Is the GOP in the midst of committing suicide? We’ve seen the headlines. Conservative Bill Kristol says, “It won’t kill the country if we raise taxes on millionaires.” House Speaker Boehner says he might agree to “higher revenues.” The GOP Governors Association ends their meeting by saying they “are open to higher taxes on the rich.
As a businessman, I understand that branding is everything. You either stand for something, or you stand for nothing. If you muddle or compromise your brand, consumers won’t understand or trust it. Your business is dead.
So, what exactly is the GOP brand? You can’t stand for lower taxes by agreeing to raise them. You can’t stand behind small business owners and job creators by agreeing to a compromise that raises taxes primarily on small business owners and job creators. You can’t claim that punishing "the rich" is bad economic policy, then compromise by punishing "the rich." You can’t say that raising taxes will devastate the economy, then agree to raise taxes on people that make $250,000 to $500,000 per year- primarily small business owners who are not "rich" but who make up the biggest spenders, investors and job creators. If you do, you'll certainly destroy your brand...and the economy.
Worst of all you can’t claim to be against tax increases, but then vote to “raise revenues.” If you eliminate our mortgage interest or charitable deduction, you automatically raise our taxes. You can disguise your words, but you can’t hide the truth. “Revenue increases” are actually worse than tax increases- because you are raising our taxes even if our income goes down. Where are small business owners (who are not billionaires) supposed to get the money to pay the extra taxes triggered by the elimination of legal deductions?
By agreeing to the “compromise” that Democrats and the national media are clamoring for, the GOP is killing their own brand and committing political suicide. By agreeing to raise taxes the GOP won’t win a single election, nor gain a single Democratic voter. However, many Republican Senators and Congressmen will lose their next election.
President Ronald Reagan, the greatest tax cutter in political history, agreed to raise a few taxes (in order to get spending cuts approved by Congress). The result: His reputation has been slandered by Democrats ever since, and his “compromise” has been used by Democrats to brand any Republican who opposes tax increases as “extreme.” Gee, that worked out well.
Lesson learned? Raising taxes isn’t compromise, it’s brand suicide.
Never forget that President George H.W. Bush violated his “no new taxes pledge” and compromised to raise taxes. Result: He lost his re-election to Bill Clinton. Gee, that worked out well.
It has happened countless times to Republican Governors and Senators. After they compromise, they lose the next election. Why does this happen? Because when a Republican raises taxes, he loses at least 10% to 15% of conservative voters who are angry and disillusioned at the decision; he kills the enthusiasm of his remaining supporters; he doesn’t gain a single Democrat voter (if a voter supports tax increases, they’ll always vote for the Democrat); and he hands ammo to his next opponent to destroy him. It’s brand suicide- a losing decision on all levels.
Then there’s the #1 rule of business- always take care of your best customers. Your top 20% of customers will account for 80% of your success. Small business owners are the GOP's biggest contributors and most loyal supporters. By “compromising” to raise taxes and kill deductions for successful small business owners you’re kicking your biggest supporters and contributors in the teeth. This generally doesn't lead to brand loyalty, or winning elections.
But there is a bigger issue than the political survival of the GOP. It’s the survival of the U.S. economy. Even the NY Times reports that the "Top 2%" are responsible for 33% of consumer spending and 30% of all charitable giving. They are also responsible for most business startups and job creation.
Only those totally ignorant about the economy, those who have never actually created a job, believe the fairy tale that taking money away from the top spenders, investors and job creators isn’t going to further damage the economy.
If higher taxes are good for the economy, why not raise them on everyone? If higher taxes solve a budget crisis, why is California perpetually broke? Why has California lost over a million net residents in the past decade? If higher taxes help an economy, why is the EU insolvent and on the verge of a Great Depression? Why aren’t Greece, Italy and Spain models of economic success?
Now the geniuses in Congress want to eliminate the mortgage deduction for upper income taxpayers, wiping out one third of the value of every high-end home in America. Entire upscale suburban neighborhoods will be decimated overnight. Foreclosures will skyrocket. Residential real estate will take a final dive, causing a new bank crisis. Wealthy consumers will slow their spending. We are looking at a total collapse of the U.S. economy- caused by ignorant politicians. Unfortunately some of those ignorant politicians are Republicans.
So the next time Obama suggests it’s “fair” to go back to Clinton era tax rates, the GOP should say it’s only “fair” to go back to Clinton era spending, regulations, and welfare reform. Let’s agree to roll back all spending, new government programs, and regulations enacted since Clinton. That’s how you heal our economy.
And the next time a Democrat wants to raise taxes, Republicans should point to President John F. Kennedy as the ultimate tax cutter and call Democrats “extreme” for ignoring JFK’s success.
The GOP’s job is not to assist Obama in crippling small business owners and job creators…in destroying even more jobs…in damaging the U.S. economy even further. If Obama wants to do that, let him commit economic suicide alone- and accept all the blame.
But to willingly kill your own brand and help Obama damage the economy- the GOP can’t really be that stupid, can they?