To VAT, or not to VAT…
The Value-Added Tax (or VAT) is some expert's solution to our national budgetary and fiscal woes. Here's a pithy description of what the term "VAT" even means, as well of some its immediate implications for society:
A VAT, used in 100 countries around the world, is essentially a sales tax but one collected at every stage of production.
Take bread, for instance.
“When the farmer grows the wheat, sells it to the baker, there's value-added tax on that. When the baker makes something and sells it to the grocery store, there's value-added tax. When the grocery store sells it to the individual, there's value-added tax,” said William Gale of the Brookings Institution.
But a VAT is regressive, meaning the poor and the wealthy pay the same tax on every product, which is why liberal analysts say a VAT would have to be on top of the current income tax.
“You would not want the value-added tax to replace the income tax. If you did that you would have huge tax increases on middle income people and on the working poor and massive tax cuts for the richest people in the country, ” said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities.
But others say adding VAT on top of the income tax, rather than replacing the income tax with it would make the total tax burden far too great and put a dent in economic growth.
“You don’t want a value added tax on top of the income tax otherwise the total tax bite of the government is huge. You'll have individuals who are paying tax rates on their income of 25 and 28 and 30 percent and then going to the grocery store and paying a 20 percent tax on whatever money's left over,” said Brian Reidl, lead budget analyst at the conservative Heritage Foundation.
Many impressive writers/thinkers of our day have weighed in on the matter. George Will, of The Washington Post, and Robert Samuelson, writing in Newsweek, are two worthy examples. Both men foresee a necessary national dialogue regarding the appropriate (and desired...and Constitutionally-allotted) size of government that MUST occur before we take drastic measures to fix the mess we're most certainly in. 
Will adds:
When liberals advocate a value-added tax, conservatives should respond: Taxing consumption has merits, so we will consider it -- after the 16th Amendment is repealed.
A VAT will be rationalized as necessary to restore fiscal equilibrium. But without ending the income tax, a VAT would be just a gargantuan instrument for further subjugating Americans to government...
Money is time made tangible -- the time invested in the earning of it. Taxation is the confiscation of the earner's time. Although some taxation is necessary, all taxation diminishes freedom.
Adding a VAT without subtracting the income tax would constrict Americans' freedom much more than the health care legislation does. Because the 16th Amendment will not be repealed, adoption of a VAT would proclaim the impossibility of serious spending reductions, and hence would be the obituary for the Founders' vision of limited government.
I doubt I could agree more. 
Samuelson, with whom I often disagree, hits the nail on the head as well this time out:
The value-added tax has become the designated panacea for massive federal budget deficits. It's touted by think-tank economists and mentioned by congressional leaders. A VAT could, it's said, raise stupendous amounts of money, which, Lord knows, are needed to cover projected deficits. A VAT is likened to a "national sales tax," so once in place, most Americans would barely notice it -- just as they barely notice state and local sales taxes. How's that for friendly politics? A VAT would also discourage consumption and encourage saving and investment, making America richer in the future. What's not to like?...
The basic budget problem is simple. For decades, the expansion of Social Security, Medicare and Medicaid -- programs mostly for the elderly -- was financed mainly by shrinking defense spending. In 1970, defense accounted for 42 percent of the federal budget; Social Security, Medicare and Medicaid were 20 percent. By 2008, the shares were reversed: defense, 21 percent; the big retirement programs, 43 percent. But defense stopped falling after Sept. 11, 2001, while aging baby boomers and uncontrolled health costs keep retirement spending rising.
Left alone, government would grow larger. From 1970 to 2009, federal spending averaged 20.7 percent of the economy (gross domestic product). By 2020, it could reach 25.2 percent of GDP and would still be expanding, reckons the Congressional Budget Office's estimate of President Obama's budgets. In 2020, the deficit (assuming a healthy economy with 5 percent unemployment) would be 5.6 percent of GDP. To cover that, taxes would have to rise almost 30 percent.
