The Small Business The 97% Fallacy
The president's plan to raise top marginal rates is holding back the very people who should be leading the economic recovery.
http://online.wsj.com/article/SB10001424052748703959704575454061524326290.html#mod=most_viewed_day

If Obama had created a proper business environment long ago, that $2T they're sitting on would've been fueling this economy. Instead, we're closing out "The Summer of Recovery" with unemployment up to 9.6%, now, and — just to ensure that Business sits on that cash that much longer — a master plan to raise taxes. And campaign trails filled with Dems, saying "Vote for me because... uhhh... well, because... ummm..."

If I weren't witnessing this with my own eyes, I'd never believe it.

The thing I'd like to see is a distinction made between small businesses and multi-national corporations.

Obama has done some to make this distinction, but not nearly enough.

Because I think you make a good point, CB. Small businesses are struggling. Yet, at the same time, most of large corporate America is doing amazingly well. M&A activity is up across the board. In part because they have so much in cash reserves, they literally do not know what to do w/ it.

Everyone wants to help small businesses. What bugs me is when the multi-national corporations whine like small businesses to milk the government (when most are doing amazingly well).

The supply side is important. But I think for too long we've focused solely on supply side economics. If we run out of middle-class consumers, eventually this will catch up to those large corporations who are doing so well right now.

This is why what I'd like to see is a tax structure that helps create innovation and small businesses and appropriately taxes the very very upper end of the spectrum.

The trick is, who is able to donate most to political campaigns ... both Democrat and Republican. *sigh*

Cheers
-David

$250k a year, especially if you live in NY, parts of California, or D.C., is really not "wealthy".

Good article, D. This is exactly the kinda thing I'm talking about. Professional politicians — many of whom have never even been on a private sector payroll in their lives, much less had to make a payroll — really, truly do not understand how business works. Just wait and see what raising taxes, in this current environment, is gonna do. I don't even wanna think about it.

Is that okay? In this economy, with people seriously struggling to keep their fledgling little businesses afloat, is it all right that ONLY 3% — who are barely even cutting a profit — will be shelling out another thousand bucks? How many people does 3% amount to? And is this a way of creating jobs? See, that's my point. These people should not be included in the top-tier. This level of business-owner is just barely scraping by.

(In fact, nobody should be getting their taxes raised at a time like this, but that's another story entirely.)

Y'know, Chris, when Dems talk about "only $1,000 more," they're forgetting all the other monies these little guys are paying out. Depending on where one resides, some of these people are already paying through the teeth for state and local taxes and all sorts of other things. Some have to carry federal flood insurance, which is "only" another couple of grand. How about the new mandated health care insurance? You put enough "only's" together — especially for the little guy residing in, say, NYC, who's getting killed with rent and permits and licensing fees, etc., etc. — and a lot of these little guys are gonna be among the 9.5% receiving unemployment bail-outs in a NY heartbeat. This is not how jobs are created; this is how little businesses get ruined. Because Dems are very myopically looking at "only" the federal tax aspect and failing to factor in a whole lot of other financial realities. You'd be surprised how very far $250K does NOT go for a family of four in NYC.

OK, I didn't go back and dig up your quotes, but I did come across this searching for something else:

Heh.

Chris1962 -

Only 3% of small business owners would see their taxes rise. That "income" to a worker is actually "profit" to a small businessman, and not the net worth of the business or even the net receipts of the business. So it doesn't affect businesses that are "worth" over $250K, just the ones that "profit" over $250K in one year. Hence the small percentage (at some point, they stop being "small businesses" and start being "large businesses" which affects it too) of small business owners affected. And they'd be paying less than 4 percent more -- ONLY on the money they make OVER that $250K. Not exactly crippling. If someone made $275K, for instance, his taxes would rise by only $1,000 (less, actually, since I used 4% to make it easier math).

[Oh, and go look at the note I just posted at the bottom of my press conference article from Monday, and read the link -- this may be interesting, tax-wise... we'll see next week...]

But I do agree with you -- this is one thing Reagan started that has gotten completely out of hand. We used to have a LOT of tax brackets in this country. The GOP decided fewer was better. In doing so, they got rid of all the top brackets (I think we only have 5 brackets now, I could be wrong). I think Dems would be smart to push for a "millionaires' bracket" -- you only hit it if you make a cool mil per year. But that probably makes way too much sense for Dems to jump on it. Sigh.

Michale -

There's a reason for that. Although you're right about Dems not being able to block much in the past (they blocked some judges), it's because in the past few years, Republicans have used the filibuster/cloture thing MORE THAN IN OUR ENTIRE HISTORY. In the 2007-2009 Congress, they used it more in TWO YEARS than in ALL OTHER YEARS COMBINED. And this Congress will likely shatter that record, too. So it basically comes down to that, I think -- which side uses their leverage more. But I think also that you can look forward -- the next time the Dems are in the minority in the Senate -- for Dems to use it on par with the new standard the GOP just set. So we may achieve parity then... or maybe "absolute gridlock" is a better way to put it. And look for the GOP to be loudly denouncing the Dems as "obstructionists" just like the Dems now do (although the GOP will complain louder and more effectively, because they're better at whining than Democrats could ever hope to be).

