So three weeks ago, when the Congresscritters betrayed those who put them in office by passing a measure that would give them control of a huge chunk of the American economy, the Congressional Budget Office claimed the bill was deficit neutral. Now that it’s been signed into law, not so much.

The nation’s fiscal path is “unsustainable,” and the problem “cannot
be solved through minor tinkering,” the head of the Congressional Budget
Office said Thursday morning.


Doug Elmendorf, best known for arbitrating the costs of various health
care proposals, added his voice to a growing chorus of economic experts
who predict dire consequences if political leaders don’t scale back
spending, increase taxes or both — and soon.


Elmendorf noted a recent CBO report that pegged an increase in the
public debt from $7.5 trillion at the end of 2009 to $20.3 trillion at
the end of 2020 if President Barack Obama’s fiscal 2011 budget were to
be implemented as written. As a percentage of gross domestic product,
the debt would rise from 53 percent to 90 percent, CBO forecasted. The
last time the percentage was that high was right after World War II.

The Maastricht Criteria for joining the Eurozone mandates that the national debt be no more than 60 percent of GDP and the deficit be no more than 3 percent of GDP.  With our deficit projected to rise to more than 11 percent of GDP this year, we couldn’t join the Eurozone even if we wanted to! 

But now, that Obama has signed the health care bill into law… NOW the CBO tells us, “Ooops!”

And of course, they’re now going to use the CBO’s minor boo boo to push for a value added tax! “Oh, we’re sorry!  Now that we passed this monster bill, and our fiscal situation is unsustainable, we need some way to fix it, so we have to implement yet another tax!

Dan Mitchell explains more.

The real-world evidence shows that VATs are strongly linked with both
higher overall tax burdens and more government spending. In 1965, before
the VAT swept across Europe, the average tax burden for advanced
European economies (the EU-15) was 27.7 percent of economic output,
versus 24.7 percent of GDP in the United States. But the Europeans began
imposing VATs in the late 1960s, and now the European Union requires
all members to have a VAT of at least 15 percent. Good news has not
followed. By 2006, the average tax burden for EU-15 nations had climbed
to 39.8 percent, versus 28 percent in the United States. The spending
side? In 1965, pre-VAT, government spending in EU-15 nations averaged
30.1 percent of GDP, against 28.3 percent in the United States. By 2007,
government spending consumed 47.1 percent of GDP in EU-15,
significantly higher than the US burden of 35.3 percent. Nor has the VAT
stopped Europe from raising other taxes. Taxes on income and profits
consumed 8.8 percent of GDP in Europe in 1965 — below the US level of
11.9 percent. By 2006, the European burden had climbed to 13.8 percent
of GDP, slightly higher than the 13.5 percent US figure. (The same trend
holds for corporate-tax data.)

How much longer will the thinkers and producers of this country tolerate this rape of their earnings and achievements?

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