According to exit polls, Americans who voted last November 4th described themselves as 34% conservative, 44% moderate and only 22% liberal. One third of new voters were independents — and about two-thirds of them voted for President Barack Obama. How did President Obama win over so many moderates and independents? By explicitly renouncing his party’s tax and spend past. Specifically, Obama promised to “cut taxes for 95% of workers and their families” and enact “a net spending cut” for the federal government. Not only has President Obama failed to keep these promises, but his leftist base is stepping up their campaign for massive new tax hikes and spending increases.
Obama’s ‘no tax increases on families making $250,000 a year or less‘ lasted exactly 15 days. On February 4th, the President signed into law a bill expanding the children’s health insurance program that was paid for with a 156% tax hike on tobacco. Since slightly more than half of today’s smokers (53%) earn less than $36,000 per year, there is no way this bill can not be considered a tax hike on the poor. Democrats in the House have also passed a trillion dollar energy tax hike, and the Senate is about to approve new taxes on individuals who don’t have health insurance, businesses that want to create jobs, and on families with high cost health insurance plans. But even all those new taxes are just the beginning. This past Monday on Charlie Rose, Speaker Nancy Pelosi (D-CA) said a new value-added tax (VAT) is “on the table” as well.
A VAT is a type of national sales tax. However, instead of being collected at the cash register, it is imposed on manufacturers at each “value added” stage of the production process. Since everybody buys stuff, including families making less than $250,000 a year, any VAT would necessarily break Obama’s no tax hike promise. Worse, a VAT would expand the size of government, inadvertently increase income tax rates, and destroy jobs.
And it is that last part, the destroying jobs part, that should most worry Americans today. The latest Bureau of Labor and Statistics report released last Friday contained some truly sobering employment numbers that completely undercut any claims that the President’s $787 billion stimulus plan is working. Every aspect of the labor market in September was negative. The labor force participation rate fell to 65.2 percent, the lowest point of this recession and the lowest rate in 25 years. The unemployment rate increased by only 0.1 to 9.8 percent, but the unemployment rate would have been higher had 571,000 not left the labor force. The male unemployment rate reached 10.3 percent, the highest level since the Great Depression.
So what is the left’s answer to the President’s failed spending? More spending. The New York Times editorial board recommends “more stimulus to spur job creation” or “a large federal jobs program” or, we love this one: “surprise us.” Not to be outdone, New York Times columnist Paul Krugman is suggesting the federal government should raise its deficit stimulus spending to at least $1.2 trillion. And none of this even includes the trillion dollar price tag for Obamacare or President Obama’s long-term budget which would permanently keep annual spending between $5,000 and $8,000 per household higher than it had been under President George W. Bush.
Quick Hits:
- According to Subsidyscope, the Federal Aviation Administration awarded $270 million in stimulus grants to low-priority projects.
- The state of California is gutting the work requirements in their welfare system.
- The Obama administration has taken away the authority of Maricopa County Sheriff Joe Arpaio’s deputies to make immigration arrests in the field.
- According to Gallup, Americans’ approval of the job Congress is doing is down to 21%.
- Michael Jordan was caught breaking San Francisco’s ban on smoking on public golf courses this weekend.
Speaker Nancy Pelosi joined a growing liberal chorus calling for a massive tax hike through the implementation of a value added tax (VAT). A VAT is similar to a national sales tax. Businesses would pay it at each stage of the production process and consumers at the cash register. European countries have had VATs for years.
As we pointed out earlier this year, Congress should not pass a VAT to pay for a government takeover of the health care system or expand the size of government. If it does so, it will be a massive tax hike:
Just a 1 percent VAT on all goods and services in the economy would raise $63 billion for Congress to spend each year. Some suggest the VAT rate should be set as high as 20 percent. At that rate, a VAT that covers all goods and services in the economy – including food, clothing, housing, and health care – would collect an additional $1,260 billion a year and cost every U.S. household $10,680 annually.
Even if Congress passes a VAT that has a rate of just a few percentage points, it would likely lead to higher rates in the future. Evidence from other countries that already have VATs show once it is on the books the rate tends to rise over time.
The American people would be better off if Congress stopped spending and instead reformed existing entitlements to make them more affordable and effective. Adding a new entitlement will only make the country’s fiscal situation worse and make painful tax hikes more likely. Unfortunately, that might have been the plan all along.