Research Briefing

Despite Denials, Obama Administration Clearly Considering Value-Added Tax To Pay For Binge Spending Habit

HOUSE CLAIMS OBAMA OPPOSES A VALUE-ADDED TAX …

This Morning, Obama’s Treasury Secretary Claims President “Does Not Support” VAT. MSNBC’s JOE SCARBOROUGH: “Do you oppose a VAT tax?” TIM GEITHNER: “The president does not support a VAT, but we all recognize that our deficits are too high. We’re going to have to bring them down.” (MSNBC’s “Morning Joe,” 4/22/10)

And Earlier This Week, Obama’s Press Secretary Denied That President Is Considering VAT. Q: “Is there anything that this administration is doing to consider, calculate, pose in any way, shape or form, weigh or measure potential deficit implications or economic implications of a value-added tax?” GIBBS: “No, this is not something the President has proposed nor is it under consideration.” (Briefing By Press Secretary Robert Gibbs, The White House, 4/19/10)

BUT OBAMA IS CLEARLY CONSIDERING IT TO PAY FOR HIS BINGE SPENDING

Yesterday, 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 “Street Signs,” 4/20/10)

Obama’s Economic Team Has Already Calculated How Large Vat Would Need To Be In Order To Pay For Their Binge Spending. “[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 …” (John Harwood, “Reduction Is Theme Of President’s Next Act,” The New York Times’ “The Caucus“ Blog, 4/18/10)

Executive Director Of Obama’s Fiscal Commission Says VAT Among Options To Pay Down Deficit. “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 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)

 And House Speaker Nancy Pelosi Has Said That VAT Should Be “On The Table.” “Speaker Nancy Pelosi (D-Calif.) said last fall that the VAT should be ‘on the table’ along with other tax proposals and that it’s ‘fair to look at’ a value-added tax.” (Russell Berman, “‘Fair Tax’ Seen As Wedge Issue To Push Split Between Republicans, Tea Party,” The Hill, 4/21/10)