While Obama tours the country promoting his personal donation plan, the Republican Presidential hopefuls are in a pitched battle for the nomination and arguing which tax simplification plan is best. Threatened with the possibility of rate cuts, the Media and politicians trot out the usual suspects of lies about tax hikes and tax cuts.  This is a battle Republicans must win and, to do so, they need to expose those lies.

Keep in mind that the battle between those who create wealth and those that want to redistribute it, mainly politicians, is as old as civilization itself.  We read of tax battles and even reform in every age, like Urukagina’s tax reductions in Babylonia/Sumer in 2350 BC.  Equally venerable are the constant set of demagogic lies by those against tax cuts and simplification.  It is important to note that politicians like complicated tax codes and high tax rates because they control those rates and dispense the loopholes and regulations that complicate the tax code.  Tax simplification means they lose power.  As a result, resistance to tax reform is more often the rule than reform. As for the lies, they abound, so let’s consider just a few:

Lie # 1: Tax cuts cause deficits/Tax hikes balance the budget.  The Media and the Left often say that the Reagan and Bush tax cuts led to deficits while Clinton’s tax hikes led to a balanced budget. In truth, according to the IRS, federal tax revenues rose dramatically after the overall Reagan tax cuts/reforms (98%) and the Bush tax cuts (a record $700+ billion). This is just as they did after the Harding/Coolidge cuts (61% revenue increase) and after the Kennedy/Johnson cuts (62% revenue increase).  Those are the four major income tax reductions we have had since the inception of the income tax in 1913 and every time revenues rose after they were in place – every time.

So did the tax rate cut cause a deficit? The lie, of course, is to blame the revenue gathering mechanism (tax code/rate cut) instead of the revenue spending mechanism, i.e. Congress/Presidents.  The spenders kept spending – often at an accelerated rate when they saw the new revenues.  Thus, the fault for continuing deficits lies not with tax rate cuts, which produced higher revenues, but with politicians who spent too much.

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The struggles of the Democrats and the Republicans are making news.  The Democrats are learning that it is far easier to make campaign promises than it is to govern. As for Republicans, the party that loses the Presidential election often spends the off-year attempting to refine its message if not find a new message and new messengers. In the watchful eye of 24/7 cable news channels and the Internet, however, such political soul searching can appear rather untidy.  As the calendar turns, the process remains unresolved for Republicans to say the least.  Worse than mere overexposure, according to Rasmussen polling, despite Obama’s falling polls and Democrat divisions, the Republican Party would fare worse in an upcoming election than the Tea Party – a “Third Party” that, as of yet, does not exist.  It is no minor issue because with the help of Tea Party activists, Republicans certainly can beat Democrats next year – without them they may not.

It would seem evident to many that the Tea Party movement should be the natural ally of the Republican Party.  After all, the issues that inspire most Tea Party activists should not be inimical to Republican Party leaders.  However, the fact that the Tea Party movement is at odds with certain aspects of the Republican establishment belies the greater issue as to why the Tea Party movement – and its potential to be a 3^rd Party movement – arose at all.

It is worthy, as part of this discussion, to note that the rise and fall of third party movements and candidates is directly tied to whether voters perceive the existing parties as being successful.  In this context, successful means providing effective leadership on the major issues of the day.

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