I am sure Barack Obama will deliver a stirring Inaugural address tomorrow. However, Obama’s most important remarks since his election came in an interview the other day with The Washington Post. There, he promised to convene a bipartisan fiscal summit in February. This has the potential to be the most important step of his Presidency. Yes, at least as important as fixing the immediate economic mess.

The stimulus plan unveiled by House Democrats today includes a little something for everyone. With an eye-popping price tag of $825 billion, I suppose it should. The plan, written in close consultation with the incoming Obama Administration, includes $275 billion in business and individual tax cuts, and $550 billion in direct spending for everything from smart appliances to repairing hiking trails in national parks. A huge chunk—roughly half—would be direct assistance to state and local governments.

Policy makers are rightly focused on boosting demand as a way to pull us out of the current recession. The proposals offered so far will help, but none directly target the price of goods and services that people buy and all will add to our alarming budget deficits. So here’s a simple suggestion. Why don’t we promise future price increases so consumers will have an incentive to spend more now. Enact a value-added tax (VAT) that phases in starting in 2010. (A VAT, common throughout the rest of the world, is basically a sales tax that is collected in stages from producers and retailers.) If the VAT started at a 5-percent rate, that would push retail prices up by 5 percent (assuming the Fed lets the money supply grow), providing an incentive for consumers to make purchases in 2009 rather than postpone them.

U.S. multinational corporations want another tax holiday. (Who doesn’t?). Under current law, U.S. multinational corporations can defer U.S. income tax on profits earned abroad in their foreign-owned subsidiaries until they bring them home as dividends from the foreign corporation to the U.S. parent. The American Jobs Creation Act of 2004 provided them with a “one-time” chance to bring home these profits at a greatly reduced tax rate. Instead of paying the normal rate of 35 percent (with a credit to offset taxes paid abroad), Congress allowed firms that filed a “domestic reinvestment plan” to bring back funds at an effective rate of just 5.25 percent. To get the benefit of the lower rate, U.S. companies could not use repatriated profits from their foreign subsidiaries to distribute cash to their shareholders either as stock redemptions or dividends, so that the money would be available for domestic investment. The argument back then was that the holiday would stimulate jobs and investment in the United States by allowing firms to access profits trapped abroad by the U.S. tax on repatriations. However, this ignored the well-known adage that “money is fungible”—i.e., that if we require companies to reinvest repatriated profits, it will free up other cash that they can redirect as they wish.