A British view of US fiscal insanity

April 8, 2010

Nile Gardiner writing in at the Telegraph web site on Paul Volcker’s raising the possibility of a Value-Added Tax in the US:

I cannot think of any move by the US government that would be better designed to shed jobs, undercut small businesses, frighten foreign investment, and kill economic growth, than to raise taxes and build a climate of economic uncertainty. If Barack Obama wants a European-style tax system, he must also face the spectre of European-style levels of unemployment (as high as 20 percent in countries like Spain), capital flight out of US markets, and frightening levels of government bureaucracy.

The surest way to reduce the deficit, create jobs and spur economic growth is by cutting government spending, reducing taxes, and getting rid of excessive regulation and red tape. There is a direct correlation between levels of economic freedom and economic prosperity. By going down the well-worn route practiced by major European economies such as France and Germany, the Obama administration will only undermine both.

The introduction of a further layer of national taxation would be a huge leap forward for the United States towards a continental European vision of economic management. It would strike a significant blow against economic liberty in America, and would be another sign that Barack Obama is willing to sacrifice American global power on the altar of big government. There can be only one end result from this kind of folly – a large drop in US economic competitiveness and the decline of a superpower.

It seems the President’s agenda is the opposite of Reagan’s: whereas President Reagan wanted to cut taxes to “starve the beast” and reduce the size of the federal government (an effort in which he had limited success), Obama wants to first inject the beast with steroids so it grows so large that we have no choice but to feed it via higher taxes.

The trouble is that, in contrast to Reagan’s ideas, which unleashed the American economy and laid the ground work for roughly 20 years of unprecedented growth, Obama’s plans seem certainly to shackle and hobble that same engine of wealth-creation for the foreseeable future.

November, 2010, cannot come fast enough.

RELATED: “The Hungry Maw of Endless Taxation” at Blue Crab Boulevard.