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Republicans rebuff Obama’s call to raise taxes on small business

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First, an article explaining how the Obama administration wants to raise taxes on small businesses.

Excerpt:

Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”

The administration’s plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.

Geithner’s explanation of the administration’s small-business tax plan came in an exchange with first-term Rep. Renee Ellmers (R.-N.C.). Ellmers, a nurse, decided to run for the U.S. House of Representatives in 2010 after she became active in the grass-roots opposition to President Barack Obama’s proposed health-care reform plan in 2009.

“Overwhelmingly, the businesses back home and across the country continue to tell us that regulation, lack of access to capital, taxation, fear of taxation, and just the overwhelming uncertainties that our businesses face is keeping them from hiring,” Ellmers told Geithner. “They just simply cannot.”

[…]When Ellmers finally told Geithner that “the point is we need jobs,” he responded that the administration felt it had “no alternative” but to raise taxes on small businesses because otherwise “you have to shrink the overall size of government programs”—including federal education spending.

So what about the Republicans in the House? Are they going to cave in to the Democrat demands for more taxes on job creators?

CNS News reports that House Republicans categorically refuse to raise taxes during a recession.

Excerpt:

Two days after House Majority Leader Eric Cantor (R-Va.) dodged the question of whether Republicans would insist that any increase in the debt limit in this fiscal year would be exceeded by spending cuts in this fiscal year, the congressman walked out of debt/budget talks with Vice President Joe Biden, stating he could not continue as long as the Democrats insisted that taxes be raised as part of a budget deal.

House Speaker John Boehner (R-Ohio), meanwhile, maintained that tax increases were off the table and that spending cuts should exceed any increase in the federal debt limit.

“Each side came into these talks with certain orders, and as it stands the Democrats continue to insist that any deal must include tax increases,” said Cantor in a statement released on Thursday.  “[T]he tax issue must be resolved before discussions can continue. Given this impasse, I will not be participating in today’s meeting.”

Both Cantor and House Speaker John Boehner (R-Ohio) have consistently said that any budget deal for the remainder of fiscal year 2011 and a vote on raising the debt limit–from $14.29 trillion to potentially $16.79 trillion (a $2.5 trillion increase)–would not include raising taxes.

After Cantor left the talks with Biden, along with Sen. Jon Kyl (R-Ariz.), Boehner held a press conference and said, “Listen, we’ve got to stop spending money that we don’t have and, since the beginning, the Majority Leader [Canotor] and myself, along with Sen. McConnell and Sen. Kyl have been clear: tax hikes are off the table.”

“First of all: raising taxes is going to destroy jobs,” said Boehner.  “If you raise taxes on the people that we need to grow our economy and to hire new workers, guess what? They’re not going to do it if they have to pay higher taxes to the federal government.”

“Second, a tax hike cannot pass the U.S. House of Representatives,” said the Speaker. “It’s not just a bad idea, it doesn’t have the votes and it can’t happen. And third, the American people don’t want us to raise taxes. They know that we’ve got a spending problem. That’s why Republicans passed a budget [drafted by Rep. Paul Ryan of Wisconsin] that pays down debt over time without raising taxes.”

But what about the Republicans in the Senate? Aren’t they usually more liberal than the Republicans in the House?

CNS News reports that Republicans in the Senate are absolutely opposed to increasing taxes in a recession.

Excerpt:

Sen. Mike Lee (R-Utah) told CNSNews.com that he would “absolutely not” support any tax increases as part of a deal to increase the debt limit.

Lee was asked if he agreed with Treasury Secretary Tim Geithner that revenue increases should be part of a negotiation on the debt limit because spending cuts alone are “irresponsible.”

“I’m fine with revenue increases as long as they don’t involve tax increases. There are other ways of increasing revenue. They could expand their use of federal public land through extension of oil and gas leases and so forth. If they want that kind of revenue increase, I’m all for that,” said Lee after endorsing the “Cut, Cap and Balance Pledge” during a press conference at the Capitol on Wednesday.

Politicians who support the pledge vow to vote against raising the debt limit unless Congress adopts a balanced budget amendment to the Constitution and implements budget cuts and caps on federal spending.

Lee was then asked if he would support any tax increases, specifically.

“No. Absolutely not. We can’t afford a double dip recession right now, and that’s exactly where that would take us,” said Lee.

“You take the same people whose investment dollars are needed to create jobs and you penalize them and you tell them you’re going to get to keep less of your, the rewards from your investment than you would otherwise take – that’s going to chill rather than promote investment. And if you do that, we’re going to have fewer jobs rather than more at a time when we can least afford to hemorrhage jobs.”

