Compromise or Capitulate?

Old Gadfly:  IM (an American citizen with an inquiring mind), there seems to be a serious impasse with current “fiscal cliff” discussions.  How do you understand the different strategies at play?

IM:  Obama and Democrats feel they have the political momentum to further advance progressivism through the further distribution of wealth with higher tax rates for the wealthy and more government spending.  Republicans are opposed to raising tax rates, but will consider increasing revenues through tax reform and want spending reductions.

Gadfly:  Which strategy is best?

IM:  That depends on what the strategy seeks to achieve as an outcome.

Gadfly:  Do you have a sense for the outcomes?

IM:  Yes.  Resources provide power.  The more money the government spends, the more power it wields over the affairs of American society.  And when a lot of that money is in the form of entitlements, the recipients become more and more dependent upon them and those who claim to be their champions.  This is why Obama and the Democrats push for higher taxes from a very small percentage of the population to support more spending.  Notice, Obama and fellow Democrats have not offered to use increased tax revenue to pay down any of the deficits incurred from the massive spending growth over the past four years.

Gadfly:  So, how about the Republicans?

IM:  The Republicans understand that real revenue generating potential is tied to a growing economy.  When the government takes money out of this dynamic by increasing tax rates, this is money that cannot be used for investment or consumption.  New taxes for more government spending requires more government jobs to monitor and regulate the spending programs, which is another drain on the wealth generating capacity of a nation.  Besides those who receive entitlement benefits, government employees also become dependent upon these programs.  Investment and consumption generate jobs.  New jobs increase the tax base.  Thus, when the economy grows, and unemployment rates decrease even without any changes in tax rates, tax revenue increases significantly.

Gadfly:  Why do so many Americans not appreciate the Republican logic?

IM:  They align with better story tellers.

Gadfly:  So, are you saying Obama and Democrats are better story tellers?

IM:  Yes, and not only are they offering no compromise in current negotiations, they are preparing the public to blame Republicans if America falls off the fiscal cliff.  The only way to delay the fiscal cliff in the short-term is for Republicans to capitulate, to surrender.

Gadfly:  What happens if the Republicans capitulate?

IM:  Republicans should explain to their constituents and the American people that they have sheathed the sword to give the Obama and Democrats full accountability for the outcome of their policies.

Gadfly:  That is an interesting thought.

IM:  As the baker’s union discovered with the Hostess negotiations, there is only so much that can be done when wealth is not being generated.  When the baker’s union stood on ideological principle despite reality, Hostess closed its doors and thousands of employees lost their jobs.  We’ll see a lot more of this across our nation.

Gadfly:  Life could become pretty grim in America.

IM:  Yes, but we can recover if enough people who hitched their wagons to the progressive ideology discover how unsustainable it is and vote in 2014 for those who have a better understanding of how to work with the private sector.

Gadfly:  There is such a simple logic to the flow of money between the private sector, the government, and recipients of government funding.  But, those who align with Obama and Democrats seem to forget where the government receives its funding resources.  It’s almost as though they believe the government creates the money it uses to “provide for the masses.”  It is the private sector that generates an economic wave and its corresponding jobs, wealth, and tax revenue for government spending.  If businesses close, the wave subsides, jobs go away, wealth creation goes away, and tax revenues go away.

IM:  Obama will likely get his way.  And, it won’t take long to see how quickly the economy will further contract.  Character-based leaders would rise to the occasion; unfortunately, Obama will exploit the occasion for more power.

Gadfly:  A future Spielberg is not likely to produce a movie about a Representative or a Senator involved with current policy negotiations, but Obama will certainly have a legacy to dramatize.

IM:  I suspect any production will more likely be a comedy than a portrayal of epochal history; and its massive cast of characters will be the Copernican drones who voted Obama and other progressives into office.