Tuesday, December 4, 2012

Boehner Preparing to Sell Out

Hint to Congressional Republicans: if you let Speaker Boehner remain as speaker and continue his "leadership," you will succeed in doing something Democrats have been trying to accomplish for at least 30 years.  The complete destruction of the Republican party.

Breitbart is reporting that John Boehner and the House Republicans are considering a "Doomsday" plan to avoid the so-called "Fiscal Cliff."  Basically, they plan to roll over and give Barack Obama exactly what he wants- higher taxes on job and wealth creators, and nothing much else.  Yes, Obama is also calling to increase the debt limit, but we probably won't hit that until after the new congress is sworn in anyway, he knows that Boehner has plenty of time to capitulate on that, too.

Let us be very, very clear, here.  The United States Government does not have a revenue problem.  The US Government took in nearly $2.5 trillion dollars in 2012.  That is more than enough revenue to do everything the Federal Government should be doing, with some (a lot) left over.  To put it in perspective, 2.5 Trillion seconds ago was around 74,000 BC.  What the United States Government has is a spending problem.  Spending, especially on entitlements, must be cut.

Of course, spending cuts are politically difficult, and tax rate increases, especially on the "very wealthy" are politically easy.  Class warfare sells, after all.  Unfortunately for "politically easy" tax rate increases, of any variety, are not the answer.  This is true for a variety of reasons.  For one thing, even if we confiscated all the wealth from every person living in the United States, we couldn't pay our bills.  For another, tax rate increases traditionally reduce GDP, and therefore reduce revenue.  On the other hand, lowering tax rates increases GDP, growing the tax base, and increasing revenues.

Now, I understand we are not going to get tax rate cuts out of any deal.  We have, as the weenies in Congress are so fond of pointing out, "One half of one third of the Government."  So there is no way we "win" this fight.  However, perhaps we should be looking for a "lateral win."  That is, maybe we should change the goal we're pursuing.  We're not going to get tax rate cuts.  We can't even prevent tax hikes (if nothing happens, the old Clinton Rates go back into effect, and the Democrats in the Senate won't even consider something that doesn't allow the top marginal rate to go up).  So let's redefine "victory."

Obama and the Democrats are fond of pointing out to the balanced budgets and surpluses of the Clinton years.  Few realize that the US Government had virtually nothing to do with that.  The Clinton years were the rise of the Internet.  They were the "dot com" bubble which burst just before Clinton left office (people usually forget that part, too).  So, yes, the Federal Government was doing quite well in those years, but that was despite Clinton's economic policies, not because of them.  However, we should embrace their idea.  The Clinton economy was so good, let's go back to all of those tax rates.  All of them.  And, since we're now expecting a return to "Clinton's" (really Newt Gringrich's) balance budgets and even surpluses, we don't need to raise the debt ceiling, either.

In this case, the correct answer is to embrace the reversal of the Bush tax rates.  Don't merely "allow" the Bush rates to expire.  Push a bill fully embracing the return of the Clinton rates.  Push a bill explicitly refusing to raise the debt limit for, say, one year.  Let's really test the Democrat's economic theory.  If they're right, and raising tax rates will increase revenue and decrease the deficit, then it is every American's Patriotic duty to do their part to help, by working even more for the Government than they do already.

Give it one year, and then go back to the table.  One year of Clinton rates, and I'm guessing most of America will support Republican calls for reduced taxation and reduced spending.  And, if not-  Let it burn.