Congress Defaults

The so-called “Super Committee” failed to yield one iota of progress in resolving our debt crisis and credit-rating downgrade. We knew this would be the result the day it was announced. The leadership of both parties and President Obama should be ashamed for supporting this stunt that merely wasted precious time. The notion that 6 Democrats and 6 Republicans could agree on anything was and is ludicrous. That Congress would abdicate it’s duty in this way is shameful. This will be Boehner’s legacy.

I don’t know what is more frustrating: the ridiculous straw man arguments that the Democrats keep recycling — or the Republicans inability to debunk them.

The left has assailed sensible economic policy for decades via this tactic. Reagan’s policies that focused on cutting top tax rates, a strong dollar and selective deregulation were smeared with the moniker “trickle down” — as if that is what the conservatives were hoping would result. In a grand compromise, tax rates were cut with the promise that spending would be cut later. The Democrat-controlled Congress reneged on that pledge and the resulting deficits were blamed on Reagan’s tax reductions. The fact that revenues doubled in 8 years as top rates were cut from 70% to 28% was and is intentionally ignored. It is worth noting that it was Newt Gingrich and the GOP-led Congress that did get things under control resulting in the alleged surpluses of the Clinton era. (This was mostly smoke and mirrors that involved the raiding of the mythical Social Security “trust fund”; an accounting ruse that would land a CEO in jail.)

Now the Democrats are trying to pretend that the GOP has only one solution to every economic ill. They’ve consistently referred to unchanging tax rates as “tax cuts”. Democrats ramped up spending by 25 % in their 2 years of control and we have a jobless, weak recovery with record debt to show for it. Their stimulus failed as every sensible economist said it would. Keynesian economics can now be relegated to the “ash heap of history”.

The truth is that it is the Democrats who are offering a single solution to all our problems: hike tax rates on the top-earning bracket. A quick analysis shows that this doesn’t result in a substantial increase in revenue or a reduction in debt. Why? As always, there just aren’t enough rich people around. When this is acknowledged the next logical question must be: if taxing the top bracket is insufficient and we refuse to cut spending what must happen? And the only possible answer is: tax rates must then be raised across the board or our exploding debt will lead to excessive money printing, hyperinflation and ultimately, default and economic collapse. The middle class would be wise to take notice and vote accordingly.

Polls consistently show that we hold Congress as a whole in utter contempt – yet tend to give our own representative a passing grade. News flash: If your Senator or Representative has been around for more than 2 terms they are the problem.

I suggest Newt or Mitt or whoever make this their campaign theme:

It’s the spending stupid.

At some point spending and taxes must equate. Deficits at any point ensure higher taxes later. Politicians always prefer later. Later is here. We are at a point on the Laffer Curve where higher rates will produce diminishing returns. Comparisons to rates of earlier eras become faulty as local governments raise their taxes ever higher.

The tax demagogues should be confronted with this simple graph:

The lower rates accompany a period of tremendous growth, falling inflation rates and low unemployment. When I see this graph my impulse is to ask: what gives us the right to seize 90% of anybody’s anything? How did this happen? Isn’t our Constitution designed to prevent exactly this type of tyranny?

As for the spending, our next GOP nominee would be wise to choose Oklahoma Sen. (and Dr.) Tom Coburn as VP. He has outlined hundreds of billions in wasted spending – and yes, much of it is earmarked for Republican projects. This is the time for leadership. The GOP must take the first steps and specify where they will make cuts dear to their own constituency for the good of the country.

We have all the ammunition we need to support a conservative plan for real spending cuts – not just smaller increases – and tax reform that would eliminate the loopholes and streamline the filing process. When properly presented this common sense approach reveals the Democrats singular alternative for what it is: a simplistic and naïve approach that has been used before with disastrous results. Their insistence that it be tried once more is not policy it is a tantrum.

If the current President and Congress can’t take the obvious steps we need to fire them and elect a group who will.

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