It's Not the Fall that Kills You

It is 2013, and we went over the Fiscal Cliff long before midnight last night. The fact is that our economy does not rise and fall over the course of months or even a year. We went over the Fiscal Cliff when the never-ending debt ceiling increase became standard operating procedure in Washington. While our “Mighty Mouse” politicians rush in to save the day, they are in fact saving themselves from deserved blame and are in full political crisis-management mode.

The lack of political will in DC is exemplified by the never-ending blame game. Americans will give credit to politicians who provide solutions. Both sides run to the microphones and cameras to make their point but neither offer solution oriented plans nor the transparency they promised.

History and reality, a record of success and one important failure

To understand where we are now, we have to examine history and see what has worked for our economy compared to what exists in DC today. America’s successful economic history has many examples of low tax rates, low spending, and responsible government.

Ronald Reagan lowered tax rates. In 1986, the Tax Reform Act was passed, closing loopholes lowering the top tax rate to 28%.

George W. Bush cut the top income tax rate to 35% and cut taxes on capital gains. Federal tax revenues grew by $780 billion between 2003 and 2007.

Liberals tout that Bill Clinton raised taxes and the economy roared. The dirty little secret: Federal spending as a percentage of GDP was low, declining from 22% in 1993 to 18% in 2000. Less federal spending has the economic effect of countering higher tax rates. The Clinton surplus is often talked about outside of the Dot-Com Bubble and the beginning of the housing bubble, which burst in 2007. The fact is, bubbles do not happen overnight. They grow over time.

The repeal of Glass-Steagall Act of 1933 by the Clinton administration let banks become casinos, prodded by Fannie Mae and Freddie Mac, backed by taxpayer dollars. These combined factors exacerbated the current economic crisis.

The Adults in the Room

As a founder of the tea party movement, I warned America beginning in January 2009. We helped Republicans in 2010 with a takeover of Congress. America in large part demanded a limited, effective and efficient government.

The political institutions on both sides did not listen. We saw faux battles over the debt ceiling and the Simpson-Bowles recommendations ignored. An intractable Obama administration lied about compromise, a Senate led by Harry Reid that did not do its constitutional duty and allow debate by our representatives on House bills. All these and more contributed to our current situation.

What we need: Solutions and legislative action

Incremental solutions work better than grand bargains, as our history proves. The simple principle is One Bill / One Vote. Republicans in the House and the Senate should be writing clean bills to tackle our major problems -- Entitlement spending, corporate and individual tax reform, trade regulations, cleaning up defense sector procurement among others.

The one place we need a comprehensive approach is in energy policy. What we have is the picking of winners and losers with the Obama administration’s insolvent green agenda. $90 billion spent on increasing subsidies and minimal achievement is proof that political solutions do not solve technology issues. Domestic development in oil, natural gas, coal, nuclear, hydroelectric -- and yes, wind and solar where applicable -- will help resolve both economic and national security issues.

The ratings agencies and markets will base their decisions on legislative action or lack of it, responding favorably or unfavorably. Market forces work faster than government.

For Obama supporters

The Obama administration and the left promised to save the middle class, but those of you that have bought into the class warfare rhetoric have been hoodwinked.

Ask a simple question: What am I missing in Obama’s promises?

Answer: They are not offering the opportunity for upward mobility. When do you hear them speak of improving your position in life, economically or otherwise? You have been relegated to where you are now. You will pay the highest price, and the price that will hurt you and your children most is the lack of upward mobility in your future.

Finally

Americans have to increase their demand of both parties for real solutions. This is not a partisan issue. Compromise is a farce if there is no practical and legislatively possible solution involved. All Americans are affected by the economy regardless of socio-economic class.

Will America bounce if we hit the bottom of the Fiscal Cliff -- Or be so economically deflated that we fall flat? We are still falling. The political Kabuki Theater continues without a closing act.

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