Republican Hypocrisy About Small Business

Politics is a tough business, so I don’t want to sound like a crybaby about the Republican strategy of blocking every possible Democratic bill in Congress. But the GOP hypocrisy toward small business is so transparent that I can’t resist writing about this again.

Both parties talk about small business as if it were mom and apple pie. President Obama actually used the apple-pie cliche at a small-business event last month. But Obama is pushing a bill that might actually help small businesses, which have laid off a disproportionately large share of workers during this recession and are bouncing back much more slowly than big companies. Senate Republicans, meanwhile, have been blocking the bill for a month now.

As I wrote yesterday in the Fiscal Times, this is a bill that small business groups support; that addresses a real problem for many companies right now in getting bank loans; and that wouldn’t add to the deficit. Senate Republicans aren’t really objecting to substance. They complained that Democrats weren’t letting them offer all the extraneous amendments they wanted, like one to permanently end the estate tax.

This wouldn’t be so annoying if Republicans didn’t wail crocodile tears for small business in order to justify their opposition to everything from health care reform and financial reform to letting the Bush tax cuts expire for the top 2 percent of income-earners. Did you know that half of all small business income would be “captured” by higher tax rates if the Dems have their way? That’s what Mitch McConnell and others claim. As it happens, only about 3 percent of small business owners would be affected if the Bush tax cuts expired for those at the top. I wrote about this a few weeks ago at the Fiscal Times. Howard Gleckman offered more detail at TaxVox.

By contrast, the Democrats’ Small Business Job Creation Act might do some real good. It offers some new tax breaks, which would be paid for entirely by eliminating tax breaks elsewhere, including one for the oil industry. More importantly, it creates a $30 billion lending fund for community banks, which the banks could leverage to make as much as $300 billion in additional small-business loans. The C.B.O. estimates that the lending fund would actually make a few bucks for the government over ten years.

And remember: we’re talking about helping a constituency — small business owners — that leans heavily Republican. Yet Senate Republicans are blocking it. As Obama said on Thursday, “It’s obstruction that defies common sense.”

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