Sorry, was that a bit cynical? Sigh.

-CW

it is, after all, a campaign season, so GOP senators may just block everything (which they've proven they're quite good at).

Why is it, when the Democrats are the minority they can't block shinola??

Yet, when the GOP is the super-minority, they allegedly manage to derail everything??

I guess this harkens back to the question, why is it that, when the Democrats have a near super majority AND the White House, everything is STILL the GOP's fault??

You would think such ridiculous passing of the buck and blame evasion would invite some very real and very deep soul-searching on the part of the Democrats...

But, noooooooooooooooooooo.......

Everything is always everyone else's fault....

It is this kind of fix-the-blame-and-not-the-problem mentality that has John Q Public royally pissed off...

Michale.....

I almost posted this earlier CB. There's a great article from one of my favorite economists that takes this a step further.

http://www.newyorker.com/talk/financial/2010/08/16/100816ta_talk_surowiecki

$250k a year, especially if you live in NY, parts of California, or D.C., is really not "wealthy".

It's kind of like the Chris Rock joke: Shaq is rich, the person who writes the checks to Shaq is wealthy.

You're so right about that. I don't know if you recall, but during the 2008 campaign, given all the young voters Obama was energizing, pollsters were going crazy. Nobody wanted to commit to anything.

On the tax thing, my money (right now) is on a compromise being reached. The Dems will get the tax rates we had under Clinton for the top two brackets restored. But they'll bargain away the next one or two years of continuing these cuts in order to do so.

I really don't know what the heck they're gonna do. But as far as the top tax bracket, I've always felt that $250K was just to low to set as the bottom rung of "the wealthiest" category. There is absolutely nothing "wealthy" about $250K. I think if the Dems popped that up $500K or $750K, they would fare much better. That way, they're not giving away the entire store, and it would also mean a LOT to that lower-rung of small business owners. I don't think the Dems realize how badly hurt those small businesses are gonna get if their taxes go up in this economy.

Well, I would argue that Obama's withdrawal was a FAR cry from the precipitous withdrawal demanded by the Democrat base. THAT was the withdrawal that the GOP was complaining about.. And rightly so..

However, yes.. Credit where credit is due. Obama deserves credit for drawing down troops in Iraq in an orderly and secure fashion.

So, yes.. Obama does deserve credit for that.

Michale.....

Oh, c'mon, even if you (which I know you do) credit mostly Bush and the surge for the situation in Iraq, you have to give Obama at least some credit for where we are now. Or do I have to go back and dig up some quotes from you during the campaign to show what people were saying back then on the subject? I know it's tough, but while calling for Dems to admit they were wrong about the surge, you've got to admit that the GOP was wrong about the "precipitous withdrawal" from Obama, right? I mean, it's only fair.

Stan -

I have hopes that Obama will score a few decent legislative victories this month, but we'll see... it is, after all, a campaign season, so GOP senators may just block everything (which they've proven they're quite good at).

Chris1962 -

I try to stay out of pollsters' spats, because I'm strictly rank amateur status, myself. That's why I use a "poll of polls" average, which takes off the rough edges of any one poll, and then further average them into one single number for the month. And I had noticed a pretty wide disparity between Ras. and Gallup for the past two weeks, you're right.

For others unaware of this debate, it boils down to "likely voters" and how the pollsters decide who is "likely" to vote and who isn't. It's a tricky thing to decide, because if a wave of new voters appears (like "the youth" getting off their butts and voting) then your poll numbers will be wildly off. But this rarely happens, I should mention, which is why some like the LV measure the best. I'm officially neutral on the debate, personally.

As for the bump, we'll see. Again, for everyone -- what a lot of people miss in the art of polling is the fact that things have a lag time. Say there's an event (presidential speech) that influences public opinion. Well, only polls which START polling AFTER the event will catch the swing in the public mood. Most polls are multi-day polls, so it takes a few days for them to finish polling. Then it takes another day or so to crunch the numbers. Then the poll results come out -- anywhere from three days to a week AFTER the actual event. So, when looking for daily changes, always look to what happened the week BEFORE to see what could have influenced it.

September's going to be a wild month though, so I don't offer any predictions past a one-week bump. We'll see, we'll see...

On the tax thing, my money (right now) is on a compromise being reached. The Dems will get the tax rates we had under Clinton for the top two brackets restored. But they'll bargain away the next one or two years of continuing these cuts in order to do so. What this practically means is that the next Congress could change everything around again, although the Dems could score a (weakened) bragging point on the campaign trail. This is going to be an interesting debate, because BOTH parties think it's a political winner for them. Could be a Battle Royale, in other words.

David -

Yeah, this has been Democrats' problem since about 1980 or so. Sigh.

-CW

He's been successful in passing legislation

Yes he has...

Unfortunately, the problem is he is passing legislation that the majority of Americans are against..

To their credit, this is what the Tea Party and folks like Glenn Beck are doing: providing a sense of purpose to the dialogue that's lacking from the administration. I disagree with their mission statement, but I give them credit for doing it.