A VAT could not painlessly fill this void. Applied to all consumption spending -- about 70 percent of GDP -- the required VAT rate would equal about 8 percent. But the actual increase might be closer to 16 percent because there would be huge pressures to exempt groceries, rent and housing, health care, education and charitable groups. Together, they account for nearly half of $10 trillion of consumer spending. There would also be other upward (and more technical) pressures on the VAT rate.
Does anyone believe that Americans wouldn't notice 16 percent price increases for cars, televisions, airfares, gasoline -- and much more -- even if phased in? As for a VAT's claimed benefits (simplicity, promotion of investment), these depend mainly on a VAT replacing the present complex income tax that discriminates against investment. That's unlikely because it would require implausibly steep VAT rates. Chances are we'd pay both the income tax and the VAT, making the overall tax system more complicated.
The reality is this: we have some tough decisions ahead of us in this country. We've been putting them off for too long, and allowing our emotions to be manipulated by people and policies that count on Americans NOT knowing the facts and the options.
Don't let our leaders sell you a bill of goods (i.e. "Taxing the rich will solve everything", or "Big Brother will always be able to bail you out"). It is because of a pervasive lack of personal responsibility and fiscal discipline, at every level of the government, and in far too many homes and businesses, that we are where we are today.
There is no quick fix. There is no free lunch.
Can Iran Be Free?
The Heritage Foundation is the standard for conservative think-tanks. Heritage is involved in everything from Foreign Policy to Health Care Reform to Economic Freedom. Today Heritage posted "Ten Steps to a Free Iran", an abbreviated list of ten things the US and Europe can (and should) be doing to help the millions of freedom-loving citizens of the Sharia-dominated nation.
Here are three of the ten:
1. Impose and enforce the strongest sanctions. The U.S. should push other concerned countries to enforce targeted sanctions on the Iranian regime and its internal security organs; ban all foreign investment, loans and credits, subsidized trade, and refined petroleum exports to Iran; and deny visas to its officials.
2. Drop opposition to U.S. gasoline sanctions. Both houses of Congress voted by large bipartisan majorities to impose sanctions against firms that export refined petroleum products to Iran. Yet the White House is dragging its feet, arguing such sanctions will impede diplomatic efforts at the U.N., even though the U.N. is unlikely to approve crippling sanctions.
3. Target public diplomacy to expose the regime's human rights abuses. Such a campaign should document the abuses and aid victims, step up broadcasting and support for independent Iranian broadcasters outside the country to expose corruption of officials and the regime's aid to terrorists, and educate Iranians about genuine representative democracy.
Obamacare Is A Loser
You simply cannot explain the scope and breadth of the Obamacare debacle in one column...unless your last name is Krauthammer.
As an aspiring writer and commentator, I spend a great deal of time reading the books and articles and speeches of the people I feel effectively communicate the ideas I believe in better than anyone else.
Charles Krauthammer of the Washington Post and Fox News Channel is one of those people.
Every night of the week, at roughly 6:40 p.m. (Eastern Time), Dr. Krauthammer is a member of the "All-Star Panel" on Special Report With Brett Baier. (You should be watching or DVR-ing this every day). And each Friday, his nationally syndicated column is read in newspapers all across the country.
Today he treated his reading audience to this gem on the current state of the Pelosi-Reid-Obama health care plan:
After 34 speeches, three sharp electoral rebukes (Virginia, New Jersey and Massachusetts) and a seven-hour seminar, the president announced Wednesday his determination to make one last push to pass his health care reform.
The final act was carefully choreographed. The rollout began a week earlier with a couple of shows of bipartisanship: a Feb. 25 Blair House "summit" with Republicans, followed five days later with a few concessions tossed the Republicans' way.
Show is the operative noun. Among the few Republican suggestions President Obama pretended to incorporate was tort reform. What did he suggest to address the plague of defensive medicine that a Massachusetts Medical Society study showed leads to about 25 percent of doctor referrals, tests and procedures being done for no medical reason? A few ridiculously insignificant demonstration projects amounting to one-half of one-hundredth of 1 percent of the cost of Obama's health care bill.
