THE BLOG
09/16/2010 10:31 am ET Updated May 25, 2011

One More Example of Our Irrational Politics

In the game of political chicken, which is all about the midterm elections, it appears House Minority Leader John Boehner of Ohio was the first one to blink.

Boehner told Face the Nation host Bob Schieffer this past weekend that he would vote for the middle-class tax cuts, if that was his only option.

In the latest issue du jour that has maintained the infamous tradition of gridlock on Capitol Hill, President Barack Obama and the Democrats support keeping the tax cuts put in place by President George W. Bush for those earning less than $250,000, while Republicans support including the tax cuts for those making more than $250,000.

The day after Boehner made his comments, Senate Minority Leader Mitch McConnell made it clear from the Senate floor that the GOP was not in lock-step with the Minority Leader's position.

The differences would be laughable if Republicans were not holding 97 percent of the country hostage while also offering us a reminder and preview of how they would govern going forward.

I acknowledge the Democrats should be held accountable since they control Congress and the White House. Moreover, the president has been justifiably criticized for the tardiness by which he has focused on the economy.

But not to acknowledge that Republicans are the primary culprits of the current fiscal mess is to make Rip Van Winkle look like an early riser.

The Republicans' primary opposition (beyond the sheer politics) to the president's tax cut plan is the claim it hurts small business. Whenever a politician or pundit utters the word small business, for many Americans it conjures images of a mom-and-pop operation, struggling to keep their doors open in tough economic times.

Here is how the U.S. Small Business Association defines a small business:

• 500 or fewer employees for most manufacturing and mining industries (a few industries permit up to 750, 1000 or 1,500 employees);

• 100 or fewer employees for all wholesale trade industries;

• $6 million per year in sales receipts for most retail and service industries (with some exceptions);

• $27.5 million per year in sales receipts for most general & heavy construction industries;

• $11.5 million per year in sales receipts for all special trade contractors.

Under the president's proposal, not only will the 97 percent of Americans who make under $250,000 receive a tax cut, but so will the remaining 3 percent on their first $250,000.

As a result, 3 percent of small businesses would be affected, raising an additional question: Who exactly comprise the 3 percent of small business that would experience a tax increase?

According to the IRS, this 3 percent represents roughly 44 percent of business profits. These include large law firms, medical practices such as surgeons and other specialists.

What many of these so-called small businesses don't do is create the type of growth necessary to spur the economy. These are not manufactures that create new types of services.

Studies have consistently shown that cutting taxes for the wealthiest Americans (the 3 percent) they are more likely to save than to put the money back into the economy.

The 97 percent are more likely to put the money they receive from the tax cuts back into the economy, which spurs growth and leads to job creation.

The 3 percent is more likely to purchase unproductive assets that do not lead to economic growth a boat, luxury car, expensive watches, etc.

The other misguided feature about the Republican proposal is the $700 billion that would be added to the deficit over 10 years -- a far cry from the president's economic record.

According to the Department of the Treasury, Obama's first fiscal year resulted in a reduction of the deficit by 8 percent from the previous year, despite the stimulus spending. How does this compare with what the current group of Republicans are advocating?

Haven't we seen this movie before? Tax cuts for the wealthy and increasing deficits. This is the rationale to return the majority in Congress.

It is an amazing slight of hand. The small portion of Americans who can receive a tax cut, just not as much as the other 97 percent, who are also least likely to put their money back into the economy to spur growth, is the reason this legislation is being held up.

What's more, if you disagree with this irrational logic, Republicans will accuse you of class warfare. But this is our politics. I have no doubt Democrats would do the same if the roles were reversed.