I knew there was a reason why I liked you! :D

Michale.....

He's been successful in passing legislation. But what seems to be missing is the mission statement. The guiding principles and why they're worth fighting for. This is what he did such a good job of on the campaign trail.

I think Arianna Huffington nails it in this article:

http://www.huffingtonpost.com/arianna-huffington/glenn-beck-president-obam_b_699822.html

Because the absence of this guiding purpose leaves a moral ground which will be filled by others.

To their credit, this is what the Tea Party and folks like Glenn Beck are doing: providing a sense of purpose to the dialogue that's lacking from the administration. I disagree with their mission statement, but I give them credit for doing it.

Cheers
David

Not so fast...

Dems unlikely to repeal tax cuts for the rich
Democrats in Congress are poised to play a leading role this month in thwarting their party's effort to raise income tax rates on the wealthy.
http://www.mcclatchydc.com/2010/09/01/99992/democrats-unlikely-to-repeal-tax.html

Actually, I think this would make a great October surprise for Obama and the Dems. It would go far in giving Business some confidence to start firing up again. It would also help out a lot of Dem candidates, who are being brutalized on the stump. Right now, business owners don't know what the heck is going on with taxes, which is compelling them to sit tight and do nothing until they figure out what the deal is. Nobody can craft budgets without knowing what their tax situation is gonna be, and how it's gonna impact their bottom line.

First, before I forget, Stu Rothenberg (the Dems' Charlie Cook; don't know if you follow him) appears to have given official clearance for Dems to start taking a closer look at none other than my good friend and yours... http://rothenbergpoliticalreport.com/news/article/is-rasmussen-better-than-its-reputation

Having annoyed many, Obama's chief spokesman Robert Gibbs made sure "the professional left" wasn't left out, as he gave the Democratic base one more slap in the face, just in case they had nodded off in the August heat or something.

ROFL. When I read an article today about Obama's mideast peace talks, the first thing I thought of was Gibbs eventually saying something that ultimately blows the whole thing apart. What are the chances.

right after NBC started broadcasting live shots of the last Stryker combat brigade leaving Iraq, Obama's numbers began to improve. Now, it's impossible to say why, leaving us with mere guesses as to the reason for the improvement. My own personal feeling is that the Iraq withdrawal news led the movement back towards approval for Obama, but I can't say I have any data to back that up with, so you should feel free to draw your own conclusions.

I fully expect Obama to get a bump outta this. It might take a day or two before it shows up, but an event like formally ending combat operations on a 7-year war ought to pop him up a few points, without a doubt. I don't think the bump will last. Most don't. But I think you have that little ray of sunshine to look forward to.

Meanwhile, for all the crap Rasmussen catches from the Left, their likely voters polls have been reporting higher approvals for Obama than the last couple of RV polls. Today he's got a 48% approval. Same with yesterday, which was up two points from the day before.

Of course, a two-week blip does not a trend make. Obama could easily post some lower numbers next week, which would mean this period may end up as a spike which reverses itself.

I think the State Department's U.S. Human Rights Violations report to the U.N., citing the Arizona law, is likely to hurt him. I don't know what that man is thinking sometimes. I really don't.

I am hoping that we will see an upward trend in the polls for Obama. The reason I think this is because voters will start to notice and feel the effects of the new laws such as the new consumer protections for credit card holders and many aspects of the healthcare bill that are only now being phased in. Also if Congress can get the small business bill to Obama's desk I think it will prove very popular. The other popular issue pending is extending the tax cuts for the middle class and allowing the tax cuts for the insanely rich to expire. I just hope that Obama will be out in front on these issues which is what the voters want from him - they want a leader.

...Stan

Here's an alternate explanation..

The Media (surprisingly enough) got the remarks dead on ballz right, but Obama wasn't calculating on the fact that the vast majority (70%) of Americans were against the Cordoba Mosque..

So, the next day he had to walk back his comments because, ONCE AGAIN, he pissed off the majority of Americans..

This is exactly what happened with the "Cops acted stupidly" statement so there is ample precedence to support my interpretation of the events in question...

Having annoyed many, Obama's chief spokesman Robert Gibbs made sure "the professional left" wasn't left out, as he gave the Democratic base one more slap in the face, just in case they had nodded off in the August heat or something.

hehehehehehehehe

Now THAT was funny!!! :D And oooohhhh so true... :D

With the utmost respect (and you know I mean it) your "silver lining" could also be termed "grasping at straws".... :D

Overall, things are going exactly as I figured they would.. Obama continues to tank and will drag the Democratic Party down with him in the run-up to the Mid Terms...

But waiting in the wings is some very nasty surprises....

It's possible that Obama will rise to the occasion and show true leadership..

NOTHING to date has indicated that he is capable of doing so with two VERY minor exceptions...

Obama's response to the Somali pirates and his response to the McChristal issue...

However, those are very minor in the larger scheme of things and, to be perfectly honest, I think those were more of Obama simply following the advice of his military staff.. But, that DOES indicate good leadership, knowing when to say, "over to you."....

Michale....