The Health Care Summit last week was a dog-and-pony show, meant to portray the Republicans as obstructionists and big old meanies. But the president was confronted by the likes of Rep. Eric Cantor (R-VA), and the fact-based disagreements conservatives have with Obama's brand of "reform." Republicans DO have ideas, and many key members of the GOP on the state and national level have been promoting them all year.
Unfortunately for Democrats, that seven-hour televised exercise had the unintended consequence of showing the Republicans to be not only highly informed on the subject, but also, as even Obama was forced to admit, possessed of principled objections -- contradicting the ubiquitous Democratic/media meme that Republican opposition was nothing but nihilistic partisanship.
Republicans did so well, in fact, that in his summation, Obama was reduced to suggesting that his health care reform was indeed popular because when you ask people about individual items (for example, eliminating exclusions for pre-existing conditions or capping individual out-of-pocket payments) they are in favor.
Yet mystifyingly they oppose the whole package. How can that be?
And now, in what can only be described as the most brilliant summation of the American peoples' opposition to Obamacare, please enjoy the wit and wisdom of Charles Krauthammer in its rarest of forms:
Allow me to demystify. Imagine a bill granting every American a free federally delivered ice cream every Sunday morning. Provision 2: steak on Monday, also home delivered. Provision 3: A dozen red roses every Tuesday. You get the idea. Would each individual provision be popular in the polls? Of course.
However (life is a vale of howevers) suppose these provisions were bundled into a bill that also spelled out how the goodies are to be paid for and managed -- say, half a trillion dollars in new taxes, half a trillion in Medicare cuts (cuts not to keep Medicare solvent but to pay for the ice cream, steak and flowers), 118 new boards and commissions to administer the bounty-giving, and government regulation dictating, for example, how your steak was to be cooked. How do you think this would poll?
Perhaps something like 3-1 against, which is what the latest CNN poll shows is the citizenry's feeling about the current Democratic health care bills.
Late last year, Democrats were marveling at how close they were to historic health care reform, noting how much agreement had been achieved among so many factions. The only remaining detail was how to pay for it.
Well, yes. That has generally been the problem with democratic governance: cost. The disagreeable absence of a free lunch.
That's it, folks. Everything the Left promises sounds nice on an individual level, which is how they present their collectivist policies. The problem is, of course, that all of their policies are implemented on a national level and cannot possibly succeed. This is the heart of the debate between Right and Left: can the few rule, and provide for, the many? Can "experts" in Washington "control" the expenses and costs of 300 million-plus liberty-loving Americans?
The good intentions of liberals are heart-warming and bone-chilling, all at the same time.
Chuck closes out his devastatingly informative column with the following:
The time for debate is over, declared the nation's seminar leader in chief. The man who vowed to undo Washington's wicked ways has directed the Congress to ram Obamacare through, by one vote if necessary, under the parliamentary device of "budget reconciliation." The man who ran as a post-partisan is determined to remake a sixth of the U.S. economy despite the absence of support from a single Republican in either house, the first time anything of this size and scope has been enacted by pure party-line vote.
Surprised? You can only be disillusioned if you were once illusioned.
Responsibility is for losers
Greece is bankrupt and counting on Germany to bail them out. Sound familiar? The United States is moving closer to European-style socialism with every government annexation of power. THIS is why something like the health care debate matters.
Mark Steyn, writing for National Review Online, breaks down the broken-down economy (and collective mentality) of the Greeks.
While Barack Obama was making his latest pitch for a brand-new, even-more-unsustainable entitlement at the health-care “summit,” thousands of Greeks took to the streets to riot. An enterprising cable network might have shown the two scenes on a continuous split-screen — because they’re part of the same story. It’s just that Greece is a little further along in the plot: They’re at the point where the canoe is about to plunge over the falls. America is farther upstream and can still pull for shore, but has decided instead that what it needs to do is catch up with the Greek canoe. Chapter One (the introduction of unsustainable entitlements) leads eventually to Chapter Twenty (total societal collapse): The Greeks are at Chapter Seventeen or Eighteen.
