Mr. Volker has called for a VAT (Value-Added Tax) or Carbon tax to close the current federal budget deficit if they can not do it with budget cuts. It is surprising when people that should know better offer such devastating 'solutions' to an ailing economy. The last thing this economy needs is a tax increase. Mr. Volker should know better since he was instrumental in wringing inflation out of the economy during the 1980s. It appears Mr. Volker has forgotten the Regan tax cuts that fueled the economic expansion and got us out of the malaise of the late 1970s.
When it comes to budget deficits, it is almost always a spending problem. Politicians, however, do not have the stomach to cut spending. Their answer is always a tax increase. However, when they raise taxes, revenues go down. Thus, the very solution they prescribe makes matters worse.
The budget mess created by politicians could be solved if we simply go back to a limited government model for which the constitution is based. We now have an unlimited government with no restraint. Until this is changed, we will never get out of this mess. A VAT or a carbon tax will not close a budget gap. They will do irreparable damage to an already fragile economy.
The Wall Street Journal has the details.
