Was the tax increase a major Republican loss?

Today’s big story the new tax bill that Obama jetted off to Hawaii before signing, but that will soon (and inevitably) become the law of the land.  I don’t see any surprises.  I knew that we’d get hit hard and so we have.

I gather that sequestration has now been averted, so that Obama gets to continue spending.  As the headlines say, $1 in spending cuts for every $41 in tax increases.

Obama laughing

The media and the blogs are playing this as a major Republican loss.  Although I’m not sure it is, I actually rejoice in these headlines.  They sting, but they may have a benefit in the long term.

In my simplistic financial view of the world, there is one given that transcends any fancy economic talk from Ivory Towers and Leftist back rooms:  you cannot indefinitely spend more than you take in.  This is true whether you’re a person or a nation.  You can certainly spend more than you have for a while.  Indeed, if you’re rich (as America once was) you can keep spending money you don’t have for a long time.  You can borrow from friends who haven’t quite figured out yet that you’re broke.  And you can check kite — that is, you can use one empty account to pay off another empty account.  Essentially, you keep the same money floating around between accounts for a while until one of the banks or creditors figures out that you’re simply juggling a few dollars around and hoping that no one catches on that your accounts are usually empty.  And that’s all you can do.

Obama ran for, and won, re-election on a promise that he could fix our problems by taxing “rich” people more, while continuing to spend as before.  The voters bought it.

Another way to think of Obama’s promise, and the voter’s credulity, is to imagine that America is a corporation, with shareholders and various officers.  Obama is the CEO.  Because the CEO and his fellow officers have been spending corporate money like crazy without realizing a profit, the corporation is broke.  It’s worth noting that some of that spending involved distributions to select shareholders — those holding the fewest corporate stocks.

When the shareholders were considering making a push to fire the CEO, the CEO kept his job by telling the shareholders that he’d hire some armed robbers (i.e., the IRS) to force some of the richest shareholders to buy more shares in this essentially bankrupt company.  He made no promises about reducing corporate spending or trying different approaches to dealing with corporate debt.  The shareholders, none of whom could imagine himself (or herself) as being “the richest,” thought it was a great idea to have the “other shareholders” forced to subsidize the corporate spending binge. Those most enthusiastic were the ones who, despite holding the fewest shares, had been getting stock distributions on a regular basis.

Robber

Once his job was assured, the CEO used his renewed power to do exactly what he promised:  he brought in armed robbers to forcibly remove money from the “rich” shareholders without changing his management style, including his spending habits.  The only thing that surprised some of the shareholders was to discover that the CEO numbered them amongst the rich.

In other words, Americans — the shareholders in this nation — just got exactly what Obama promised and they voted for:  more taxing, more spending.

The question, then, is whether yesterday’s vote to increase taxes is a major Republican loss.  Certainly, the Republican party is in chaos — but it was anyway.  After the election, the Republican party was a demoralized, writhing, screaming, finger-pointing mass of loser-dom.

Pathetic loser

Given the Republicans’ already pathetic posture, is what happened yesterday even worse for the Republicans?  I don’t think so.  I think that, with the mid-term elections coming, this clarifies things for voters.  It doesn’t just clarify Republican and/or conservative principles, it also clarifies just who holds those principles.

White House Money Machine

More than that, the new taxes and spending clarify responsibility for America’s economy.  Obama got exactly what he wanted and he thinks that he’s laughing all the way to the bank.  Except when he gets to the bank, he’ll discover it’s still empty.  Within a few months, he’ll be thinking of that adage “be careful what you wish for; you might get it.”

Things are certainly going to be bad, very bad, for America in the short term.  But with a true compromise, of the type Boehner was trying to craft (proving either his good faith or his stupidity), things would have been very bad for America in the slightly longer term.  Short of a revolutionary change to America’s spending habits, which wasn’t going to happen with a compromise, America was always screwed.  Now, at least the Republicans can say “we tried to stop this, but Obama had a stronger political hand in the wake of the elections, so we were forced to give him what he wanted.  This is now, for real and for true, the Obama economy.”

Obama frowning

The one thing to remember is that Republicans had better start selling this Obama-economy message hard and fast now, while Obama and his media minions are still gloating about his victory over the GOP.  Once things go sour, as they inevitably will, Obama and the media will start blaming the Republicans.  We know that, where the media leads, the masses follow.  The only way to stop the sheeple is to drill home now the message that this is Obama’s victory, that Obama got what he’d promised and what he wanted, and that Obama joyfully accepts the responsibility for whatever flows from his glorious battle defeating the Republicans.

Remember:  Nothing, absolutely nothing, that came out of Congress today could have been good for America.  However, if Republicans willingly hand Obama this victory, the greatest likelihood is that it proves to be a Pyrrhic victory for Obama, with long-term benefits for conservative thinking and, therefore, for America.

(Alternatively, Obama could have been right all along, which will be good for America, and I’ll have to revert to my original Democrat allegiance.  Possible, but not probable.  Facts are stubborn things and so are numbers, and I’m betting that Leftist political ideology will not trump either facts or numbers.)