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Fiscal Policy: There are ironies, and then there are ironies. Former Fed Chairman Paul Volcker, who 30 years ago wreaked havoc slaying inflation, now advocates the most inflationary tax ever devised.
Conquering the seemingly intractable double-digit inflation of three decades ago was a national objective of such import to Volcker that as chairman of the Federal Reserve Board he was to tighten monetary policy to an unprecedented level of pain — raising the federal funds rate to 20%.
So hated as an inflation fighter was the cigar-chomping appointee of Carter and Reagan that an army of farmers once blocked traffic in front of his majestic offices on Constitution Avenue.
Yet on Tuesday, the chairman of the president's new Economic Recovery Advisory Board proposed an idea just as unpopular as his Fed policy of the days of yore — except that this policy would explode inflation.
Speaking at the New York Historical Society, Volcker claimed that Europe's infamous value-added tax was "not as toxic an idea as it has been in the past." Volcker reportedly added that "if at the end of the day we need to raise taxes, we should raise taxes."
Last fall, another former central bank chief, Alan Greenspan, also talked up tax hikes and called a VAT "the least-worst way."
Even a supply-sider such as former Treasury economist Bruce Bartlett has cozied to the VAT, in which Uncle Sam would collect money on goods at every stage of the production process. He views it as an inescapable accommodation to massive new spending.
In "Impostor," his 2006 critique of George W. Bush's economic policies, Bartlett wrote: "In my view, the VAT lends itself to dealing with our long-term budget problem because it can be raised a little bit at a time without causing serious economic repercussions."
Lovers of big government have long yearned for a VAT, and statements made by House Speaker Nancy Pelosi make it clear that she is salivating for its enactment to pay for some of the Democrats' endless spending spree.
How unpopular is the VAT? The best person to ask would have been the late Democrat Al Ullman. As chairman of the powerful House Ways and Means Committee during much of the 1970s, he was one of the most powerful politicians in Washington. But he actually lost the Oregon congressional seat he had held for decades after championing the VAT.
First cooked up by France, the VAT's hidden nature is what gets ordinary Americans justifiably furious when they hear talk of it. Steve Forbes and Elizabeth Ames, in their new book "How Capitalism Will Save Us," call the VAT "insidious because it imposes an invisible layer of taxation that inflates the cost of living . .. increases the cost of doing business and hits all consumers."
Illegal Immigration: An Arizona rancher is murdered while patrolling his ranch. A gaping hole in the border fence and footsteps back to Mexico tell the tale. When will we put the National Guard back on the border? Robert N. Krentz Jr., 58, scion of one of the best-known and oldest ranching ...
Dependency: The Democrats' reform bill had hardly become law before doctors and insurers began getting calls asking about free health care. The growing sense of entitlement is disheartening, to say the least. 'Where do we get the free ObamaCare, and how do I sign up for that?" That's what ...
Regulation: Sometimes, long after their public careers are done, those once in power speak openly about the past. Like Alan Greenspan, who on Wednesday told Congress what he could never tell them while in office. Testifying before the Financial Crisis Inquiry Commission, the former Fed ...
Fiscal Policy: There are ironies, and then there are ironies. Former Fed Chairman Paul Volcker, who 30 years ago wreaked havoc slaying inflation, now advocates the most inflationary tax ever devised. Conquering the seemingly intractable double-digit inflation of three decades ago was a ...
Are you a giver or a taker? No, that is not a bad pickup line from an Internet dating site — it's a question every American should be asking themselves these days. "Do I take more than I give?" I'm sure most of us want to be considered givers, not takers. After all, we grew up with the old ...
Posted By: R10002432342(130) on 4/8/2010 | 12:30 AM ET
Age corrupts the body and soul -- that is why all free men must be eternally vigilant especially as they get older. Like an athlete in his prime vs. an athlete at an old timer game, we ought not let Volker's huge economic misunderstanding of late (mis-statements?) tarnish an impressive career. However, the recent suggestion of a value added tax (VAT) proves that Washington insiders are nuts!
Posted By: ABUTOM(40) on 4/7/2010 | 10:29 PM ET
I DON'T TRUST PAUL VOLKER. HE WAS TOO CHUMMY WITH THE UN OIL FOR NO FOOD PROGRAM BOYS IN IRAQ. WASN'T HE ASSIGNED BY BUSH TO INVESTIGATE THE OIL FOR FOOD CONTRACTS? DIDN'T HE GIVE THE CROOKS A CLEAN BILL OF HEALTH? HE HAS BIG POCKETS. EVERY COUNTRY MADE MONEY WITH SADAAM DURING THE BOYCOTT EXCEPT UNCLE SAP. WWW.SPIRITOFAMERICAPARTYRADIOSHOW.COM
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