Senator: Obama, Congress 'Intentionally' Spending to Force Value-Added Tax Implementation

Senator: Obama, Congress 'Intentionally' Spending to Force Value-Added Tax Implementation


N.H. Sen. Judd Gregg tells CNBC's Larry Kudlow leaders are 'trying to run the government into the ditch' to institute European social welfare model.

By Jeff Poor
Business & Media Institute
9/10/2010 5:09:44 PM

We’ve heard from various elements that President Barack Obama was a socialist trying to “fundamentally change” the United States of America in a covert manner, but maybe it isn’t as covert as it seems.

A recent CNS News analysis of government data shows that in the first 19 months of the Obama administration, the federal debt held by the public increased by $2.5260 trillion - more than the cumulative total of the national debt held by the public that was amassed by all U.S. presidents from George Washington through Ronald Reagan. So why is the government doing this? Larry Kudlow asked Sen. Judd Gregg, R-N.H., that question on his Sept. 9 program, suggesting it was a “giant massive tax trap.”



“Senator, instead of going bankrupt, you know what will happen?” Kudlow said. “It's a massive tax trap. That's what's going to happen. It's going to be a gigantic humongous, massive tax trap that will doom us to subpar, stagnant, slow economic growth and high unemployment. Isn’t that really the issue?”

According to Gregg, who was at one time Obama’s choice for Secretary of Commerce until he withdrew his name, it’s part of a philosophy that sees the private sector as “under-taxed.”

“Larry, you're absolutely right,” Gregg said. “This is a very important point for your viewers to understand. This spending is being done intentionally. The reason the GDP –the spending-to-GDP ratio has gone from 20 percent to 24 percent, it’s heading to 27 percent of GDP is because the present government, the present presidency and the present Congress genuinely believe that you create prosperity by radically growing the size of government and they genuinely believe that our society is fundamentally under-taxed and they want to fill the gap between what has historically been our tax revenues, which have been about 18 to 19 percent of GDP and the spending, which they put in place at 24 percent.”

Their end goal with all this spending is not just short-term medicine for the ailing economy. Instead – to “fundamentally change” the American economy: Institute a value-added tax and implement the European social welfare model.

“They want to fill it with a value added tax,” Gregg continued. “That is the plan. They're trying to run the government into the ditch so that the options will be so few and so Draconian and so inappropriate that the only choice that would be left would be to go down the European social welfare mode. Remember, every European country has an income tax, a sales tax, which is their VAT tax, and what they see is the United States only has an income tax. So they say, ‘Well, we can obviously take the European model. If we go down the European road of expanding our government dramatically,’ which is what they’re planning to do and what they’ve actually done with the health care bill specifically, ‘Then we can fill that gap without going down the European model of a VAT tax.’”

And as Gregg explained, that sort of policy gesture would come at a cost.

“That of course reduces the productivity of society, because the more you put a tax burden on society, you basically reduce productivity,” he said. “That costs you jobs and makes you less competitive.”