As a domestic policy adviser to President Ronald Reagan, Bruce Bartlett was one of the key authors of supply-side economic policies that came to be known as Reaganomics. Later, he served as deputy assistant secretary for economic policy at the Treasury during the George H. W. Bush presidency. But in the last few years he has drawn the ire of some of his former Republican colleagues for his sharp criticism of President George W. Bush in op-ed columns, and especially in his book, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy, in which he criticized the second Bush presidency for what he deemed "liberal economic policies."
Bartlett has a provocative new book out, The New American Economy: The Failure of Reaganomics and a New Way Forward. In the book, Bartlett pushes the idea that some economic theories fit particular times, and may not be applicable during other periods. Some of what he writes is eyebrow-raising, at the very least, for his former supply-side allies. For one, he is now pushing for the US to adopt a Value Added Tax (VAT).
In the conservative mind, the VAT, which is embedded in the prices of goods, is the foundation upon which the European welfare state rests. Without its enormous revenue-raising capacity the Europeans never could have financed their welfare states. In short, without the VAT there would be no welfare state in Europe, government would be smaller and the threat of totalitarianism would be much less, conservatives reckon.
By advocating a VAT, I am, in effect, advocating totalitarianism, many of my friends believe. If we institute a VAT it will be like pouring gasoline on the fire of big government. It will get bigger overnight. The only thing holding this country back from having a welfare state as large as Europe's, conservatives argue, is the low level of taxation that most Americans are loath to abandon. Thus in their own minds, conservatives believe that holding the line on taxes, no matter how large the deficit, is the essential prerequisite for the preservation of liberty.
The only problem with this analysis is that it has no factual basis whatsoever. If Hayek were even remotely correct, all of Europe would be one huge gulag by this time. At the very least, Europe would be mired in poverty, growth nonexistent and freedom hanging on by the thinnest of threads.
Of course, that is not the case at all. According to Freedom House, virtually every country in Europe has just as much political freedom as we do. Even organizations like the Cato (CTR - news - people ) Institute and the Heritage Foundation, which seem to think that the tax burden is the single most important measure of freedom, concede that many European countries with tax burdens that would be considered confiscatory by all conservatives and probably most Americans are in fact just about as free as we are.
We'll be watching to see whether Bartlett's writing will spark a public conversation about the potential benefits and pitfalls of instituting a VAT, and whether it would bring about the The Europeanization Of America--the title of the above cited Bartlett op-ed--and what that really means. Read the full article at Forbes.