President Barack Obama insists that the way to fight the nation’s nearly 10 percent unemployment rate is for Congress to pass a bill letting the federal government offer $30 billion in loans to small businesses and $12 billion in tax breaks to encourage hiring.
Now, it is true that if government offers businesses money – whether through loans or tax breaks – some companies will accept that money, and there probably will be some hiring as a result.
But that is a terribly round-about way to spur job creation, especially when a more obvious and effective way is staring Congress and the president in the face. Why not just extend existing tax relief beyond its scheduled expiration at the end of the year?
Why promote more government bureaucracy by creating a new maze of government loans and tax breaks, particularly when there is little certainty that that would increase employment significantly?
One of the big reasons companies are hesitant to expand and hire new employees is the fear they will face tax increases next year. Congress could ease that fear by extending the existing tax cuts, instead of allowing them to die at the end of 2010.
But the president says he wants to raise taxes only on “the rich,” doesn’t he?
Yes, but what he doesn’t say is that many of those “rich” people are in fact the owners of small businesses that employ lots of Americans. Raising their taxes during a time of high unemployment will make it less likely they will be able to hire new workers anytime soon – and more likely that they will lay off still more employees.
It’s silly for Congress to consider “giving” a limited set of new tax breaks on the one hand while “taking away” part of the current, broad-based tax cuts on the other.
Existing tax relief should be made permanent – accompanied by spending cuts.