Less Than 48 Hours After The Election: Is a 'VAT' Tax a Possibility? [2nd Update]
I just finished listening to a live discussion about "The Lame Duck Session and the New Congress," hosted by CQ Roll Call's Mort Kondracke, with Thomas Mann (Brookings) and Norman Ornstein (AEI).
Norman Ornstein indicated that "serious discussion is being given to a dedicated consumption (VAT) tax for Medicare and Medicaid." If enacted, this would replace part of the heavy cuts to the marginal tax cuts for the wealthy (my words). Their words--"to replace part of the income tax").
The VAT tax will be for "things we don't want to encourage," according to Thomas Mann.
Ornstein believes that President Obama will embrace a deficit reduction plan within the week. Both gentlemen also believe that President Obama will defer to the Senate, Business Leaders, and Erskine Bowles and Alan Simpson to actually produce the plan.
The package will contain 4 Trillion in deficit reduction.
1 to 1.3 Trillion from revenue increases. "The rest" from defense and entitlement cuts.
They believe that along with the "Gang of Eight" and the "Gang of Forty" (senators), "the Udalls" and John Kerry will lead the Democrats. Coburn will lead the Republicans.
Ornstein says that if a VAT tax is proposed, it would be made part of the "framework" to be passed, probably in the lame duck session "under the cover of tax reform."
I'm truly not trying to be hyperbolic, but it appears to me that our entire social safety net and tax system, is "being remade" right before our eyes.
Bowles-Simpson would impose substantial increases in income taxes for low- and middle-income Americans by "broadening the base," at a time of draconian cuts to the social safety net. Couple that with mandatory health insurance, and a possible VAT tax in the making for the near future, I'd say that it's time for progressives to find their voices.
I don't know the answer, but somehow we need to wake up the liberal community, and find a way to "mainstream" all of this information. And more importantly, we need to support demonstrations against these draconian policies, hopefully in addition to, and broader than the OWS movement.
Raising revenue may be necessary, but allowing the Bush tax cuts to expire, would be the right way to go about it, since most of the cuts were to the wealthiest Americans, not the poor, or lower- and middle-income Americans.
“If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” — Woodrow Wilson