How many more months must Americans endure near-double-digit unemployment, little or no new-job creation, economic stagnation, a topsy-turvy stock market, and sagging consumer confidence before Washington politicians concede the “summer of recovery” is mostly a mirage?
They’ve spent nearly $8 trillion since 2007, including nearly $2 trillion on economic stimulus programs and an equal amount for the Troubled Asset Relief Program and similar bailouts. They’ve effectively nationalized Fortune 500 corporations, taken over the health care sector, and set the regulatory stage for more bailouts and takeovers, but the needle is still stuck. Worse, recovery isn’t likely for many months ahead because those same politicians are planning more of the same failing policies.
Consider that entrepreneurial small businesses are the job-creation machine of a free-enterprise economy. But these firms are about to get smacked with significant tax rate increases that will keep most of them struggling just to survive. President Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi will let the Bush tax cuts of 2001 and 2003 expire as scheduled Jan. 1, 2011. The current 33 percent tax rate on individuals will go to 36 percent, and the current 35 percent rate will increase to 39.5 percent. Those are individual rates, but the majority of small-business profits are taxed as income to individuals.
According to Internal Revenue Service data,30 million tax returns reporting small-business income were filed in 2008, showing net business profits of $631 billion. Americans for Tax Reform pointed out Friday that “large chunk of this net profit -$457 billion – faced taxation in households making more than $200,000 per year. A majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan.” So, those millions of small-businesses will soon have even less money to invest in expanding existing product lines or services, as well as job-creating new ventures.
As for the big corporations that are hoarding billions of dollars that would otherwise be flowing into new investments and fueling renewed economic growth, there is no mystery why they are putting off making such decisions. Who can blame them after seeing the nationalization of General Motors and Chrysler, or the moratoria under which hundreds of large and small energy firms were forced to stop drilling in the Gulf of Mexico and on land in places like Wyoming?
Also, an explosion of new anti-business regulations to further hobble the economy is coming soon, thanks to Obama-Reid-Pelosi policies. As ATR’s Grover Norquist told The Examiner, “You don’t know what the law will be next month, or if you will even be allowed to own your business. The only thing you can be sure of is they will raise your taxes. You would be a fool now to go out and hire somebody new.”