The Road To Serfdom

As Gerard Van der Luen opined the other day, we are, quite possibly, the first generation of Americans who can expect to see our children lead smaller lives. It is wholly self-imposed.

The CBO reports that Obama's FY 2011 budget has our nation on a path to a national debt equal to 90% of GDP by 2020. In other words, Obama is directing our nation to ruin, in which the only ways out are confiscatory taxes on a level never before seen in our country, and / or hyper-inflation. Obama and the progressive left are spending us into a banana-republic status.

According to Charles Krauthammer, in his article yesterday at the Washington Post, Obama in fact has a plan - adding a Value Added Tax (VAT), essentially a national sales tax, on top of the income tax. This from Krauthammer:

As the night follows the day, VAT follows health-care reform.

With the passage of Obamacare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.

We are now $8 trillion in debt [Krauthammer has his numbers transposed - we are $12+ trillion in debt today]. The Congressional Budget Office projects that $12 trillion will be added over the next decade. Obamacare, when stripped of its budgetary gimmicks -- the unfunded $200 billion-plus "doctor fix," the double counting of Medicare cuts, the 10-6 sleight-of-hand (counting 10 years of revenue and only six years of outflows) -- is at minimum a $2 trillion new entitlement.

It will vastly increase the debt. But even if it were revenue-neutral, Obamacare preempts and appropriates for itself the best and easiest means of reducing the existing deficit. Obamacare's $500 billion of cuts in Medicare and $600 billion in tax hikes are no longer available for deficit reduction. They are siphoned off for the new entitlement of insuring the uninsured.

This is fiscally disastrous because, as President Obama himself explained last year in unveiling his grand transformational policies, our unsustainable fiscal path requires control of entitlement spending, the most ruinous of which is out-of-control health-care costs.

Obamacare was sold on the premise that, as Nancy Pelosi put it, "health-care reform is entitlement reform. Our budget cannot take this upward spiral of cost." But the bill enacted on Tuesday accelerates the spiral: It radically expands Medicaid (adding 15 million recipients/dependents) and shamelessly raids Medicare by spending on a new entitlement the $500 billion in cuts and the yield from the Medicare tax hikes.

Obama knows that the debt bomb is looming, that Moody's is warning that the Treasury's AAA rating is in jeopardy, that we are headed for a run on the dollar and/or hyperinflation if nothing is done.

Hence his deficit-reduction commission. It will report (surprise!) after the November elections.

What will it recommend? What can it recommend? Sure, Social Security can be trimmed by raising the retirement age, introducing means testing and changing the indexing formula from wage growth to price inflation.

But this won't be nearly enough. As Obama has repeatedly insisted, the real money is in health-care costs -- which are locked in place by the new Obamacare mandates.

That's where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude -- if you exempt food, for example, the yield would be more like $900 billion).

It's the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent. . . .

It is not merely the national debt that Obama threatens. In the aftermath of the passage of Obamacare, the costs to major businesses has become immediately apparent. This from Powerline:

Caterpillar, which said Obamacare will cost it an additional $100 million in the first year; Medtronic, which warned that the new tax on its products "could force it to lay off a thousand workers;" and Verizon, which has told its employees that it "will likely have to cut healthcare benefits to offset the new costs."

Here's one more:

AT&T on Friday said it will record a $1 billion non-cash expense in the first quarter related to the newly passed health-care law, joining a growing list of large U.S. companies. ...

Among its many changes, the new health-care law eliminated a tax deduction that companies used to cut the cost of drug-benefit programs for retired workers. ... companies that still offer retiree drug benefits, mostly older industrial concerns or those with unionized employees, say the end of the deduction could force them to alter their benefit plans. In other words, they might curtail or even cancel them.

"As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health care benefits offered by the company," AT&T said in a filing with the government on Friday.

Hot Air also points to John Deere, which is taking a $150 million dollar hit for Obamacare this quarter. With an economy reeling, this is all nothing short of insanity. How long before the manufacturing sector - and to the extent they can, the service sector - begins to move ever more jobs overseas in an effort to stay competitive.

Bill Clinton ran the meme "its the economy" to success in 1994. Republicans need to take their cue from Bill as we head into the mid-terms and then into 2012, when the fate of our nation hangs on not merely throwing Obama and the left out of office, but consigning their legislative legacy and "progressive" ideology to the dustbin of history. This really is a second civil war.