With the payroll tax cut and unemployment insurance extensions completed to the end of the year, most observers don’t expect much action in Congress until the November elections. The fact that you can say that on February 20 is quite sad, but it also happens to be the truth. This Congress has shown no ability to get anything done without a crisis point. And nearly all of the crisis points will happen after the elections, unless by some quirk the country hits the debt limit in October.
House Majority Leader Eric Cantor claims to be soldiering on with a new set of jobs bills, necessary because the GOP has become defined by their attention to culture war issues rather than what brought them to the House majority. But these plans are either small beer or just another manifestation of the “tax cuts forever” ideology that’s so fashionable in Washington.
The first of the plans – dubbed the “JOBS Act” – would improve access to financing for small business plans and reform or remove regulations for starting a small business. Cantor said that the package drew from ideas suggested by the president’s Council on Jobs and should garner bipartisan support.
“We need to address the regulatory burden that small businesses are facing so we can see them start up again,” Cantor said on “Fox News Sunday.”
“This package represents the first opportunity for us post the payroll tax cut extension to work together in a bipartisan matter and get something done,” he added.
But in what is likely to be the far more controversial of the proposals, Cantor also proposed a 20 percent tax cut for small businesses.
“We’ll be bringing forward a bill that brings a 20 percent tax cut for small businesses knowing full well that small businesses create 60 percent of the lobs in this country,” Cantor said.
This last bit represents the GOP trying to build on the feedback loop that Democrats accomplished with the payroll tax cut, and it’s an example of why pilfering the other side’s policy ideas can end up being dangerous. Democrats were able to chip away at Republican credibility on tax cuts. But Republicans still know how to introduce tax cuts. And now that they’ve done so, with a large tax cut on small business (another area that Democrats have fetishized over the past couple years), they can just completely turn the tables on their adversaries. They can accuse Democrats of insufficient fealty to tax cuts. “If a tax cut is good enough for American workers, it’s good enough for the small businesses who employ them,” will be the rallying cry. And it just might work.
There are areas where tax relief could make sense for some businesses. Because of the benefits to mitigating climate change, I’d say renewing the Production Tax Credit for renewable energy is vital, unless we want all our water contaminated from fracking. Wind and solar power are at a critical point right now. But that’s a far cry from a 20% across-the-board tax cut for its own sake, which should be viewed skeptically as having any jobs impact whatsoever.
I should have kept a list of all the small business tax cuts that President Obama has signed over the past three years. The last I remember it was something like 18. They did little to actually solve an economic problem that almost entirely consists of weak demand for goods and services. Democrats might want to be careful about playing with the fire of tax cuts; they’re likely to get burned. Of course, to say this assumes that they don’t believe in a tax cut panacea policy, at least as a campaign strategy.





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Cantor wants a 20% cut? Obama will only comply if Cantor agrees to “go bipartisan” and make it a 40% cut.
The Democrats should counter in the opposite direction. Say, “No, 20% tax cuts are bad, we should have a small business 20% tax increase!”
I have a better idea. Let’s all stop paying taxes until we have a representative government. Okay?
I am hip to that Repug cut the tax out plan. It doesn’t go far enough. Can I stop paying all the taxes and fees on my phone bills too?
Oh, what about that highway tax and gas tax?
Sales tax is another one that must be cut.
Let’s just CUT them all. Snip, snip, snip. Like a credit card, just cut them all up and toss them in the burn pile.
If that dickwad Eric Cantor wants it……..check the fine print. Very carefully.
Democrats should suggest a “pay for” in the form of an alternative minimum tax for corporations aimed at tax scofflaws like GE.
That’ll shut them up.
“This last bit represents the GOP trying to build on the feedback loop that Democrats accomplished with the payroll tax cut, and it’s an example of why pilfering the other side’s policy ideas can end up being dangerous.”
I wish you would have realized how important this was when you were promoting the payroll tax cut, David. Perception has consequences, as Mr. Frank’s Sunday Book Salon had as its theme. The fact that both ‘sides’ profit from this meme in insidious ways is why it continues to be promoted, and thank you for pointing that out here. I just put a late-to-the-party comment on the Book Salon with respect to sincerity, and I think that frames are hugely important. We now have a frame that will further imperil the social programs we all are going to need in future.
The truth is the majority of democrats like tax cuts for themselves and their patrons. So tax cuts are always a threat to the middle class and progressives because democrats can’t get past their own Ben Nelson inertia to follow along with the overall GOP plan. After all, the GOP legislative agenda is the de facto political agenda of the political patron class and always has been.
Thomas Frank discusses the ‘defend small business from the government’ aspect of the ‘New Right’ in his book.
‘Small business’ status has been claimed and used by very large businesses to distort reality. What is a small business? Up to 50 employees? Small businesses really do have more difficulty dealing with government regulations and inspectors. They often do not have the staff to study all the various regulations in adequate detail, and fail when they cannot comply. Multinationals have a much easier time avoiding regulations, and multinationals divert regulatory problems to small businesses by using them for suppliers of materials sensitive to regulation. Whether the small business survives is not a concern to them as there is always another one ready to take up the slack.
The ‘New Right’ frames ‘small business’ in a very distorted way. It is not the case that “small businesses create 60 percent of the [j]obs in this country” and the jobs created by actual small businesses are lower paying and are much less likely to have unions and benefits like health insurance and pension plans. Lowering taxes on actual small businesses would probably help them and smarter regulation (help them to comply) might make things easier, but what the New Right is after is to make the 1% richer, not small businesses.
The Tea Party membership was largely small business people and they had some real issues that were conveniently absconded by the ‘New Right’ and the Tea Party people were shucked off as soon as possible.
I think that those people might just be ready to see the Occupy point of view. The characteristics of conservative morality stress loyalty and respect, which makes betrayal a very serious matter and they have been betrayed.
Excellent idea! I have to worry about AMT, why shouldn’t GE?
The definition of Small Business is the pitfall Democrats have to avoid. As you say, the New Right thinks things hedge funds and lawyers groups are “small business” because of the number of people claimed as employees. Contract employees are contractors not employees and one dude can play a lot of Wall Street roulette.
As long as the definition of small business is say less than $ 500k / per employee of revenues and maximum overall revenue of no more than $10 million would be a good start. The GOP definition of small business would just put more $ into the hands of the 1%.