13 July 2010

The national debt is not like a cancer, but a VAT is a lot like chemo

Erskine Bowles, co-chair of President Obama's debt and deficit commission, a.k.a., "pass the buck committee," declared yesterday that the nation's debt is "like a cancer."There is very little suspense in awaiting this commission's recommendations - they will certainly recommend substantially higher taxes, including, in all likelihood, a Value Added Tax (VAT.) In fact, equating the current deficits and skyrocketing debt to a mysterious and incurable disease is quite an obvious tip of their hand on that.

Despite the identification of many contributing causes to various cancers, nobody in the medical world really knows what causes the disease. Additionally, there still is no cure. There are, however, some treatments - awful, painful, disfiguring and permanently disabling treatments in many cases, but what can you do? It's brain surgery, radiation and chemo, or die right now.

The national debt, and the annual budget deficits which extend it, are nothing at all like cancer. We know exactly what causes deficits and we know exactly how to eliminate them. It would be idiotic to apply the high dose chemo and bone marrow transplant of a VAT.

Our annual deficit has been estimated to be in the range of $1.4 to $1.6 trillion dollars. The cause of that is overspending and nothing else. As recently as 1997, the entire Federal budget was only $1.6 trillion. Yet, during years of strong growth and low unemployment (suggesting decreasing needs for spending,) and exploding revenues (suggesting overtaxation,) Federal spending has more than doubled, to $3.55 trillion. There is no conceivable justification for spending increases of that scale in such a short time.

Bowles is wrong to call that a cancer. Cancer can attack anybody, and, while it can sometimes be cut out (surgically, radiologically or chemically,) it can't be cured. And if we treat this debt like cancer, it will certainly return, and be even more damaging to an economy which has been permanently and structurally weakened by a VAT.

Our government doesn't have cancer. It is just fat and lazy. To get rid of cancer, you have to endure horrible treatments. To lose weight, you just have to stop eating.

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