Louisiana (spending) crisis shows risks of Republican tax plans. Darrell Preston & James Nash, HoustonChronicle.com ($$$)
To get an idea of what might happen to the U.S. economy if a Republican president were to impose deep tax cuts, consider a humble string of multicolored plastic beads, the cheap-but-coveted souvenir of Mardi Gras.
It has been clear, for a long time now, that in the media, on campus, and in any other forum (outiside of the Conservatainment Syndicate and certain free-market think-tanks) where open discussion is being held that the GOP has 100% lost the narrative surrounding the conservative position on taxes.
If you look at the Jr. reporters writing for the Houston Chronicle only two viewpoints emerge. The first is that what's needed to "fix" all of the problems is more funding, higher taxes and "more". Just more. The 2nd point of view is that all tax cuts are inherently bad, as viewed exclusively from the perspective of the government "losing revenue" as a result of them.
There are several places where whatever follows the GOP could do better both explaining and implementing a sane tax policy.
First - Let's call them what they are. The Federal Government, and the State Government, Municipal, County whatever, don't have "revenues" they have "takings". Usually these takings are confiscated under the threat of imprisonment. By using the word "takings" I don't mean that all of this is wrong. Only that it's not what is (or should be) defined as "revenue". Until we allowed the definition to be changed, there was an expectation that merchandise or a service be returned for revenue. Since the government does not produce, it utilizes resources, often at great opportunity cost, they do not sell any merchandise or perform any direct service that would make the revenue earned.
The problem was the government didn't want to keep referring to it's money received as "taxes" because that reminded the serfs that the ruling class was living entirely off their largesse. Because of this the seemingly benign concept of revenues was given a government-specific definition which made it seem more benign and also led to the fallacy, bought into by many conservatives, that the "government should run like a business." This was, of course, false because the primary goal of a business is to increase profits and maximize shareholder value, you do not want a government that operates in this manner. But the GOP was in the process of trying to actively recruit business people to run for office so they agreed to allow the definition to change in order to make it appear that said business people were qualified.
Of course, what the message should have been is that the GOP was the party of efficiency. That they understood that the government had functions to perform and their goal was to see that it performed them in the manner that received the most utility for the taxpayer's dollar. By focusing on business-like behavior the GOP, in part, led to an environment where economically illiterate progressive politicians referred to a refusal to raise taxes as "tax cuts" since, when viewed from the government's perspective, they didn't raise tax takings.
Second: It's the nature of a business that wishes to remain a going concern to grow. The GOP, by acquiescing to refer to the government in business terms also allowed for even more economically illiterate progressives to portray government growth as economic growth. This ignores the fact that every dollar spent by the government is a dollar not spent by the market as a whole. Since there has been no focus on running the government efficiently, the expenditure of these dollars are pretty much done in just about the least ideal manner possible.
The result of all of this is government at all levels that is bloated, inefficient, duplicitous in effort, and constantly looking for new ways to increase takings even, at times, to the point of becoming confiscatory. The Democratic party (wrongly) views all monies as property of the government, only out on loan to the citizens at the ruling class' discretion. When you take this view, and do not view money and wealth as the property of the citizenry, then you get serious arguments from the most economically illiterate that wealth in private hands would be better served in the government coffers. The ruling class idea that most, if not all, of the citizenry not in the ruling class, would be better off letting government make its purchasing decisions is the most wrong-headed idea of all. Unfortunately it is one that the GOP has not of late been able to counter effectively.
Third: The GOP has wasted a lot of their talking points chasing down the twin follies of tax cuts for the wealthy and eliminating the safety net. While I'm not suggesting that the economically dense 'soak the wealthy' policies of Sanders and (to a lesser degree) Clinton should be explored, the idea that trickle-down economics works in an over-burdensome regulatory environment is dense as well.
What the GOP has done, of late, is posit the theory that business is going to want to expand and grow under a regulatory framework that punishes them for doing so. They have continued to provide tax carve-outs and other incentives to the courtesan (donor) class, while refusing to free up the regulatory framework that is stifling the poor- and middle-class' ability to elevate their position in the economic strata.
Finally: The GOP seemingly has little idea what to do about the entitlement state, or be willing to discuss options that make it work. The fact is, people LIKE Social Security, they LIKE Medicaid and Medicare, and vast, vast majorities don't want to see them go away. It was both sad and funny to see those "Keep your damn government hands off of my Medicaid" signs at Tea Party rallies against the Affordable Car Act (Obamacare). That there are growing majorities who want to see them greatly expanded (at zero direct cost of course, just another result of economic illiteracy) shows just how failing the GOP has been of late explaining why profitable work and investment is profoundly superior to receiving a subsistence-level hand out.
It is much better to invest in your own residence than it is to continually make subsidized payments into government housing. But that doesn't mean that government housing is, or ever will become, no longer needed. In fact, the "safety net" that many dim Democrats love to refer to has morphed more into a lifetime assistance plan, and has little to do with providing a safe landing when one's personal finances go pear-shaped.
Instead of working to promote aid as a means of personal rebirth (which people like in concept) versus as an end, many GOP voters have taken to shaming the poor. "Why should I pay for them when I pay my bills?" is one refrain that you hear. What most don't realize is that often, not all of the time certainly, people that are poor and in need of the safety net get there because of circumstances outside of their control. The GOP has done a horrible job empathizing with these people. And they've all but ceded the argument to dim Democrats, who think it wise to provide tax credits to people who pay no tax, and are already, in most cases, taking from the government more than they are putting in.
What the GOP should focus on is the system that placed these people in dependency on it, not the people themselves. Almost no one starts out on welfare thinking they are going to stay on welfare for the rest of their lives. When they get to the point that they realize just how damaging to their well-being productivity is however (the phase outs on the program often happen faster than income comes in, putting them in the false choice of either quitting, or falling behind) most of these people begin to feel trapped and just accept the hand-out. That this often has deleterious consequences (cyclical poverty, drug use, crime, etc.) is not evidence that the people were flawed, but the design of the economically illiterate system they were placed in is horribly flawed.
In part, the wave of support that the Bronzed Ego is currently enjoying (around 35-40% of Republicans nationally) are those angry people who look at the welfare system and see a group of layabouts who are profiting from their hard-won monies. In many cases, these are angry Caucasians who look at welfare and see a host of people who look different, talk different and have different cultural norms than they profiting from doing nothing. In other cases these are out-of-work, blue-collar citizens who lack the training to get another job. They feel that they are not afforded the same benefits because of a variety of reasons.
You will never put an end to all of this, but the GOP could have blunted the anger by acknowledging that the long-term fix is going to take more than simply lowering the top tax rate, or cutting the capital gains rate, it needs to involve a long, hard look at the system itself and a return to Contract with America principles (which have been all but rolled back, or ignored) that returned the 'safety' aspect back to the net. You may hear it called "entitlement reform" but it's really an admission that entitlements are here to say, and probably need to be in some form or the other.
The first thing whatever follows the GOP needs to do is reclaim the conservative narrative on taxes. What they are, what they do and why people need to be paying them. After that, you can begin the conversation about ripping up the existing tax code and starting fresh. I would suggest something much more equitable, flat, and with way fewer exemptions and loopholes. That this needs to happen at all levels of government should be understood. It should also be understood that, unless this is accompanied by a drastic reform in the regulatory framework, we're going to find ourselves right back in this position, or worse, within 20 years.