He continues:
We hard-hearted small-government guys are often damned as selfish types who care nothing for the general welfare. But, as the Greek protests make plain, nothing makes an individual more selfish than the socially equitable communitarianism of big government: Once a chap’s enjoying the fruits of government health care, government-paid vacation, government-funded early retirement, and all the rest, he couldn’t give a hoot about the general societal interest; he’s got his, and to hell with everyone else. People’s sense of entitlement endures long after the entitlement has ceased to make sense.
Read the rest of his latest column here, and ask yourself this: "What worth having in this life does not come with sacrifice?" There really is no such thing as a free lunch, and we're going to have to make the tough, unpopular decisions if we want to preserve economic, personal, political, and religious liberty.
What are you willing to do for those things?
Steyn closes his piece with a wake-up call to those who think "It can't happen here."
Think of Greece as California: Every year an irresponsible and corrupt bureaucracy awards itself higher pay and better benefits paid for by an ever-shrinking wealth-generating class. And think of Germany as one of the less profligate, still-just-about-functioning corners of America such as my own state of New Hampshire: Responsibility doesn’t pay. You’ll wind up bailing out anyway.
The problem is there are never enough of “the rich” to fund the entitlement state, because in the end it disincentivizes everything from wealth creation to self-reliance to the basic survival instinct, as represented by the fertility rate. In Greece, they’ve run out Greeks, so they’ll stick it to the Germans, like French farmers do. In Germany, the Germans have only been able to afford to subsidize French farming because they stick their defense tab to the Americans. And in America, Obama, Pelosi, and Reid are saying we need to paddle faster to catch up with the Greeks and Germans.
What could go wrong?
Health Care Summit = Joke
President Obama and the Democrats have been trying for a year to get their brand of health care "reform" passed. They had overwhelming majorities in both houses of Congress, yet nothing happened. The American people have shown up at town hall meetings, called and emailed their representatives, and the people of the most liberal state in the Union (Massachusetts) turned out in droves to vote for a Republican whose sole campaign promise was to vote against the president's health care package.
Today he is holding what seems to be his 54th "summit", this time on health care. Liberals love talking about things when they could have just been doing them. But why pass up a chance to try and make the Republicans look like the overly-used cliche "Party of No"? Why pass up an opportunity for a photo-op that makes un-informed Americans think you are really trying to reach across the aisle?
This is all you need to know about the White House's true intentions:
From Politico.com
After a brief period of consultation following the White House health reform summit, congressional Democrats plan to begin making the case next week for a massive, Democrats-only health care plan, party strategists told POLITICO.
A Democratic official said the six-hour summit was expected to “give a face to gridlock, in the form of House and Senate Republicans.”
Democrats plan to begin rhetorical, and perhaps legislative, steps toward the Democrats-only, or reconciliation, process early next week, the strategists said.
After the summit, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid planned to take the temperature of their caucuses.
“The point [of the summit] is to alter the political atmospherics, and it will take a day or two to sense if it succeeded,” the official said.
"We're going to have a health care summit to look like we're listening to the people, but you can go jump off a bridge for all we care America 'cause we're not really listening anyway.
You republicans never listen...and oh, btw, we're not listening to what you say in this meeting we called to show how much more we listen to our political enemies than you. Meanies!"
Wait until you get home tonight and watch how ill-tempered President Obama was with Republicans like John McCain (AZ) and Eric Cantor (WI).
I smell another Beer Summit to mend some fences!
This is the Left's attempt to give the federal government control over health care permanently, and create a new and eternal entitlement. The president has said so himself, in his own words. It is about ideology (progressivism) and it is about politics (buying voters). It stands against everything the Founders envisioned.
Newt vs. Jon Stewart
My boy Newt Gingrich has been a guest many times on Comedy Central's The Daily Show with Jon Stewart, and it's always a wild ride.
Last week the former Speaker of the House duked it out with Stewart over the president's handling of the War on Terror.
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Newt Gingrich | ||||
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Smugness: Stewart is thy name.
Sowell’s “Intellectuals and Society”
By: R.J. Moeller
G.K. Chesterton once wrote: “Cruelty is, perhaps, the worst kind of sin; and intellectual cruelty is the worst kind of cruelty.”
