As we start the new year, it is sad to see so many Republicans patting themselves on the back, Grover Norquist included it seems, saying, “It’s ok, it really was a tax decrease because it is Tuesday.”

The one pledge to rule them all got obfuscated away conveniently and it is time to move on to a new agenda for the Republican Party. We are now in the era of the McConnell Tax Hike of 2013, which raises taxes on 80% of Americans making between $50,000.00 and $200,000.00.

I wanted to go over the fiscal cliff, in part, because it would give the GOP the best opportunity to change the subject. They were always going to lose playing Barack Obama’s game. They were always going to lose playing Obama’s game because he has the Republican playbook memorized and can best the GOP at its own plays.

Ben Domenech, in his excellent Transom, concluded 2012 with the breakdown of where the camps are within the GOP’s need for reform. In short, Domenech says there are five camps:

1. The people who think the problem is social conservatism
2. The people who think the problem is economic conservatism
3. The people who think the problem is bad Republican candidates
4. The people who think the problem with the candidates is that they were Republicans
5. The people who think this was a purely technological failure and does not demand a shift in ideology, policy, candidates, message, or anything else

In 2012, I think we had some bad Republican candidates, I think we had some terrible ID wrapped up in the GOP, and at the national level I do actually think a lot of Romney’s collapse came from failures at the political technology level, not to be confused with technology bells and whistles.

But I think the problem of bad Republican candidates and candidates losing because they are Republicans is wrapped up in a bigger issue related to the second grouping — economic conservatism. This is not to say that the GOP should abandon small government conservatism. Rather, they should get back to it.

But in doing so, they need to move economic conservatism away from just tired old 20th century rhetoric into the twenty-first century.

The only way to win is to change the game and reshape the agenda of fiscal conservatism. The fight in the next four years will be on fiscal issues, not social issues. We must be ready on that front.

The GOP needs a new agenda.

While I don’t believe we can find a new agenda for economic conservatism from the man who uttered these words, I do think the GOP can find a new agenda in these words:

The bottom line is we have a problem in this country, and the family is fracturing.

Over 40 percent of children born in America are born out of wedlock. How can a country survive if children are being raised in homes where it’s so much harder to succeed economically? It’s five times the rate of poverty in single-parent households than it is in two-parent homes. We can have limited government, lower tax — we hear this all the time, cut spending, limit the government, everything will be fine. No, everything’s not going to be fine.

There are bigger problems at stake in America. And someone has got to go out there — I will — and talk about the things.

And you know what? Here’s the difference.

The left gets all upset. “Oh, look at him talking about these things.” You know, here’s the difference between me and the left, and they don’t get this. Just because I’m talking about it doesn’t mean I want a government program to fix it.

That’s what they do. That’s not what we do.

The words were spoken by Rick Santorum at the February 22, 2012, CNN Debate in Arizona. I’m not enamored with Rick Santorum as a candidate for President. He is not an economic or a fiscal conservative. But he did focus on something the Republicans should turn their attention toward — family.

The GOP should spend 2013 rebuilding an agenda based on a defense of family. It should couple that with an aggressive attack on cronyism, pivoting the GOP as the outsiders’ party.

Taxes

Incumbent on rebuilding an agenda based on a defense of family is not tax cuts or tax increases or other ideas from the 20th century, but new ideas for the 21st century. It will take voices from outside Washington, DC forcing the GOP inside Washington, DC to change.

With the McConnell Tax Hike of 2013 headed into law, consider that yet again the Washington Republicans have sided with the Washington, DC Democrats to keep a marriage penalty in the tax code. Married earners filing jointly get punished by doing so.

The Republicans must have serious tax reform ideas. Those ideas should start with a much flatter tax with far fewer deductions. Those deductions should favor married couples with kids making it easier for one spouse to stay home through high deductions for a household with one earner. But likewise, the Republicans should consider in a two income household of joint filers, the second income earner should pay less tax on that income.

While the default rule should always be to never use the tax code to encourage or prohibit behavior — it should just be about raising revenue — as long as Washington intends to do that, the Republicans should favor a tax code that rewards two parent nuclear households with multiple children and, through the use of generous deductions, provide incentive for one spouse to stay home. That would not only help reduce the supply of workers in the workforce at a time of decreased demand for workers, but would also ease the burden of the social safety net.

Beyond the income tax, the payroll tax affects more Americans. The Republicans have exempted more and more Americans from paying taxes each time they have cut taxes. But the payroll tax remains. The GOP should, while focusing on a simpler income tax, spend far more time addressing the burden of the payroll tax on the middle class.

Tax simplification with a bias toward families must be a Republican goal. Highlighting the gimmes to cronies and demanding their end will restore Republican credibility on taxes.

Leveling the Playing Field

Noam Scheiber at the New Republican has a profile of Maya MacGuineas that explains everything that is wrong with the GOP in Washington. I realize he nor those reading it would think that, but let me explain.

While Democrats bluster and pound their chests about Republicans being in bed with Wall Street, the truth is that both parties are. The typical Washington politician, regardless of party, hangs out at cocktail parties with lobbyists and other influentials. The leaders and their committee chairmen have rich CEOs of major companies come calling.

They go to fancy parties at fancy estates and hob-knob with the rich and very rich, neither of whom are really affected by a great deal of economic turmoil. The Fortune 500 has less and less in common with the fortunes of the average American. Gone are the days when we could honestly say “what was good for the country was good for General Motors and vice versa.”

These gatherings with Maya MacGuineas are a perfect example of this. The Republican Establishment gets their head patted as they sip wine with major CEOs who want Washington to just do something. But these CEOs have something in common. They want Washington to work for them. Washington working for Fortune 500 does not equate to Washington working for families or entrepreneurs or small businesses. We have an unlevel playing field with Washington picking winners and losers with cushy jobs for the elites when they leave the Capitol. The corruption and money is disconnected from and keeps the disconnect with the rest of America.

