Research Briefing

Meeting For First Time Today, Deficit Commission Being Used By Obama To Push National Sales Tax To Pay For His Binge Spending

“The White House Fiscal Commission Will Hold Its First Meeting Tuesday And Will Meet Once A Month Thereafter.” (Walter Alarkon, “White House Fiscal Panel Starts Monthly Meetings Tuesday,” The Hill’s “On The Money” Blog, 4/26/10)

OBAMA WILL USE DEFICIT COMMISSION TO PUSH FOR EUROPEAN-STYLE VALUE-ADDED TAX …

Executive Director Of Obama’s Fiscal Commission Says VAT Among Options To Bring In More Revenue. ”The Executive Director of the White House panel charged with reducing the national debt told Fox Wednesday a value-added-tax or VAT would be among the options up for consideration. ‘We need to talk through all sides of this equation,’ Bruce Reed told Fox in an interview ...” (Major Garrett, “Key Player On Debt Commission Says VAT In The Mix,” Fox News’ “Row 2 Seat 4“ Blog, 4/21/10)

Obama Told CNBC That VAT Would Be “Novel For The United States,” Is Among Options To Pay For Binge Spending. JOHN HARWOOD: “[C]ould you see the potential for value-added tax in this country?” OBAMA: “I know that there’s been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It’s something that would be novel for the United States. And before, you know, I started saying, ‘This makes sense or that makes sense.’ I want to get a better picture of what our options are.” (CNBC’s “Str eet Signs,” 4/20/10)

Obama’s Economic Team Has Already Calculated How Big VAT Would Have To Be In Order To Pay Down Deficit. “[S]ince any Social Security plan would probably preserve benefits for those nearing retirement, it would not help the administration achieve its goal of reducing the deficit to 3 percent of gross domestic product, from 10 percent, within a decade. One way to reach that 3 percent goal, by the calculations of Mr. Obama’s economic team: a 5 percent value-added tax, which would generate enough revenue to simultaneously permit the reduction in corporate tax rates Republicans favor.” (John Harwood, “Reduction Is Theme Of President’s Next Act,” The New York Times “The Caucus” Blog, 4/18/10)

Obama Economic Adviser Paul Volcker Says VAT Needed To Get Obama’s Deficits Under Control. ”The United States … may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday. Volcker … said the value-added tax ‘was not as toxic an idea’ as it has been in the past … ‘If at the end of the day we need to raise taxes, we should raise taxes,’ he said.” (Volcker: Taxes Likely To Rise Eventually To Tame Deficit,” Reuters, 4/6/10)

DESPITE THE FACT THAT THE TAX WOULD VIOLATE HIS CAMPAIGN PLEDGE,

HIT MIDDLE-CLASS AMERICAN FAMILIES HARD …

Erskine Bowles, Co-Chair Of Obama’s Deficit Commission, Says President Wants “Everything On The Table” To Pay For Huge Deficits, Even If It Breaks His Tax Pledge From The Campaign. FOX NEWS’ CHRIS WALLACE: “Mr. Bowles, Barack Obama, I don’t have to tell you, campaigned in 2008 for president on a flat pledge that he would not raise any taxes, not income taxes, not any taxes on people making less than $250,000 a year. Do you feel bound by the president’s pledge?” ERSKINE BOWLES, CO-CHAIR OF OBAMA’S DEFICIT COMMISSION: “What i feel bound by is the president looked Senator Simpson and me in the eye and he said, ‘Everything is on the table.’ ... We have to have everything on the table.” (Fox’s “Fox News Sunday,” 4/25/10)

• Obama’s Pledge Was To Have No Tax Increases Of Any Kind On Families Making Less Than $250,000.  “I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” (Senator Barack Obama, Remarks In Dover, NH, 8/12/08)

Value-Added Tax Being Considered By Obama Would Violate His Tax Pledge. “The value-added tax, common in other countries, is collected in stages from each business that contributes to the production and sale of consumer goods. … But a VAT could violate Mr. Obama’s campaign pledge not to raise taxes on households with incomes under $250,000 a year.” (Robert Pear and Jackie Calmes, “Cost Concerns as Obama Pushes Health Issues,” The New York Times, 6/15/09)

• Because Tax Would Increase The Price Everything From Groceries To Services. “The VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer ... It would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer.” (Lori Montgomery, “Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look,” The Washington Post, 5/27/09)
• And Would Fall “Heavily On The Poor.” “[S]ome Washington policymakers are taking a fresh look at a money-making idea long considered politically taboo: a national sales tax. Common around the world, including in Europe, such a tax ... -- has not been seriously considered in the United States ... It is also hugely regressive, falling heavily on the poor.” (Lori Montgomery, “Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look,” The Washington Post, 5/27/09)

ALL TO PAY FOR HIS RECORD BINGE SPENDING SPREE

According To CBO, Obama’s Deficit In 2010 Is Projected To Be A Historically High $1.5 Trillion.  “If the President’s proposals were enacted, the federal government would record deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011. Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively. By comparison, the deficit in 2009 totaled 9.9 percent of GDP.” (“An Analysis Of The President’s Budgetary Proposals For Fiscal Year 2011,” Congressional Budget Office, March 2010)

• After Obama Rang Up Record-Setting $1.42 Trillion Deficit In 1^st Year In Office, Nearly Triple The Previous Record. (David Jackson, “Obama Team Makes It Official, Budget Deficit Hits Record. By A Lot,” USA Today’s “The Oval“ Blog, 10/16/09)

According To CBO, Ten Year Deficits As A Result Of Obama’s Budget Will Total $9.75 Trillion. (“An Analysis Of The President’s Budgetary Proposals For Fiscal Year 2011,” Congressional Budget Office, March 2010)

According To CBO, Obama’s Budget Will Lead To $20.3 Trillion Debt By 2020, Equaling 90 Percent Of GDP.  “Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020—$5 trillion above what CBO projects for 2020 in its baseline (see Figure 1-2).” (“An Analysis Of The President’s Budgetary Proposals For Fiscal Year 2011,” Congressional Budget Office, March 2010)