Remember the joke about the VAT. Democrats oppose it because it’s regressive, republicans oppose it because it’s a lot of money for the govt to spend. It’ll pass as soon as democrats realize it’s a lot of money and republicans remember that it’s regressive.
Do Americans retain enough residual good sense against taxes to resist the VAT temptation? Even with a VAT there’s not enough revenue to honor all the unfunded promises. If you don’t believe me just check out Europe’s debt crisis. VAT didn’t save them. It just enabled a longer binge before reality intruded, and makes the crash that much worse.
Ramesh Ponnuru cogitates on whether tis nobler to starve the beast or pass the check:
Regardless of what politicians have been saying in public, everyone who has looked at the budget projections for the next few decades understands that, absent a sudden reduction in Americans’ life expectancy or other shocking development, middle-class -benefits are going to have to be cut, middle-class taxes are going to have to be raised, or both. The war between liberals and conservatives over the future of the welfare state is largely a matter of how much of each will be done. Conservatives think that it would be better to cut middle-class benefits than to raise middle-class taxes: that we should not take more out of people’s paychecks in order to give them more when they retire. Liberals would rather raise middle-class taxes than cut middle-class -bene-fits, a policy that reduces risks by setting a higher floor in retirement for everyone.
During the fiscal cliff debate, as in previous battles in that war, Republicans pointed out that the government cannot realistically make up much of its long-term financing gap by raising taxes on the rich. A tax-heavy solution to that gap will eventually have to rely on much higher taxes on the middle class. That’s how they finance large welfare states in other developed countries. European social democracies don’t generally have much higher taxes on corporations or high earners than the United States. The chief difference between their tax policies and ours is that they levy value-added taxes that hit consumption.
Holman Jenkins sees a future of either Cylons or Soylent Green: Robots to the Rescue
None of these matters, of course, has been allowed to intrude in the empty theatrics that President Obama, primarily responsible, has ordained should be the substance of the fiscal-cliff war. But even from the perspective of the fiscal cliff, let’s welcome the new year by envisioning a future that won’t be so bad, where modest entitlement reform and proper incentives for robot builders will save us from the Soylent Green solution to an aging society.
Make no mistake: The alternative is not a pretty future. It’s a future in which older people receive Social Security checks but still go hungry, in which Medicare is a paper entitlement because doctors and hospitals can’t be found to provide services for what Medicare is willing to pay. If we weren’t still in a New Year’s mood, we’d say the latter future is the more likely one.