Dems on Obama fiscal commission raise conservative hackles with talk of ‘pro-growth’ tax hikes

A value-added tax (VAT), he said, is the most likely recommendation to come out of the fiscal commission’s liberal wing, at least, because “while it may not be pro-growth at least it’s not anti-growth.”

“It raises a lot of money without affecting what people do and that’s a good thing,” Williams said.

The VAT taxes goods at every stage of production, functioning as a consumption tax that is driven by how much people buy.

Some conservatives like the egalitarian nature of the VAT and are open to replacing the income tax with a VAT. But most believe the Obama White House would only tack it on top of the existing tax structure, creating a large new source of revenue and doing nothing to encourage government belt-tightening.

The White House has offered a dizzying array of explanations about whether or not it plans to consider a VAT. Press secretary Robert Gibbs has denied it is even an option under consideration, while other advisers have openly said it has to be on the table.

As for where the fiscal commission ends up, Rivlin acknowledged last week that “we are not agreed and probably in the end won’t all agree on an exact solution.”

The commission will need 14 of the panel’s 18 members to vote in favor of final recommendations for them to be passed to Congress, where the report would be only advisory and Congress would not be required to vote on it.

Experts agreed that even if the commission ends up deadlocked, it will still have served a purpose.

“Discussions are good,” Williams said. “The more the public understands what the issues are and how big the problem is, the better off we’ll be.”

Holtz-Eakin said he expects the commission to be so divided between those on the left and those on the right that “there’s a chance you’ll get two clearly articulated different plans.”

“And that’s a good start. You’ve got to have a debate about how to solve this problem and specific solutions is way better than general rhetoric,” he said.

Still, many conservatives see the commission as a stalking horse for taxes.

“It’s about finding ways to trick people into thinking about spending, but in reality the only outcome is to increase taxes,” said Ellis.

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