Home  |   Jihad Watch  |   Horowitz  |   Archive  |   Columnists  |     DHFC  |  Store  |   Contact  |   Links  |   Search Wednesday, July 18, 2018
FrontPageMag Article
Write Comment View Comments Printable Article Email Article
Font:
The Coming Tax Hike By: George F. Will
New York Post | Tuesday, July 14, 2009


Economic policy, which became startling when Washington began buying automobile companies, has become surreal now that disappointment with the results of the second stimulus is stirring talk about the need for a . . . second stimulus.

Elsewhere, it requires centuries to bleach mankind's memory; in Washington, 17 months suffice: In February 2008, President George W. Bush and Speaker Nancy Pelosi agreed that a $168 billion stimulus -- Stimulus I -- would be the "booster shot" the economy needed. Unemployment then was 4.8 percent.

In January, the administration said that unless another stimulus -- Stimulus II wound up involving $787 billion -- was passed immediately, unemployment, which then was 7.6 percent, would reach 9 percent by 2010. But halfway through 2009, the rate is 9.5. For the first time since the now 16-nation Eurozone was established in 1999, the unemployment rate in America is as high as it is in that region, which Americans once considered a cautionary lesson in the wages of sin, understood as excessive taxation and regulation.

"Everyone guessed wrong" about the economy's weakness, says the vice president, explaining why Stimulus II hasn't yielded anticipated benefits.

To be fair, economics is a science of single instances, which means it is hardly a science. And it is least like one when we most crave certainty from it -- when there is a huge and unprecedented event and educated guessing is the best anyone can do.

But before embarking on Stimulus III, note that only about 10 percent of Stimulus II has yet been injected into the economy in 2009. This is not the administration's fault, the administration's defenders say, because government is cumbersome, sluggish and inefficient.

But this sunburst of insight comes as the administration toils to enlarge governmental control of health care, energy, finance, education, etc. The administration guesses that these government projects will do better than the Postal Service (its second-quarter loss, $1.9 billion, was 68 percent of its losses for all of 2008) and the government's railroad. (Amtrak has had 38 money-losing years.)

Let's guess: Will a person or institution looking for a place to invest $1 billion seek opportunities in America, where policy decisions are deliberately raising taxes, debt, regulations and the cost of energy, and soon will increase the cost of borrowing and hiring?

Or will the investor look at, say, India. It's the least urbanized major country (70 percent of Indians live in rural areas) so the modernizing and productivity-enhancing movement from the countryside to the city is in its infancy. This nation of 1.2 billion people has a savings rate of 25 percent to 30 percent, and fewer than 20 million credit cards. Which nation, India or America, is apt to have the higher economic growth in the next decade?

Yet while government diminishes America's comparative advantages, liberals are clamoring for . . . higher taxes. Partly because of changes endorsed by presidents from Ronald Reagan to Barack Obama, some 60 percent of taxpayers now pay either no income tax (43 percent) or less than 5 percent of their income. Because one can't raise significant money by that tax without nicking the middle class, or without bringing millions of people back onto the income tax rolls, attention is turning to a value-added tax.

A VAT is levied at every stage of production. Like cap-and-trade, a VAT is a liberal politician's delight: It taxes everything, but opaquely.

Before he became an economic adviser in the Obama White House, where wit can be dangerous, Larry Summers said: Liberals oppose a VAT because it is regressive and conservatives oppose it because it is a money machine, but a VAT might come when liberals realize it is a money machine and conservatives realize it is regressive.

At the June 29 White House briefing, Press Secretary Robert Gibbs was asked, with reference to health-care legislation, if the president's pledge not to raise taxes on couples making less than $250,000 is "still active." Gibbs answered: "We are going to let the process work its way through." What's your guess?




We have implemented a new commenting system. To use it you must login/register with disqus. Registering is simple and can be done while posting this comment itself. Please contact gzenone [at] horowitzfreedomcenter.org if you have any difficulties.
blog comments powered by Disqus




Home | Blog | Horowitz | Archives | Columnists | Search | Store | Links | CSPC | Contact | Advertise with Us | Privacy Policy

Copyright©2007 FrontPageMagazine.com