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The Value Added Tax is still on the table, but don’t count on this commission to cut spending.

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Obama’s Tax-Loving Debt Commission

The Value Added Tax is still on the table, but don’t count on this commission to cut spending.

There are several things most people don’t know about the National Commission on Fiscal Responsibility, created by President Obama, to get control of the spiraling federal debt. It has no actual authority to cut or control anything, least of all the budget. The people running it think fiscal responsibility means raising taxes. The big-government spenders and taxers outnumber the budget-cutters.  

The 18-member commission held its first meeting Tuesday, at which Obama, breaking with his campaign pledge not to raise taxes on the middle class, said that “everything has to be on the table,” even ways to pay for his new $1 trillion healthcare scheme. Recently, Obama and other top administration officials have been sending signals that they are open to raising taxes, even if it means hitting those who earn less than $250,000 a year.

The administration and top Democratic leaders in Congress are already planning on letting the 2001 income tax rate cuts on the two top brackets expire at the end of this year, effectively shoving the 35% top tax rate to over 40%. And the White House has let it be known that they are considering a number of other taxes such as the Value Added Tax, or VAT, that would result in a new national federal sales tax, hitting everyone.  

No Big Budget Cuts 

But budget analysts held out little hope that the budget commission will be able to muster the 14 votes needed on the bipartisan panel to approve the kind of massive cuts in politically sensitive entitlement programs that would make a dent in the mountain of rising debts that threaten to engulf the U.S. economy.

“Commissions can be useful if they provide creative solutions, and then force Congress to take up an important issue like entitlement reform. Unfortunately, I know of no approach to close long-term budget deficits that could win the required votes of 14 of the commission’s 18 members. Thus, the commission will likely deadlock,” Brian Riedl, the Heritage Foundation’s top budget analyst, told HUMAN EVENTS.

Obama created the commission in February after polls showed that a vocal, sizable majority of Americans gave him poor marks on controlling spending and the budget deficit, and that this is emerging as a paramount issue in the midterm elections. Federal spending will soar to almost $4 trillion in fiscal 2011, up from $3.5 trillion. The deficit last year hit $1.4 trillion, a post-World War II record, which equaled about 10% of the nation’s $14 trillion economy.

The Congressional Budget Office forecasts that the yearly gap between spending and tax revenue will be in the trillion dollar-plus range for much of this decade, with the public debt skyrocketing from $9.2 trillion this year to $20.3 trillion in 2020.

Obama signaled his true intentions about reining in spending by picking as co-chairmen to head the commission two men who have a history of supporting higher taxes and increased spending:  

Former Clinton White House Chief of Staff Erskine Bowles was a key supporter of President Clinton’s budget policies, which raised the two top income tax rates, pushing the highest marginal tax rate to nearly 40%. He is a loyal Obama partisan.

Former Republican Sen. Alan Simpson of Wyoming apparently never met a tax increase he didn’t like. He voted to raise the top marginal income tax rate from 28% to 31% in 1990, raising Medicare payroll taxes, among other levies. He voted against Ronald Reagan’s tax-reduction reforms of 1986 that lowered the top rate to 28%. He voted to raise Social Security payroll taxes in 1983, the biggest tax hike in its history.

Notably, Bowles appointed Bruce Reed, head of the Democratic Leadership Council, who was Domestic Policy Council director in the Clinton White House, to be executive director of the commission, thus insuring that a loyal Democrat and Obama supporter will be effectively running the panel’s operations. 

Other Obama appointees include Democrats Alice Rivlin, of the liberal Brookings Institution and Andy Stern, former president of the left-wing Service Employees International Union, who is a close Obama labor union adviser. 

The panel’s six Democratic members of Congress are Senators Dick Durbin of Illinois, liberal Senate Democratic Whip Max Baucus of Montana and Kent Conrad of North Dakota, and Representatives John Spratt of South Carolina, Xavier Becerra of California and Jan Schakowsky of Illinois.

The six Republican members are Senators Judd Gregg of New Hampshire, Mike Crapo of Idaho and Tom Coburn of Oklahoma and Representatives Dave Camp of Michigan, Paul Ryan of Wisconsin, and Jeb Hensarling of Texas.

There is an enormous ideological gulf between the panel’s Democratic majority and its Republicans.  

Coburn, who has made such a name for himself as the arch-enemy of pork-barrel spending that he has been given the nickname of “Dr. No” by the Democrats, has already sent his fellow commissioners a thick loose-leaf binder filled with ideas of where and how to cut spending.

Ryan and Hensarling are known among their Republican colleagues as low tax-rate crusaders who want to reduce entitlements through privatization reforms for younger workers to wean them off Social Security and Medicare and into market alternatives.  

The long history of presidential commissions—from the Hoover Commission of the late 1940s to the Grace Commission of the 1980s—shows not much lasting success in slaying the scourge of big government.

Few analysts think this one will not be any different.

“It is noteworthy that the President did not create a deficit commission immediately after taking office last year. First, he deepened the deficit hole with a $787 billion “stimulus” bill, an 8% hike in discretionary spending, and a trillion-dollar healthcare expansion,” Reidl said. “Only after most of the President’s expensive spending priorities had already been locked in—and worsened the budget situation—will his deficit commission have had its first meeting.”  

“This feeds the perception that Obama is not serious about spending control but merely seeking a bipartisan rubber stamp for tax increases to pay for his past spending,” Reidl said.

In the end, the only way federal spending can be cut down to size is to elect enough members of Congress who will pledge to do that.

Will it happen? The voters will answer that question when they go to the polls in November—a month before the Obama commission is expected to complete its report.

 

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Written By

Mr. Lambro is a nationally syndicated columnist and former chief political correspondent for the Washington Times.

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