Blog on the Run: Reloaded

Tuesday, May 25, 2010 2:00 pm

“Obama Administration Has Secret Plan to Raise Your Taxes and Cut Your Social Security.”

It’s true:

Over the past week, top White House officials have been floating a trial balloon for their strategy on the economy. At its core is a decision to put deficit reduction ahead of job creation.

The premise is that the bond markets and allied deficit hawks are demanding action to cut the budget, that Obama lacks the votes in the Senate for a serious jobs initiative, and that polls show voters care more about deficit reduction than about jobs.

So the plan, modeled closely on the work of the Peter G. Peterson foundation and the anticipated report of the president’s own fiscal commission, is a deal that includes cuts in Social Security plus a new Value Added Tax (VAT), in order to get deep cuts in the deficit. As a sweetener to get Republicans to back the VAT, White House officials would cut the corporate income tax.

This is nuts both in terms of whether it actually would help the economy AND in terms of whether it would help Democrats politically. It’s like Obama is bent on repeating all his biggest mistakes in the health-care debate.

Of course, there is some good news:

In the end Republican opposition to a VAT is likely to save the Democrat budget hawks from themselves.

We may end up with a mirror image of the health-care endgame, where the choice was between an unappetizing bill and an even more unappetizing status quo. Only here, the choice may be between an unappetizing status quo and an even more unappetizing package of recommendations from Pete Peterson’s anti-Social Security committee that Congress would have to vote up or down. Fun.

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