VAT Talk No Suprise

Editor’s note: This is one of many articles from The Center for Vision & Values dealing with the topic of our two-day conference on "The Progressives," which kicked off today on the campus of Grove City College.

As soon as healthcare reform passed through Congress, talk about how to pay for it began immediately. Fox News commentator Charles Krauthammer said that he thought President Obama would propose a VAT (value-added tax) after the fall elections. The pretense would be that our prescient president had seen that debt and deficits were a big issue for the nation and had to be solved dramatically. Ah! What to do.

In his wisdom, the president would come up with the VAT, and the fiscal and monetary issues would melt down to a very manageable level. His brilliance once more would arrive to rescue the nation, as it had with myriad proposals over the previous year.

For those who have not yet heard about a VAT, it is in sum as follows: The federal government adds a tax at various stages of production of goods—say, 5 to 10 percent. By the time the full process is tallied, most goods go up dramatically in price to consumers. It is a hidden tax, just like existing excise taxes and hundreds more from the 1930s that were dropped slowly over the last decades.

Ordinary people will suffer the most from such taxes as the price of certain goods will become too high for them to pay on modest incomes. Others will lose their jobs as demand for VAT-taxed goods drops. Capital accumulation will probably drop, too, because those with more money will have less to save, even though they will spend more than their less-well-off friends.

Interestingly, the fact that there is a sudden discussion of VAT may well undermine the president’s anticipated post-election tax proposal. Indeed, discussion of it from now until the election might prevent it from being a live option for revenue in the months ahead.

Especially interesting, at least to me at this time, is the fact that I discussed the VAT in several articles last year. I noted that the VAT appeared in the writings of the principal "progressive" supporter of Obama, John Podesta. If more people had taken the time to read Podesta’s The Power of Progress: How America’s Progressives Can (Once Again) Save our Economy, our Climate, and our Country, they would have known of the possibility of the VAT long before the 2008 election. Further, they would have gotten another clue about the radical nature of what I call the "Obama/Podesta movement." If you doubt the extremism of Podesta’s program, note the title to part III of his book: "Why America is Poised for a Progressive Revolution in Politics."

A bit more information about Podesta is helpful here: A one-time chief of staff for Bill Clinton, Podesta has headed up a radical or far-left think-tank for most of a decade, hoping that somehow a radical candidate would emerge to support his leftist agenda. Not surprising, when the Clinton campaign tanked in the summer of 2008, there stood a fellow Chicagoan who was an experienced community organizer and part-time U.S. Senator—Barack Obama. Obama had "found himself;" that is, he came to feel that radically reforming America was his calling—or, as Obama called it, a "fundamental transformation" of America. This vision, or calling, came to him while studying at Columbia and Harvard, and then was really driven home to him when he joined the "family" of Jeremiah Wright.

If you were looking carefully, you would have seen, and now still see, Podesta in Obama’s shadow. He was Obama’s transition chief after the election and before the inauguration. When Bill Clinton went to North Korea a while back to "rescue" the "spies" who had wandered into North Korea, it was Podesta who was with him—surely to give Obama a firsthand report on what happened. Or, you can see Podesta on weekend TV explaining Obama programs, most of which are listed in Podesta books and articles written over the past few years. He even published an inauguration speech that he wanted Obama to give. It, of course, was a summary of many of his favorite programs. Among those favorites is a value-added tax.

VAT a surprise in the past week or so? Not if you have read a guiding source of Obama ideas—John Podesta.

— Dr. L. John Van Til is a Fellow for Law & Humanities with The Center for Vision & Values at Grove City College.