Republicans: Great Technocrats, Lousy Politicians

Explaining to the electorate why the American fiscal situation is so fraught with peril should have been the Republican's great mission.  And, one of the major reasons they failed is that they got hung up on the "taxing of the millionaires" nonsense.

Taxing the millionaires and billionaires is the typical Democratic ploy and the Republicans fell for it.  What the Republicans should have said was, "fine, let's increase the tax on the top 1% of the public."  And, now, that we've agreed on that, let's sit down and solve our problem, because if you think that our agreement on that matter solves our fiscal mess, you're living in an alternate universe.

Let's get to the nub of the problem; namely, an unsustainable federal debt.  What is an unsustainable federal debt?  It's a debt to GDP ratio that puts you in the danger zone.  It's like driving a car that shows it's low on gas.  You're not exactly sure as to how many more miles you're still going to be able to drive.  But, you do know that if you don't get gas soon, at some point in the not too distant future the car will stop running.

This is not an easy message to deliver.  First, it involves a ratio.  For many Americans that's higher math.  Second, it involves GDP (gross domestic product), an economic term very likely unfamiliar to most of the electorate.

But, if you get past those two hurdles in explaining our fiscal nightmare, you face even more problems.  These can be summarized in three words; revenue, spending, and growth.  You'd think these would be easy words.  Revenue is the money that government takes in and there are two ways it can take in more of it; namely, through higher taxes and, secondly, through reforming the tax code.  Ah, the tax code!  At this point you will have lost most of your audience.

Taxes require tax laws.  These laws are called our tax code; it's the laws telling the government how it can assess taxes.  If you would write into the law that people with only four fingers on one hand can get a deduction of 50% on their assessed taxes, youd be making a percentage of the population very happy indeed.  This example, is, of course, made up.  There is no deduction for having only four fingers on one hand that I know of.  But, there are lots of deductions that are even more frivolous than our hypothetical four- finger deduction, and these actual exemptions allow the upper 1% to avoid a lot more in taxes than the increase in the tax rate being promoted by Obama.

Now let's get into what is, for the Democrats, the third-rail of fiscal policy; namely, spending.  Indeed, it's actually proven to be the third rail of fiscal policy for a great many democracies.  It's what brought Greece to its knees and promises to do much the same for Italy, Spain and France.  Consider this: if spending $5 million a day to extend the life of a terminally ill patient for one day is considered good medical practice, can a nation afford to provide such coverage.

But, let's take this issue one step further.  If the $5 million a day for our hypothetical terminally ill patient is judged excessive for a governmental healthcare coverage policy, it follows that a truly rich (top 1% in wealth) patient might live a few days, or even a few weeks, longer than a poorer patient.  Depending on how you view this situation, this might seem unfair.  But, can a government establish perfect fairness for its population.

And, finally, we come to growth.  It's an amorphous kind of word but it has very direct and specific consequences.  Growth means more jobs.  It means the creation of more tax payers.  It will therefore result in a government gaining greater revenues.  In general, higher taxes retard growth.  So getting back to the top 1%:  how do we factor in the issue of fairness versus greater economic opportunity for all.

There's a lot more to fiscal policy than what's been just covered.  Educating the electorate is not easy.  But, this was the assignment for the Republicans.  And, they failed.  Instead they got hung up on women's rights, on immigration policy, and a number of other extraneous issues.  Let's hope they do better in 2016.