For Democrats Class Warfare Trumps Job Creation Posted 06:36 PM ET
Taxes: With unemployment chronically high, how does taxing more than a third of small-business income make sense? Politically, that's how. The Democrats' dead-on-arrival surtax is a campaign ploy, not a jobs strategy.
At a time when leadership is sorely needed to get America back to work, President Obama, Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi just can't move beyond class war. It's a potent political strategy because it unfailingly attracts voters ignorant of economics.
A real leader learns from failures. It may have taken President Bush too long to order the surge in Iraq, but he ultimately recognized the defects of a strategy that risked another Vietnam-style surrender for America.
Admitting that their big-spending stimulus failed is the first step to getting to work with Republicans on a jobs policy that actually produces jobs.
But Obama, Reid and Pelosi, with their unconscionable record of incompetence and corruption in handling the economy over the past five years, refuse.
The latest example is their 3.25% small business surtax (5% in the Obama "jobs bill" version), a purely punitive device that all parties know has no chance of becoming law.
As Roll Call describes it, "Senate Democrats and the White House are setting up a certain-to-fail vote to extend and expand the payroll tax cut as soon as this week as their signature political showcase heading into the election year."
Far from being just a tiny, harmless tax on millionaires, the small business surtax slaps 41% of all business income according to the figures of Obama's own Treasury Department.
Joint Committee on Taxation data show that about 34% of all small business income would be affected by the surtax in 2013. That means 34% of all small firms with a reduced incentive to hire and expand output.
As the National Federation of Independent Business points out, small businesses produce roughly half of America's private GDP and historically generate about 65% of net new jobs.
It would be hard to design a better program for killing future job growth than one that taxes the job creators.
Yet, the Democrats' narrative is that Republicans will do anything to protect the "rich."
"If they vote 'no' again, the typical family's taxes will go up $1,000 next year," President Obama said at a campaign stop in Manchester, N.H., last week. "If they vote 'yes,' the typical working family will get a $1,500 tax cut."
But Republicans have made it clear for months that they want to work with Obama on extending the payroll tax cut. Their Will Rogers "I've never met a tax cut I didn't like" approach is fine.
Unfortunately, as an economic policy cutting payroll taxes simply isn't a jobs generator because that cash goes to employees, not employers.
Sen. Mike Enzi, R-Wyo., got it right when he pointed out this week that the payroll tax cut may not have "created a single job."
Moreover, as House Republican leaders pointed out in a September memo, "There may be significant unforeseen downsides to large temporary tax cuts immediately followed by large tax increases" — namely the expiration of the Bush tax cuts at the end of next year.
The moves together may ultimately add "significant new uncertainty in an already uncertain economy."
There are more than 20 bipartisan jobs measures that have passed the House, but which the Democratic Senate is ignoring. President Obama once said, "there is not a liberal America and a conservative America — there is the United States of America."
Well, tell your party's senators that, Mr. President.
Get them to pass some bipartisan job creation bills. Stop demonizing Republicans and thinking about Election Day 2012. Focus instead on getting the 9% unemployment rate down. |
