In the next two years, Obama and the Democratic Party are going to push America into their long-sought dream, to make America more closely resemble the democratic social welfare states of Germany and France. Health care, pensions, employment insurance, and many other government provided or underwritten social benefits that are now available to special groups on a limited basis will be universalized. The bottom fifty percent of American families, classed by income, will not have to pay any federal income taxes. Education through college will be free for them. Government owned infrastructure, such as railroads, city civic centers, and other public facilities, will be greatly refurbished and expanded. Many cities will have bright, impressive public ceremonial centers and government office buildings, like Washington, D.C., though surrounded by slums that are not on the tourist paths.
How will this transformation of American national life be paid for? An increase in the progressive tax structure at all levels is a foregone conclusion and is already, as in California, underway. This is a long sought goal of the Democrats, who, though more than Republicans represent the rich and elites, affect a political camaraderie with the populist masses. Quietly, the cap on employee to Social Security and Medicare contributions will be raised to $200,000 or so and the employer's contributions will also be raised. But these measures will not begin to pay for the vast cost of the social democratic revolution, which is estimated at over $60 trillion over the next thirty years (as I recall the estimate from somewhere). This sum can only be paid by a new federal tax. Since the President and the Democrats are looking to Europe for guidance, we can be assured that they will impose a federal sales and/or a value-added tax. With our national economy generating $14,280 billion, that is, $14 trillion dollars, annually (1), a total federal sales tax or VAT of 10% would bring $1.4 trillion dollars in new tax revenues. If federal spending were to level off, this new tax revenue would pay for most of the Obama and Democrats social renovation of America. And that is why this new tax will be imposed.