When drug addicts do speedballs, they combine cocaine and heroin in one massive dose that lets them experience the former drug’s instant rush with the euphoria induced by the latter. Druggies say it’s an incredible high, but it’s also often a short one because the cocaine effects wear off quickly and the addict dies from an acute heroin overdose that paralyzes the lungs. Sounds a lot like what Washington’s political establishment is trying now to avoid admitting its spending addiction.
The political speedball would combine the quick rush of income tax increases with the euphoria induced by a value-added tax on consumption. Tax increases typically produce a revenue spurt that quickly cools off as people find creative ways to evade them, while the VAT keeps taxing consumption at every stage from production to purchase of a product. European VATs typically create substantial revenue streams, but stifle entrepreneurial energy and job creation. That’s why all of Europe’s welfare states are slow-growth economies. As Greece’s need of a bailout to avoid bankruptcy demonstrates, political speedballs eventually produce the economic equivalent of the lethal heroin overdose that is so common among speedballing drug addicts.
