The one running for office, Rep. Charlie Melancon, has not let his trailing massively in polls to incumbent Republican Sen. David Vitter get in the way of keep digging his hole deeper. While Republicans and Vitter have argued that tax cuts pushed through by former Pres. George W. Bush and the GOP but which will expire by the end of the year should be renewed – a view increasing supported by Democrats – Melancon wants taxes to increase in line with Pres. Barack Obama’s view for those single filers making more than $200,000 and for those married filing jointly of more than $250,000.
Melancon says so because – get this – otherwise the federal budget deficit will increase more. This is the same Melancon who hadn’t cared at all about deficits during Obama’s term, voting for record budget-busting spending throughout, most prominently for the early-term spending bill that has managed to increase unemployment and the number of federal government jobs simultaneously while producing nonexistent economic growth. That bill’s bite looks to be settling in around the $800 billion range; Obama Administration officials predict an extra $35-40 billion would be raised by this tax hike. And if Melancon were a genuine deficit hawk, he’d be against renewing cuts for any income earners.
What this hypocrite doesn’t seem to understand is the tax hike he backs has the greatest potential to choke off any potential economic recovery. Democrats in trying to sell this idea fixate on the “97 percent fallacy,” that only three percent of household filers report any business income and therefore it won’t be very burdensome on small business. This is to divert attention from the fact that, in reality, almost half of net income attributable to small business activity went to households above the $200,000 level. In other words, just about half of all small business activity will be subject to these tax increases, so they would gut recovery chances as proprietors reduce activity or, as studies have shown, entrepreneurs are significantly less likely to try to start small businesses as rates increase.
He’s not the only one trying to demagogue this issue. His co-partisan Sen. Mary Landrieu, also takes the Obama position and rationale, proving you don’t have to be running for election to be similarly disingenuous and a sudden convert to reducing deficits, she also having voted for the spending bill. And both claim they want to help small business when in fact the Obama legislation they support would bring more government control over the financial sector where it doesn’t destabilize it further.
This legislation, which claims $12 billion in tax credits, would help few businesses and what few can use it can only do so for the next two months to two years (depending on the kind of credit). Worse, the $30 billion asserted to lend to business contains qualifications that would lower credit lending standards and give the government some ownership in the accepting lending institutions. Raising this money, which runs afoul of Melancon oft-stated but seldom followed pledge to pay-as-you-go in government, he conjures up from “waste” in the Department of Defense.
If Melancon and Landrieu, who actually is chairwoman of the Senate’s Small Business and Entrepreneurship Committee, really preferred helping small business, they’d back extending the Bush tax cuts in their totality. Instead, they’d rather support an agenda featuring more government spending and control that slowly but surely is bringing ruin to America’s economy.