Center for Freedom and Prosperity.
For my latest electoral prediction, click here.
A lot of my Republican friends (yes, I admit to having some) are feeling very confident about the 2012 election. They’re not quite measuring the drapes in the Oval Office, but this electoral map seems to be their “worst-case” example of how the states will break in 2012.
Notwithstanding my reasonably accurate 2010 election predictions, I don’t think I’m an expert on politics. But that’s never stopped me from commenting on things beyond economics, so here’s why I think Republicans are prematurely giddy.
First, while I certainly agree that Obama is much less popular than he was in 2008, that’s not terribly important since the election is still more than 18 months away.
Second, we don’t know what the economy will be a net plus or net negative next year. There’s a lot of evidence that people vote on pocketbook issues, and it appears that disposable income is an important variable. If we manage to have any sort of growth, even sub-par growth of perhaps 2.5 percent annually, that may be enough to make people more comfortable and to bring unemployment down close to 8 percent. If that happens, Obama will claim he brought the nation back from the brink of a second Great Depression. The fact that his policies actually retarded the recovery will be overlooked.
Third, you can’t beat something with nothing. Barack Obama’s secret weapon is the names on this list.
I’m a lucky guy to work at the Cato Institute, and I’m especially happy to be at Cato’s Benefactor Summit in San Diego this weekend. One of our supporters, John Aglialoro, is the person most responsible for the movie version of Atlas Shrugged (he independently produced the film with his own money), and he let us see the movie yesterday.
Five stars. Two thumbs up. Whatever rating system you use, you need to see this movie. You don’t need to be a “Randroid” or objectivist to like the film. Heck, you probably don’t even need to like small government or have capitalist sympathies.
I realize I’m biased, but I genuinely think John did a fantastic job. The production quality is first rate, the musical score (I think that’s the term) is perfect, and the story is well told – a particularly challenging task since the 1000 page-plus book is actually being brought to the screen in three parts and this is just the first installment.
The movie is released to the public on April 15 (yes, that choice is deliberate).
If you want to see the trailer, click here.
I spoke at the Tea Party Patriots convention earlier today. Great people, great crowd.
My job was to debate on the side of the flat tax over the fair tax. Several people asked for more information, and I promised to put this video on the blog. Long-time readers probably will have seen it before, but it’s always good to be reminded why we need tax reform – and also reminded why we can’t trust politicians with a new source of revenue.
I’m awake at a completely uncivilized hour in San Diego so I can catch a plane to Phoenix for a presentation to the Tea Party Patriots conference.
Since it’s too early for me to say anything coherent, let’s start the weekend with some good jabs from the late-night comics.
Moammar Gadhafi said that Libyan protesters were all on drugs, and then he blamed it on al-Qaida. Now, he’s saying it’s the fault of the teachers unions. – Jay Leno
Sarah Palin is going to a political conference in India next month. Palin said she’s loved India ever since she saw “Hoosiers.” – Jimmy Fallon
People in Libya want Moammar Gadhafi to leave. The problem is, he’ll be replaced by his idiot son, Moammar W. Gadhafi. – David Letterman
Senate Majority Leader Harry Reid says he wants to outlaw prostitution in his home state of Nevada. He said he wants to keep prostitution where it belongs — in Washington, D.C. – Jimmy Fallon
I spent Presidents Day acting like a president. I took someone else’s money and spent it on something I don’t need. – Jay Leno
Posted in Big Government, Congress, Democrats, Fiscal Policy, Government Spending, Obama, Republicans, tagged Congress, Democrats, Government Shutdown, Government Spending, Obama, Republicans on February 25, 2011| 60 Comments »
When existing spending authority expires on March 4, the “non-essential” parts of the federal government will shut down unless Republicans and Democrats reach an agreement. This is causing lots of agitation in Washington, both by Democrats who don’t want the money spigots in the off position and Republicans who fret that they will be blamed for (gasp) gridlock.
I have a new piece at National Review that explains how the GOP can win this fight. Indeed, I explain that Republicans actually did a pretty good job during the 1995 fight, even though they now have negative memories of the experience. This excerpt provides my basic assessment, but the full article has lots of additional information, including quotes from news accounts in 1995 showing that the GOP held the upper hand, as well as four specific recommendation of how advocates of limited government can do even better this year.
With the GOP-led House and the Democratic Senate and White House far apart on a measure to pay the federal government’s bills past March 4, Washington is rumbling toward a repeat of the 1995 government-shutdown fight (actually two shutdown fights, one in mid-November of that year and the other in mid-December). This makes some Republicans nervous. They think Bill Clinton “won” the blame game that year, and they’re afraid they will get the short end of the stick if there is a 1995-type impasse this year. A timid approach, though, is a recipe for failure. It means that President Obama and Senate Majority Leader Harry Reid can sit on their hands, make zero concessions, and wait for the GOP to surrender any time a deadline approaches. In other words, budget hawks in the House have no choice. They have to fight. But they can take comfort in the fact that this is not a suicide mission. The conventional wisdom about what happened in November of 1995 is very misleading. Republicans certainly did not suffer at the polls. They lost only nine House seats, a relatively trivial number after a net gain of 54 in 1994. They actually added to their majority in the Senate, picking up two seats in the 1996 cycle. More important, they succeeded in dramatically reducing the growth of federal spending. They did not get everything they wanted, to be sure, but government spending grew by just 2.9 percent during the first four years of GOP control, helping to turn a $164 billion deficit in 1995 into a $126 billion surplus in 1999. And they enacted a big tax cut in 1997. If that’s what happens when Republicans are defeated, I hope the GOP loses again this year.