VAT & Obama's Next Supreme Court Pick

VAT

Our President is floating the idea of a VAT or Value Added Tax. The idea being that we cannot fix our current deficit and maintain programmatical spending with the current level of revenue. With this type of tax, our government would be allowed to tax consumer goods at each level of production. This could drastically increase the cost of all consumer goods and depress retail sales. A VAT could change the landscape of consumer sales. Our consumer economy, as we have known it, may disappear. What will emerge from this morass of taxation is unknown.

A Value Added Tax starts with the raw materials. Let's use 1% (one percent) as our basis. How many outside manufacturers are there for a new American car? Well, in the VAT world, each manufacturer would have to charge a 1% value added tax for each part it sold to the manufacturer. So that is 1% on the stereo, 1% on the auto glass, 1% on the tires, 1% on the brakes, 1% on the raw materials. You get the idea, right? Oh, let's not forget that all the companies supplying these subcontractors charge a 1% VAT on their materials as well. The stereo manufacturer has to pay for chip sets, CD drives, speaker wire and speakers for their auto stereos. There is a 1% VAT on each of these items.

How much will this "Value Added" add to the price of a typical American automobile? Value is an interesting term. Generally, most American cars are currently considered to be a good "Value." If the costs of American manufactured autos goes up 10% due to increased taxation and inflation, will they still be a good value? If simple items are priced out of reach of the average consuming American family, is the VAT a fair and equitable tax?

Ask any European who lives here what they think of the VAT in their country. You may learn that escaping the unfair VAT is the reason they came to the U.S. The VAT will effect everyone. No one will be able to avoid paying it.

Supreme Court

There was an article today on Yahoo News asking "Why are there 9 justices?" The article gave an interesting history of how the court was shaped during the 19th century until the Judiciary Act of 1869 set the limit at 9 and it has not changed since.

The article failed to acknowledge the Judiciary Reorganization Bill of 1937 also known as the "Court Packing Plan." In this particular case, the Supreme Court invalidated a large part of FDR's New Deal in 1935. FDR wasted no time in his attempt to pack the court with several new justices who saw things his way. The bill would have given the president the power to appoint a new justice for every justice over the age of 70 1/2 up to a maximum of 6. This would have given FDR the power to place up to six additional pro-New Deal justices on the court and change the course of the U.S. history.

This is a fine example of a politician trying to politicize the court to their own ends. According to FDR, prior to his presidency, the Republican Party controlled the Presidency, the House, the Senate, and the Supreme Court. By enactment of the Judiciary Reorganization Bill of 1937, the President could count on better treatment for his administration's economic policies that may had previously been deemed unconstitutional by the Supreme Court.

Doesn't that seem like stacking the deck and cheating in some ways? "I don't get my way so I change the way the judiciary works." That seemed simple to FDR. He had just been reelected in 1936 with one of the largest electoral majorities ever seen in history at the time. It should have been a slam dunk for him to get this passed. However, there was an extreme backlash from the American public in regard to this bill. In the end, the idea was negatively viewed by the press. The public's view of the bill was generally running from 41% to 49% negative. People who viewed the bill favorably averaged only 39% at best. But the ensuing battle among democrats in the senate with the Republicans watching from the sidelines doomed the bill and any chance of passage died along with the Senate Majority leader at the time, Joseph T. Robinson.

I think what we discovered from FDR's failure to stack the court was that Americans prefer a level playing field.

Certainly, we know that our president will nominate someone who holds most of his same values to heart. Should we assume that our next justice will be cautious of allowing business to function without strong regulation? The new justice may be more inclined to allowing government bureaucracy to grow unfettered. The justice will support women's right to abortion and will not likely favor the 2nd Amendment to the constitution. I don't wish to use generalized labels like "left wing" or "liberal." As with the retiring Justice Stevens, you cannot judge a book by it's cover. A justice may be appointed by a Republican based upon conservative dogma at the time. That justice may have a paradigm change in their personal politics or judicial viewpoint after many years on the bench and find themselves siding with a different group of justices than they had previously.

With SCOTUS, anything can happen. No one expected Pres. GW Bush to have an extra pick after he nominated Justice Roberts. A very short time after Roberts' appointment, Rehnquist died. Roberts then became the Chief Justice and Justice Alito was later confirmed. Several current Justices are over 70 years old. It is early in Obama's administration. Obama could conceivably get one additional pick over the next couple of years.