Republican Leadership Failing to Lead in the Argument

The performance of the leadership in the Republican party, and its announced Presidential candidates, is so poor as to literally guarantee the re-election of Pres. Obama. Specifically to be criticized is the Republican positions on the national deficit and debt situation, and the implications for tax policy.

"No tax increases” is the refrain heard from all. But why should there not be “tax increases”? It can be shown using historical data that there are tax increases that do generate benefit (and a financial return) to tax payers. An example is the Dwight D. Eisenhower National System of Interstate and Defense Highways, as outlined and funded through the Federal-Aid Highway Act of 1956. This act allocated excise taxes to the highway fund, and increased these taxes several times (two largest increases were under Pres. Reagan and Pres. Bush 41, 225% and 156% respectively). There are cases, clearly, where the federal government is the only solution and that taxes can and must be raised.

Failure of the Republican leadership to properly frame the issues of taxes and to base their position on a sound, and explainable, principle will only lead to losing the argument. An opposition to taxes can only be based on the principle that the private citizen will make the choice of investment that will best benefit the nation as a whole, when it is within the ability of the citizen to make such choices. As with the interstate highway system, the citizen can’t choose, therefore the government may assume that function. It is then left to the government to convince the people of what is a wise choice, and suffer the consequences for poor choices.

Similarly, there is little conclusive evidence that a reduction in tax rates or other fees will cause growth in the economy or job growth, or that an increase in taxes or fees will cause contraction of the economy. The case must be made individually for each tax. If we returned to a maximum marginal (not average or base) tax rate of 39.6% for earners who ear above $250K, what is the impact? How much comes out of the capital pool, and how effective is the capital in boosting GDP?

I look forward to the discussion.