There’s not much argument that Republicans as a whole support business and the free-market. They’ve long espoused their belief in government’s responsibility to support the private sector and its role in job creation. With machine like consistency, they’ve beat back efforts to spawn government jobs, always asserting that small business is where the jobs are. So, one would think the Republicans would support an attempt to assist small businesses. But such was not the case yesterday, when Senate Republicans voted unanimously to defeat a bill to stimulate investment in small business.
The Small Business Jobs and Credit Act of 2010 is intended to spur investment by eliminating capital gains taxes for investment in small firms, and also creating a Small Business Lending Fund to underwrite loans through community banks. It would also waive fees on Small Business Association loans and allow increased tax deductions for new equipment and other expenses. For many this sounded like a reasonable shot in the arm for beleaguered businesses, but Republicans filibustered yet again — and another potential jobs bill failed to pass.
This comes after weeks of Republican fighting to strip the job creation provisions from the bill to extend unemployment benefits, which they subsequently stalled even after stripping. Democrats in the Senate did finally pass the extension last week with the help of 2 Republicans, but not before 2.6 million Americans had seen their benefits run out. If this all seems more than a little counter-production in an environment where real unemployment is still over 16.5%, that’s because it is.
So, what is the reason for the seeming incongruity between Republican rhetoric and their voting record? The answer just might be found in their position on the Bush tax cuts.
When defending the extension of the Bush cuts for the wealthy, Republicans routinely cite the detrimental impact the “hikes” would have on small business. This slant certainly makes good political sense, since according to the Small Business Administration (SBA), 90% of U.S. firms have fewer than 20 employees. And considering the current state of unemployment, coupled with the fact that small business creates between 66% and 88% of net new jobs, it’s patently obvious that efforts to stimulate job growth must be focused on this segment of business.
So, Republicans profess support for the little guy, and typically rely on Grover Norquist’s 2008 estimate stating that two-thirds of small businesses would be adversely affected by expiring the cuts for the rich. Asserting their allegiance, Rep. Eric Cantor (R-VA) recently appeared on CNBC to make his case for extending all tax cuts and claimed it was because of the Republican desire to, “commit ourselves to help small business.” Indeed, Douglas Holtz-Eakin, a former Congressional Budget Office director who now runs a Republican think tank, tied it all back to jobs, claiming that the tax increase would reduce small business hiring by 18%.
Of course, all of this is as much nonsense as the Republican spin on tax cuts paying for themselves. In truth, only a small fragment of small businesses would be affected by ending the cuts for those making over $250,000. Tax expert Len Burman put the number at 3% of small businesses that are subject to the top two individual tax rates. The Center on Budget and Policy Priorities set the number even lower, at 1.9%. As it turns out, Norquist’s calculations looked at the percentage of income, not of firms. What he was attributing to the ranks of small business was the wealthiest hedge funds, law firms and lobbying outlets in America.
Fortunately, once the layers are peeled off the onion, the Republican message at least becomes consistent. It’s not small business that they support, not unless you consider multi-million-dollar sole proprietorships or partnerships as small business — just because they have few employees. The sad truth is that Republican support for small business is as ephemeral as their concern over the unemployed. It only lives in the rhetoric they use to justify their policies while hiding their true and undying loyalty to the richest 2% of Americans.
Let all voters wake up and beware. A line has been drawn in the sand. We no longer need to debate the sides based on some nebulous idea of who Democrats and Republicans support. All ambiguity has been removed — the Republican Party supports big business and will gladly sacrifice small business, the unemployed, even the nation if it will increase the profits of their elite minority.
People need to take a serious look at this and ask themselves which side of the line they’re on. And if they make under $250,000 per year and still choose to vote Republican, they need to do so with full understanding that they’re contributing to their own demise.