Grassley blasts suggested value-added tax

Republican Sen. Charles Grassley railed against the possibility of a value-added tax, calling it Wednesday a "misguided new tax."

Paul Volcker, the former Federal Reserve chairman who provides guidance to the White House, said Tuesday night that new taxes and possible a VAT might be needed to pay for growing deficits. 

The White House has distanced itself from Volcker's statement, saying "the president is not proposing to cut the deficit at the expense of middle-class families."

Grassley said a VAT would break a promise to restrain the government's growth so the federal revenue base would stay within its historic average of 18.2 percent. 

"Now with the permanent explosion of federal spending across the board," Volcker is "giving an unvarnished assessment of where the administration feels it must go." He said the administration is laying the foundation for the VAT. 

"If the president wants to add completely new layers of taxation, then he should take this issue before the American people when he runs for re-election," said Grassley, ranking member of the Senate Finance Committee.