From yesterday’s WSJ.com Political Diary (subscription required):
The same day President Obama called for another $50 billion to $100 billion stimulus plan (and concomitant increase in the deficit), he also appointed the chairmen of his Deficit Reduction Commission. It says a lot about Washington that almost no one got the irony of those paired announcements.
Indeed it does. Fortunately, the Commission’s job is pretty simple. There are only two ways to cut the deficit. One is to cut spending. The other is to raise taxes. Cutting spending is the right thing to do. But it is also politically difficult. There is a lot of fat to trim from the budget. But government has little incentive to put itself on a diet.
That’s why the Commission is expected to recommend a tax increase, probably in the form of a VAT. A prestigious bipartisan Commission can provide the political cover that Congress and the administration need to avoid the embarrassment of backtracking on their policies.
Wayne Crews and I recently warned why a VAT is a bad idea in Investors’ Business Daily. Hopefully some of the arguments will find themselves into the debate.
Posted in Economics, Political Animals, Taxation
Tagged commission, cut spending, deficit, deficit commission, deficit reduction commission, obama, obama deficits, tax increase, taxes, value added tax, vat, washington
When Republicans are in the White House, Paul Krugman thinks budget deficits are bad. When a Democrat is in the White House, deficits are no problem at all.
Correctly noting in 2005 that the Bush deficits were “comparable to the worst we’ve ever seen in this country,” Krugman worried that investor confidence would wilt under the difficulty of paying back such massive obligations.
Now that President Obama has tripled the Bush deficits, he has a column poo-pooing deficit worriers as “being terrorized by a phantom menace — a threat that exists only in their minds.” Investor confidence will be just fine.
Would he be so sanguine if a Republican president ran up a $1,400,000,000,000 budget deficit in his first year in office? The party in power has nothing to do with whether deficits are good or bad. Deficits are either a problem or they aren’t.
Krugman’s partisanship is regrettable. What’s more regrettable is that it is taken seriously. Such is the tragedy of the partisan mind.