Categorized | Economy, Politics

Reagan’s David Stockman on budgets, VAT and trade deficits

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David Stockman was Reagan’s budget chief.  In an op-ed today, he is pretty hard on the Ryan budget.  But I post excerpts of the piece because he cites the trade deficit and also calls for a value added tax to substitute for payroll taxes.

CPA is interested in a VAT to neutralize the tariff and subsidy effect of foreign VATs, to make us a more successful trading nation.  And of course, our opposition to trade deficits is the reason we exist.

On trade deficits:  “The Greenspan-Bernanke campaigns to repress interest rates have crushed savers, mocked thrift and fueled enormous overconsumption and trade deficits.”

On the VAT: “Like his new boss, Mr. Ryan has no serious plan to create jobs. America has some of the highest labor costs in the world, and saddles workers and businesses with $1 trillion per year in job-destroying payroll taxes. We need a national sales tax — a consumption tax, like the dreaded but efficient value-added tax — but Mr. Romney and Mr. Ryan don’t have the gumption to support it.”

3 Responses to “Reagan’s David Stockman on budgets, VAT and trade deficits”

  1. China Watcher says:

    David Stockman’s credentials as a progressive economic strategist are highly. He ‘s right that Romney/Ryan don’t have a “serious plan to create jobs.” Neither does Obama/Biden. That’s the tragedy of current American politics. In fact, there is no credible plan that does not feature some sort of consumption tax as its centerpiece. In the past, Ryan — as well as Phil English, Glen Hubbard and other prominent Romney advisors — have argued for a VAT. They were right then. If they win, let’s hope they remember the good reasons why they once believed in real tax reform.

  2. Tom T. says:

    There is no question that our over all national policy creates these problems that Stockman mentions. Our economy is going astray because the political leadership never wants to admit that their ideology is the problem.

    Facts show otherwise.

    We have traded our economy to the Chinese because we allow them to play by different rules than we do and so they get the advantage in trade.

    On a larger note, this has resulted in a huge strategic problem. It is the same problem that we “won” the economic war in the Cold War. Strict communism was beat by capitalism because it capitalistic markets capture the motivations of the human spirit. The unfortunate thing for us in the United States is that these same motives have captured our politicians— that of self interest. We have developed a political system where crass self interest by politicians and a good PR program has supplanted the self interests of constituents.

    Congress is now polling at all time lows because they have made this substitution for their self interests as it wrecks the economy. Unfortunately the republican response has been to double down on this political strategy and claim that government is not the solution, can’t regulate the economy, and must yield to the forces that have them captured. This includes both parties who vie for the resources that are compiled by crony capitalism. It is a force that works against their own strategy when it comes to the interests of our democracy and the public as a whole. Fraud in medicare, welfare, and other programs really means that Congress does not have the ability to competently govern.

    Tom T.

    • Joe Brooks says:

      “The unfortunate thing for us in the United States is that these same motives have captured our politicians— that of self interest”

      I certainly agree with this assessment. As you know I see the Red Chinese as the penultimate Communists. Communism was alaways a backdoor hoax to unfettered State Capitalism and was never anything else.

      Objectivism was created by a USSR era Russian immigrant. They espouse an Asian/Eastern philosophy that is diametrically opposed to Western Civilization, the Enlightenment, the Judeo/Christian created US Constitution and the ethics based American School of Economics, the modified Capitalistic plan of the Founders.

      What she proposes is the criminal governments of the USSR, Red China, Burma, Cuba, etc., without the false “dictatorship of the proletariat” nonsense.

      http://www.youtube.com/watch?v=s7zwO88nRH8

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