To hear Senate Minority Leader Mitch McConnell and some of his fellow Capitol Hill Republicans tell it, a failure to extend the Bush tax cuts for the wealthiest 2 percent of Americans would cripple the nation's small businesses.
But McConnell's House counterpart, Rep. John Boehner, undercut that argument over the weekend by acknowledging on Face the Nation that just 3 percent of small businesses would pay higher taxes under President Barack Obama's proposal to let the cuts expire at the end of the year as scheduled for taxable income in excess of $250,000 but extend them for income of $250,000 or less.
Boehner's candor exposed just one of the flaws in Republicans' disingenuous arguments for cutting their rich friends more tax slack.
For instance, McConnell and crew rant and rail about deficit spending and the national debt. But extending the tax cuts for the rich will cost the federal government $700 billion over the next 10 years — $700 billion that could reduce deficit spending, $700 billion that could pay down a bit of the national debt.
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It's also $700 billion the government won't be borrowing, which will increase the availability of credit for those small businesses that bring the crocodile tears to McConnell's eyes. If financing isn't available to small businesses when they need it for expansion, it will slow the nation's recovery from the worst economic downturn since the Great Depression.
McConnell argues that now is the wrong time to raise taxes. Of course, if the economy was in the biggest boom in the history of the world, he would say that's the wrong time to raise taxes, too. His view of the world precludes there ever being a right time to raise taxes.
The implication of the "don't raise taxes during a recession" argument is that doing so takes money out of the economy people would otherwise be spending on goods and services. But that isn't necessarily the case with tax cuts for the rich.
According to a Bloomberg News report, research by Moody's Analytics Inc. found that wealthy Americans put more money into savings following the Bush tax cuts.
By contrast, they saved less during the Clinton years of the 1990s, when taxes were higher. So, tax cuts for the rich don't provide the kind of economic stimulus McConnell and his fellow Republicans would have us believe.
Tax cuts for the rich while trying to fight two wars, one of which was totally unnecessary, didn't make sense when they were enacted. They make even less sense now, as the federal government tries to cope with this recession without going too deeply into debt.
Obama's plan to let the cuts for the wealthiest 2 percent of Americans expire while extending them for the middle class folks who will stimulate the economy with their spending is the right course for the nation.
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