It's Our Fault

I recently spent a week in Toronto, as part of an education program I am enrolled in.  Most of the week was spent taking in various topics in supply chain management.  One of the speaker’s, who had a Ph.D in economics, spoke on the economics of transportation in supply chains.  For whatever reason he spoke early on about how transport to the U.S. hasn’t completely re-bounded after 2008 and that it was likely due to the economic slowdown and federal debt that the U.S. has.  Then he said something quickly, almost as an aside and most didn’t really know it was even said. 

He commented than virtually no U.S. politicians are addressing the debt or how to fix it except for….the economic advisor to Mitt Romney during the 2008 campaign.  This advisor was and is Glenn Hubbard.  According to the speaker, Dr. Hubbard is suggesting the use of a value added tax as a way to pay off the federal debt.  The value added tax is similar to our nations’ GST.

The very fact that he mentioned it tells me he approves of it since it didn’t really jive with much of his topic.  So I just assumed he was all for it and I decided I needed to talk to him afterwards…

Now I’m not writing this to debate a GST type tax over an income tax…I really don’t know what’s worse.  I’m suggesting that by commenting on a GST component on top of income tax, it doesn’t even begin to treat the problem of the debt which is due to run away government spending. 

I asked him how and why he would suggest that the GST is a good way to reduce federal deficits when it hasn’t erased ours.  He mentioned 2 things.  First, it’s inexpensive to administer from the governments perspective.  I retaliated by saying, right, but it also turns the citizens into tax collectors.  Second, he said it has reduced our debt by quite a bit.  However in the last 4 years we have added back onto it so that since 1990 the debt has not retreated by any respectable amount.  20 years of GST funds and they haven’t reduced our debt by even a third.

Let’s get real.  The guy never even bothered to mention that the government spending our money is the reason behind it.  His suggestion is that citizens aren’t taxed enough.  The government doesn’t need to make any significant policy changes, we just need to ante up and dig in.

I think I threw up a little in my mouth…