In fact, most Americans work for small businesses. Wal-Mart was perfectly happy with Obamacare because it could offload anonymous employees to healthcare exchanges. The mom and pop shops are the ones who opposed Obamacare because they know their employees and want to provide for them in a way Obamacare won’t let them. Wal-Mart is perfectly happy with more gun regulations because it will drive up costs on small gun shops, driving gun purchases toward Wal-Mart’s greater economies of scale.

We live in an age when major corporations can spend better money on lobbyists going to Washington to seek carve outs and loopholes from Congress than in innovation. Rich businesses and rich people get tax breaks and legal advantages under the patent and copyright system and elsewhere that keeps them from suffering at the hands of the creative destruction of upstart capitalists. Washington is propping up legacies instead of letting natural selection and evolution in business happen.

This hurts families because this hurts the small businesses where most families work. Small businesses do no have an opportunity to become big businesses because of Washington.

The dirty little secret is that for all of the Democrats talk about this being the GOP’s fault, the Democrats are more in bed with most of these CEOs and bluster with no action. The GOP should act. The act should be away from more government control and more regulation. More government and more regulation protects existing players by driving up the costs of entry into a market.

Republicans must start telling these stories and doing so creatively. They must show what companies were shut out while Solyndra got money. They must show what businesses did not get tax breaks. They must show how regulation hurts.

Break Up the Banks

One of the perverse consequences of Dodd-Frank, which I actually believe was intentional given what we know about both Barney Frank and Chris Dodd, is that now the top five American banks hold the vast amount of assets in this country. It is time to break them up.

I do not support a government ordered action to break apart the banks. The government would just get it wrong. What I do support is a government law that would require the banks to hold more capital to be able to cover their own losses. Instead of a system of banks that are too big to fail without government help, we should require banks to help themselves.

The reality is that, given the debts they hold and the necessity of capital acquisition, the banks would collapse on their own. They would have to structure their own breakup if done right, which would satisfy my desire to see more banks, more competition, and less taxpayer risk balanced with a distrust of government to get it right.

Choice

The GOP should also start taking a pro-choice agenda. No, not abortion. The only choice Democrats ever want to give anyone is whether or not to kill a child. The GOP should provide real choices. They should let people opt into alternatives to the existing entitlement programs to prove there is a better way. Republicans should wage a fight for school reforms. They should protect the rights of parents to home school their children. They should provide choice in education.

One of the best things the GOP could do would take a lead from Rick Perry and Rick Scott. Colleges should be denied federal funding, including through the use of student loans, unless colleges offer a Bachelor of Arts degree for $15,000.00 total. That’s $5,000.00 higher than the Texas plan (which Florida has copied), but will take into account private schools too.

We are graduating more and more people from college with massive debts. Then we punish them through the tax code if they get married and file jointly. Instead of offering more and more college loans, which distort the market, let colleges drive up the cost of tuition, and cause college grads to delay families, Republicans should demand colleges offer a low cost BA. If the GOP wants to be the party of family and entrepreneurs, it must start here.

Regulation

Republicans have an easy story to tell if they would. Every day the Obama Administration issues new regulations on businesses. Some of those regulations are put in place on behalf of one corporate interest against another. Some are put in place because rich players can spread the money around to benefit themselves.

The Georgia Dome covers 8.89 acres, has seven levels, and has 1.6 million square feet of space on all seven levels. It’s roof is 290 feet high. Imagine the Georgia Dome. Now imagine filling up the Georgia Dome with ping pong balls from floor to ceiling. Now imagine one of those ping pong balls — only one — is red.

That one red ping pong ball would represent the parts per million of mercury the Obama Administration wants power companies to remove from coal burning plants. No company can certify the removal because it is so infinitesimal. But because of that regulation, coal power plants are shutting down around the country and energy costs will go up. Those costs will affect American families both in price and in lost jobs.

That is but one of many regulations. There are the healthcare regulations. There are energy regulations. There are all the other regulations. The GOP controls the House of Representatives of the United States. It can tell these stories. It can work to repeal the regulations. It must.

Healthcare

Most policy polling in America is junk. Why? Watch this clip from Yes Prime Minister and you’ll understand all you need to know about why public policy polling is so unreliable.

Despite that, the American public has consistently been opposed to Obamacare. It is one of the few striking issues besides the second amendment. No matter how a pollster asks the question about gun ownership or Obamacare, Americans, by clear majorities well over 51%, support the right to own guns in this country and oppose Obamacare.

As Obamacare taxes and regulations start impacting America and more and more Americans move to part time work, the GOP must keep this issue alive and must continue to demand repeal of Obamacare. The GOP should combat and try to stop the funding of healthcare exchanges and the implementation of Obamacare related regulations.

From the Outside

Unfortunately, Washington’s Republican Establishment is largely filled with the men and ideas of the eighties. They are still fighting with Ronald Reagan’s playbook, but have ironically abandoned most of Reagan’s principles. The time has come to shift the agenda on economic conservatism. It should be more populist and more family oriented. It should be about breaking apart the government programs that create government dependence and should be about removing the tax costs of families.

This will take men and women from outside Washington pushing the Washington GOP in this direction. Washington Republicans are fine with the status quo. If they will not change, we should change them. We can start by looking to the states. 30 of 50 Governors will be Republican. Governors like Rick Perry, Rick Scott, Bobby Jindal, and Nikki Haley are already showing us the way forward. Starting on the job in a few days will be Mike Pence, who leaves Washington voting against the McConnell Tax Hike, and returns to Indiana its decidedly conservative Governor.

That should give us, as a party, hope for our future.