Weekly Standard

The Obama presidency is nearly out of gas. So are the Democratic majorities in the Senate and House. Yet the White House and congressional Democrats aren’t surrendering. They’re still intoxicated with their “historic majorities” and bent on enacting more landmark liberal legislation this year, including cap and trade, a value-added tax (VAT), and who knows what else.
Are they fantasizing? Not entirely. The odds—and the political climate—are against them. But their ideological ambitions are undiminished and they have a sense of urgency. They know their majorities will be crippled (if not eliminated) in the midterm elections on November 2, which means they must enact the remaining parts of the agenda in 2010 or put them back in the cupboard of liberal dreams, maybe for decades. So it’s now or never.
There are two time slots for passing these bills, both difficult. The first is between now and whenever Congress recesses in the fall. Prospects look bleak in this time frame for approving anything except the final version of the financial reform bill. The second is when a lame duck Congress, filled with defeated and retired senators and House members, convenes in December.
Lame duck sessions don’t ordinarily enact major policy changes, but this one could be an exception. It is likely to meet after the president’s commission on reducing the deficit announces its recommendations, which may include a VAT. Democrats insist they’re not scheming to pass what is in effect a national sales tax. But a Republican official in the Senate told me a White House aide, in a recent chat, had raised the possibility of enacting one in the December session. A VAT has obviously crossed the president’s mind.

One can imagine the pressure that might be exerted to pass a VAT in a fiscal “emergency” in December: the deficit and the national debt exploding, Treasury Secretary Tim Geithner reporting purchasers of government debt are suddenly backing off because of America’s fiscal mess, the president and his commission vowing to match the tax hike with spending cuts. The result: a VAT becomes law, most of the cuts don’t. President Reagan experienced a similar squeeze in the 1980s when he agreed to a tax increase in exchange for two times that amount of spending cuts. Taxes went up, the spending cuts went away.