The VAT Cometh - by Charles Krauthammer

WASHINGTON -- As the night follows the day, the VAT cometh.
With the passage of Obamacare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.

We are now $8 trillion in debt. The Congressional Budget Office projects that another $12 trillion will be added over the next decade. Obamacare, when stripped of its budgetary gimmicks -- the unfunded $200 billion-plus doctor fix, the double counting of Medicare cuts, the 10-6 sleight-of-hand (counting 10 years of revenue and only 6 years of outflows) -- is at minimum a $2 trillion new entitlement.

It will vastly increase the debt. But even if it were revenue-neutral, Obamacare pre-empts and appropriates for itself the best and easiest means of reducing the existing deficit. Obamacare's $500 billion of cuts in Medicare and $600 billion in tax hikes are no longer available for deficit reduction. They are siphoned off for the new entitlement of insuring the uninsured.

This is fiscally disastrous because, as President Obama himself explained last year in unveiling his grand transformational policies, our unsustainable fiscal path requires control of entitlement spending, the most ruinous of which is out-of-control health care costs.

Obamacare was sold on the premise that, as Nancy Pelosi put it, "health care reform is entitlement reform. Our budget cannot take this upward spiral of cost." But the bill enacted on Tuesday accelerates the spiral: It radically expands Medicaid (adding 15 million new recipients/dependents) and shamelessly raids Medicare by spending on a new entitlement the $500 billion in cuts and the yield from the Medicare tax hikes.

Obama knows that the debt bomb is looming, that Moody's is warning that the Treasury's AAA rating is in jeopardy, that we are headed for a run on the dollar and/or hyperinflation if nothing is done.

Hence his deficit reduction commission. It will report (surprise!) after the November elections.
What will it recommend? What can it recommend? Sure, Social Security can be trimmed by raising the retirement age, introducing means testing and changing the indexing formula from wage growth to price inflation.

But this won't be nearly enough. As Obama has repeatedly insisted, the real money is in health care costs -- which are now locked in place by the new Obamacare mandates.

That's where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude -- if you exempt food, for example, the yield would be more like $900 billion).

It's the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent.

American liberals have long complained that ours is the only advanced industrial country without universal health care. Well, now we shall have it. And as we approach European levels of entitlements, we will need European levels of taxation.

Obama set out to be a consequential president, on the order of Ronald Reagan. With the VAT, Obama's triumph will be complete. He will have succeeded in reversing Reaganism. Liberals have long complained that Reagan's strategy was to starve the (governmental) beast in order to shrink it: First, cut taxes -- then ultimately you have to reduce government spending.

Obama's strategy is exactly the opposite: Expand the beast, and then feed it. Spend first -- which then forces taxation. Now that, with the institution of universal health care, we are becoming the full entitlement state, the beast will have to be fed.

And the VAT is the only trough in creation large enough.
As a substitute for the income tax, the VAT would be a splendid idea. Taxing consumption makes infinitely more sense than taxing work. But to feed the liberal social-democratic project, the VAT must be added on top of the income tax.

Ultimately, even that won't be enough. As the population ages and health care becomes increasingly expensive, the only way to avoid fiscal ruin (as Britain, for example, has discovered) is health care rationing.
It will take a while to break the American populace to that idea. In the meantime, get ready for the VAT. Or start fighting it.

Prepare Now For When TSHTF....It's Coming

Look at these projected numbers.....more bad news on the way for the housing market. How many more foreclosures are going to hit the market after those ARMs reset? Do you think Nanny is going to be able to buy up that mess too? Might as well print more bills and sell more bonds (if you can), it's all funny money now.


At about time mark 2:27 Pat Caddell hits the nail square on the head.

Nothing Much to Say Lately

I've got nothing to say that isn't already being said somewhere out in the media / blogosphere somewhere. I've been reading alot and taking it all in. There is not much good news currently or on the horizon. So, until I feel like I have something to add (as if anyone is really reading this and it is mostly for my personal venting, what's the point?) I guess I won't post anything else. I'll just prepare for the next "Greater Depression" and stock up on all manner of staples and supplies. Between Kim Jong Il, Barry, Osama, Bernanke and Geithner, Kennedy/Dodd healthcare bill, China buying everything (except our debt), yadda yadda yadda, I am not in the mood to write much or often. With that, I'll leave you with this letter I found over at Michael Bane's blog (link to his site on the right side of the screen).
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Snopes says this letter from Lou Pritchett to President Barry is the real deal....

AN OPEN LETTER TO PRESIDENT OBAMA


Dear President Obama:


You are the thirteenth President under whom I have lived and unlike any of the others, you truly scare me.


You scare me because after months of exposure, I know nothing about you.


You scare me because I do not know how you paid for your expensive Ivy League education and your upscale lifestyle and housing with no visible signs of support.


You scare me because you did not spend the formative years of youth growing up in America and culturally you are not an American.


You scare me because you have never run a company or met a payroll.


You scare me because you have never had military experience, thus don't understand it at its core.


You scare me because you lack humility and 'class', always blaming others.


You scare me because for over half your life you have aligned yourself with radical extremists who hate America and you refuse to publicly denounce these radicals who wish to see America fail.


You scare me because you are a cheerleader for the 'blame America' crowd and deliver this message abroad.


You scare me because you want to change America to a European style country where the government sector dominates instead of the private sector.


You scare me because you want to replace our health care system with a government controlled one.


You scare me because you prefer 'wind mills' to responsibly capitalizing on our own vast oil, coal and shale reserves.


You scare me because you want to kill the American capitalist goose that lays the golden egg which provides the highest standard of living in the world.


You scare me because you have begun to use 'extortion' tactics against certain banks and corporations.


You scare me because your own political party shrinks from challenging you on your wild and irresponsible spending proposals.


You scare me because you will not openly listen to or even consider opposing points of view from intelligent people.


You scare me because you falsely believe that you are both omnipotent and omniscient.


You scare me because the media gives you a free pass on everything you do.


You scare me because you demonize and want to silence the Limbaughs, Hannitys, O'Relllys and Becks who offer opposing, conservative points of view.


You scare me because you prefer controlling over governing.


Finally, you scare me because if you serve a second term I will probably not feel safe in writing a similar letter in 8 years.


Lou Pritchett


About Lou Pritchett: Lou Pritchett is one of corporate America's true living legends- an acclaimed author, dynamic teacher and one of the world's highest rated speakers. Successful corporate executives everywhere recognize him as the foremost leader in change management. Lou changed the way America does business by creating an audacious concept that came to be known as "partnering." Pritchett rose from soap salesman to Vice-President, Sales and Customer Development for Procter and Gamble and over the course of 36 years, made corporate history.

Intro / Welcome, etc.

So, this is a first attempt at this sort of thing. I'm not sure exactly where this endevour will go, but hopefully it will at least be interesting and maybe somewhat cathartic for me. I don't have time to waste these days, so maybe there won't be many postings we'll see. I did manage to get some lists, recommendations, etc. posted to the right, so at least I was somewhat productive during the time spent staring at the screen. Here is a political cartoon from 1934 that I found today on the website of James T. Harris after seeing his appearance on The Factor. (He found it here: http://www.tommcmahon.net/) The picture details may be hard to see and the words hard to read here, so save it and enlarge it OR go the listed link to view it. It will be well worth your time.