Written a century after Chesterton’s remarks, Thomas Sowell’s latest effort, Intellectuals and Society, is, broadly speaking, a 317-page cultivation of precisely those sentiments. Combining the heady ideological exegesis of Conflict of Visions (1990) with the utterly graspable dissemination of facts and statistics in both Basic Economics and Applied Economics: Thinking Beyond Stage One, Dr. Sowell offers the reader of Intellectuals and Society a part-academic lecture, part-fireside chat, and part-Greek tragedy glimpse into a world few of us would otherwise ever experience.
That world is the realm of the “Intellectual”. It is a world where ideas, so long as they conform to the agreed upon norm, reign supreme, and consequences are rendered inconsequential by the insulation afforded to the idea-makers by things like academic tenure, a highly complicit media, and the unnecessary (and unhealthy) intimidation John and Jane Q. Taxpayer feel in the presence of intellectuals and their ideas.
Sowell’s intent in this book is to explain what an intellectual is, expose what it is an intellectual actually does, and examine what impact an intellectual’s end-product (ideas) has on the society around them. I picked up on seven primary themes/concepts which are developed throughout the entire book.
1) It’s not enough to know; you must be able to apply (and apply correctly).
Using the formula “Intellect < Intelligence < Wisdom”, Sowell stakes out his position on the undue levels of prestige given to those who are, as my generation would say, “book smart.” He explains:
The capacity to grasp and manipulate complex ideas is enough to define intellect but not enough to encompass intelligence, which involves combining intellect with judgment and care in selecting relevant explanatory factors and in establishing empirical tests of any theory that emerges. Intelligence minus judgment equals intellect. Wisdom is the rarest quality of all – the ability to combine intellect, knowledge, experience, and judgment in a way to produce a coherent understanding. Wisdom is the fulfillment of the ancient admonition, “With all your getting, get understanding.”
2) Incentives and Constraints are universal
”Intellectuals”, as a group, are people whose professional task it is to create and cultivate ideas, as opposed to implement them. An intellectual is a member of an occupational category, and the behavior of the members of this category can (and should) be studied to discover characteristics and patterns among them. In Sowell’s mind, the pivotal question that is asked far too infrequently is: What incentives or constraints affect the behavior and patterns of Intellectuals?
Society as a whole suffers when people erroneously assume that the only people with incentives (i.e. money, fame, advancement of ideological beliefs, prestige amongst colleagues, etc.) are “capitalist fat-cats” in expensive suits. Another serious error occurs when people assume that to put any constraints on an Intellectual, on a professor for example, is a horrible thing that will limit creativity or curb academic curiosity. This is rubbish. Without constraints of any kind you have anarchy, even in the academic world.
3) If you ain’t Left, you ain’t right
The “realm of ideas” in which Intellectuals reside is overwhelmingly Left-of-Center in its political and economic ideology. Sowell defines the “vision of the political left” as follows:
…Collective decision-making through government, directed toward – or at least rationalized by – the goal of reducing economic and social inequalities.
The majority of the academic world is progressive, liberal, or far-Left. The majority of the academic world would be included in Sowell’s definition of an Intellectual. You do the math.
4) It’s nice to be needed
Intellectuals tend to “manufacture” a public need for their ideas. There are three basic explanations Sowell offers for why this happens.
The first is completely understandable: intellectuals, like anyone else, want what they do to matter and have a positive impact on the world.
The second is not very flattering: ego. From the time an intellectual is a young student in junior high or high school, they have been told they are the “smart” kid. After attending the best universities for undergraduate, graduate, and post-graduate degrees, many intellectuals succumb to the notion that they are the “philosopher elites” envisioned by the likes of Plato and Karl Marx, destined and ordained to guide the un-enlightened masses to social utopia.
The third explanation for why intellectuals often “manufacture” a public need for their ideas (and services) is, put simply, “dolla’ dolla’s bills ya’ll.” By manipulating the very free market principles so many of them hold in open disdain, intellectuals help to create a demand for themselves, which they are only too happy to supply. Intellectuals need funding, and it is hard to get a grant from the federal government if your area of intellectual expertise involves the teaching of such ideas as limited government.
