Squeezing Tax Dollars from Turnips

I was quite taken by a number of headlines on Drudge this morning. Citizens' credit scores are falling as they struggle to pay bills, IRS revenue is down 34%, China--America's biggest creditor--is warning us to stop printing money, and Rahm Emanuel's brother suggests that we need a 10% European-style, national Value Added Tax (VAT). It is amazing to me that just as the financial markets decreed that the usual rules regarding extension of credit no longer applied just before the credit meltdown, the White House believes that they can escape the usual rules of economics and squeeze tax dollars out of turnip taxpayers.

What part of the dismal science does the White House fail to understand? Do they seriously believe that, given falling demand for goods, demand will stabilize or increase when prices increase?