James Pethokoukis has interviewed GOP policy wonk-in-chief Rep. Paul Ryan of Wisconsin on different policy strategies the Republicans should employ over the next five or 10 years. It’s not a bad list that Ryan comes up with. One prediction that sticks out is his pronouncement on the Dems’ plans to introduce a Value Added Tax:
The VAT is coming. They just know they can’t do it before the election. My fear is that the credit markets blow up on us again, we’ll get some shot across the bow by the bond market one of these days. And if the Democrats are still in power, that will bring us the VAT. They will say they have no choice but to do it to save the creditworthiness of the government. It will kind of be like another TARP weekend where the Treasury Secretary and the Fed chairman come to Capitol Hill hyperventilating and out of that comes a VAT. Our government is premeditating a moment like that. But there is another way with real entitlement reform, real tax reform, fulfilling health and retirement security but also paying off our debts and making our economy really competitive.
I think that if you assume that the trends remain the same, the Democrats will be correct at that point to say that we have no choice. We probably will be facing either a debt crisis or a VAT. Of course if there were some kind of meaningful debt-reduction plan put in place, or even if it were reasonable to anticipate now such a plan, there would not be a looming dilemma. Ryan does hint at an approach for reducing entitlements debt in the interview, but it doesn’t look politically feasible. Unfortunately, it’s hard to think of any kind of plan that involves cutting spending that would be politically feasible.