5) Intellectuals have an influence on society and culture, and friends to help facilitate that influence
After creating a need for themselves, it comes as no surprise that intellectuals end up having a tremendous impact on the society and culture around them. Intellectuals influence public opinion, which is the very air politicians (the decision-makers) breathe, even though the vast majority of Americans do not know the names and faces of the intellectuals who have influenced them.
A largely complicit media do what they can to advance the ideas of intellectuals, and thus their influence grows and grows. In the chapter entitled “Optional Reality in the Media and Academia”, Sowell discusses the ease with which the Intelligentsia (Intellectuals + Gate-keepers of information) ignore facts that contradict their worldview, manipulate data that doesn’t corroborate their hypotheses, and in some extreme cases, lie as if their trousers were engulfed in flames.
Like the militant Muslim who has convinced himself that it is okay to lie under oath to “infidels”, the insulated, self-satisfying world intellectuals can create for themselves is a place where the truth is secondary to the “cause.”
6) Heads in the proverbial sand
It isn’t just that intellectuals, like all fallible human beings, have been wrong about certain things, but it is that they seemingly refuse to learn from their mistakes, and the mistakes they make involve some of the most important things with the furthest-reaching ramifications.
In chapter three, “Intellectuals and Economics,” Sowell gives the example of the Smoot-Hawley tariffs enacted in 1930. In the year following the stock market crash of 1929, unemployment topped out 10%, and by the time the federal government took its first (of many) giant Keynesian steps and signed the protectionist Smoot-Hawley tariff into law, unemployment had already dropped to just over 6%. The stated goal of the tariffs was to reduce unemployment, and was based on the idea driven by leading intellectuals of the time that the State must act, and act big, to save an economy from crisis. By 1931, however, unemployment was more than 15% and in 1932 it was 25.8%.
Have intellectuals learned their lesson in subsequent decades regarding the detrimental nature of government intervention into the economy? NOT EVEN CLOSE!
See: The Obama administration, one saturated with intellectuals, and its preposterous economic antics of the previous year-plus.
7) How are the people who won’t change their minds called “progressive”?
There are three reasons why intellectuals typically do not learn from their mistakes.
First, their presumptions about human nature and knowledge are innately flawed. Intellectuals, on the whole, tend to believe that human beings are inherently “good”, and simply need guidance and direction from the powers on high. This then leads to their fundamental error in how they view knowledge. Knowledge is dispersed among the people and no one person, or oligarchy of intellectuals, can know everything. This logically infers that it is impossible to centrally plan something as big and vast as a nation’s economy (or educational system). A refusal to accept this truth is, as F.A. Hayek wrote, the intellectual Left’s “fatal conceit.”
Second, intellectuals tend to be removed from the results of their ideas. There are so few external tests or criteria for an intellectual to meet. An engineer building a bridge is judged on the soundness of the bridge. Vince Lombardi was judged by his winning record. Intellectuals who come up with a horrendous idea, say, for example, that paying able-bodied “poor” people not to work, and preventing them from saving or investing the money you pay them, will have no ill effects on society, suffer no real consequences for their wretched schemes.
Third, and final, they are surrounded by so many like-minded people, who hail from equally impressive intellectual backgrounds and pedigrees. How can I be wrong when so many of my colleagues (i.e. the other “smart” kids) think the same way? In business they call it “group-think.” In the land of the intellectual, it’s known as “progressive thought” to walk lock-step in line with your peers.
Don’t think for a moment that Dr. Sowell isn’t aware of the fact that his is a book about the potentially dangerous influence intellectuals can have on society, written by an intellectual trying to influence society. Sowell is open, honest, frank, and uncompromising in his assessment of the career he chose for himself. His aim is to educate, not indoctrinate; lead a horse to water, not drown it in elitist condescension.
Thomas Sowell’s writing is an oasis of reasoned thought and discourse, and after finishing (and thoroughly enjoying) Intellectuals and Society, I can confidently say that I’ve been refreshed.
(Do yourself a favor and watch the 5-part interview with Sowell at National Review Online here.)
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