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Posted: December 02, 2010

Political reality bites

Why Washington is likely to fail America

Aaron Harber

Many Americans wonder why their political leaders cannot get along and appear to be unable to solve the tough problems facing the country. The reason is simple --- our leaders are afraid to lead because they fear us. They know the truth but are scared to death that, if they reveal it, we will vote them out of office.

They see us as spoiled children --- wanting more from government yet simultaneously claiming we want to shrink it (e.g., "Get the government out of health care and leave my Medicare alone"). They see us as unwilling to sacrifice to any significant degree and they worry any call for sacrifice will result in their electoral loss.

Consider any politician who calls for us to pay higher taxes for the benefits we receive rather than borrowing trillions from future generations. Such a "Tax and Spend" policy is far more responsible than our current "Borrow and Spend" approach but we consistently disparage the former and support the latter.

If a politician calls for higher taxes or for the severe reductions in government services which would be requisite to balance the federal budget if no tax increases were to occur, he or she immediately would be met by an opponent who would argue, "No, we don't need higher taxes or severe losses of benefits. We should cut taxes (or at least tax rates) as that would boost the Economy and actually result in more tax revenues because more people would be working and would be paying taxes --- and even if they were paying taxes at a lower rate, the aggregate amount of taxes collected would increase."

Most voters when choosing between these two scenarios understandably would choose the rosier, lower-tax, have-your-cake-and-eat-it-too option. This is consistent with how politicians use "Perception Politics" to win elections --- manipulating how we already feel rather than trying to substantively change our minds about issues and candidates. It is easier for politicians to work with what we are than try to change us --- that is the beauty of Perception Politics. And who doesn't want to have it all without paying for it now?

In the example of balancing the Federal Budget, however, the problem is there are limits to lowering tax rates for two reasons. First, at some point, tax revenues will decrease. Obviously, if rates were cut to 1%, revenues would be almost nonexistent, so the question becomes "What rate structure minimizes tax burdens, maximizes incentives for economic activity, and generates the maximum amount of tax revenue?"

Second, tax revenues often depend on the state of the Economy. For example, when capital gains tax rates are cut during a time when there are huge profits amassed in assets subject to capital gains (such as real estate or stocks), one can expect significant tax revenue increases from tax rate cuts as asset owners cash in to take advantage of rate reductions and then purchase other assets.

Cutting the same capital gains tax rates when the values of such assets have plateaued or even decreased (as is the case with most real estate and many stocks today) could result in lower tax collections, however, even if owners had an incentive to sell such assets (which they don't). So we have to be thoughtful about where and when to cut tax rates.

Because we have failed to fully inform and educate the American public about the specifics of these issues, citizens are more likely to succumb to the most attractive claims politicians make. Once fully informed, however, the public would be less susceptible to the erroneous and misleading albeit attractive assertions made by many politicians.

Thus, educating ourselves about economics, for example, could serve to inoculate us against politicians of any stripe who depend more on demagoguery than facts to get our votes. Where our system has failed is neither major political party has shown any sincere interest in fact-based discussions. Instead, each continues to rely on Perception Politics as the most efficacious way to manipulate voters. That is why one party wins in one or two election cycles and the other does the same a few election cycles later.

Only when there is a long-term investment in the education of voters will the approach used by politicians change. Unfortunately, those who win are the ones who govern and today's winners see themselves as the beneficiaries of Perception Politics while the losers see Perception Politics as the quickest path back to the top.

We can change the winners into true leaders if each of us answers the question, "How do we, as citizens, become accurately informed so we can help our leaders make better decisions?" By demonstrating our expertise and understanding of the issues, we can give our elected officials the courage they need to make the tough decisions America requires to prosper once again. Until we do that, however, our leaders will fear us too much to do what is best for our country.

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Aaron Harber hosts "The Aaron Harber Show" seen on Channel 3 KCDO-TV (K3 Colorado) on Sundays at 8:00 pm and at www.HarberTV.com . He also hosts "Colorado Election 2010 TM" seen Sundays at 8:30 pm on Channel 3 and on Mondays at 8:00 pm on COMCAST Entertainment Television and is viewable 24/7 at www.Colorado2010.com . Send e-mail to Aaron@HarberTV.com.

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