House and Senate Republicans understand that we need jobs, and that raising taxes will hurt job creation. Obama’s answer to everything is always more taxing and more spending and more borrowing. The Republicans have got to hold firm and take away his credit card. We need an intervention.

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Obama’s retreat defies military commanders and emboldens terrorists

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The Heritage Foundation analyzes Obama’s decision to cut and run in Afghanistan.

Excerpt:

President Obama’s plan for a hasty withdrawal of U.S. troops from Afghanistan risks squandering the hard-won gains made on the battlefield in southern Afghanistan over the last ten months.

U.S. military commanders on the ground in Afghanistan had reportedly requested a slower pace of withdrawal to afford them the opportunity to consolidate recent gains against Taliban insurgents.  President Obama has denied his military commanders flexibility to determine the pace and scope of withdrawal based on conditions on the ground, and instead appears to have based his decision largely around the U.S. domestic political calendar.

The plans for rapidly withdrawing U.S. troops from Afghanistan also risks upending the major achievement of eliminating Osama bin Laden across the border in Pakistan.

Bin Laden’s death and an aggressive drone campaign in Pakistan’s tribal border areas have put al-Qaeda on its back foot.  The Administration deserves credit for accomplishing this crucial objective.

However, it is short-sighted to use bin Laden’s death as justification for hastening the U.S. troop draw down in Afghanistan.  Announcing rapid withdrawal of U.S. forces will likely bolster the morale of the Taliban and encourage them to stick with the fight.  Since al-Qaeda has not yet dissolved as an organization and its relationship with the Taliban remains strong, reducing military pressure on the Taliban in Afghanistan could benefit al-Qaeda and provide it a lifeline at a critical juncture in the fight against terrorism.

The withdrawal plan will signal to both our Afghan allies and enemy forces that the U.S. is more committed to withdrawing its forces than the long-term goal of stabilizing the country. The U.S. made a grave error in turning its back on Afghanistan after the Soviets departed in 1989. President Obama’s speech will stoke fears that the U.S. is getting ready to repeat a similar mistake.

Obama’s announcement on rapid troop withdrawals from Afghanistan will further discourage Pakistan from cracking down on the Taliban leadership that finds sanctuary on its soil. The speech will reinforce Islamabad’s calculation that the U.S. is losing resolve in the fight in Afghanistan and thus encourage Pakistani military leaders to continue to hedge on support to the Taliban to protect their own national security interests.

And more from the Wall Street Journal.

Excerpt:

President Obama delivered a remarkable speech last night, essentially unplugging the Afghanistan troop surge he proposed only 18 months ago and doing so before its goals have been achieved. We half expected to see a “mission accomplished” banner somewhere in the background.

Not long ago, Secretary of Defense Robert Gates spoke about only a token drawdown this year, but he’s now on his way out of the Pentagon. This time Mr. Obama overruled his military advisers and sided instead with Vice President Joe Biden and his political generals who have their eye on the mission of re-election. His real generals, the ones in the field, will now have to scramble to fulfill their counterinsurgency mission, if that is still possible.

[…]In justifying the withdrawal, Mr. Obama repeatedly stressed the damage we’ve done to al Qaeda. Yet most of those successes have been mounted from Afghanistan, including the killing of Osama bin Laden. Mr. Obama stressed that he’ll continue to press Pakistan to cooperate in attacking terrorist havens, but his accelerated withdrawal schedule will make that persuasion harder. The Pakistan military will now almost surely not act against the Afghan Taliban. The Pakistanis will press instead for a “reconciliation” between the Afghan government and Taliban leaders, who will be the most relieved by last night’s speech.

Republican reactions to Obama’s decision to cut and run, taken from the left-leaning Washington Post.

Excerpt:

Likewise from House Republican Policy Committee Chairman Tom Price (R-Ga.) came a blast:

“The brave men and women of our military continue to risk their lives to ensure that Afghanistan does not once again become a safe haven for terrorists who seek to kill Americans and our allies. . . . President Obama must lead. Leadership in this instance means making decisions based on conditions on the ground, listening to our military commanders and not changing strategy for political purposes. If the president is unwilling or unable to lead with resolve and commitment, if he continues to telegraph our strategy and tactical decisions to the enemy, then he should admit to the country that his administration will not support the fight that is necessary, and bring our brave men and women home now.”

[…]Sen. Mark Kirk (R-Ill.) had this statement:

“I am concerned that the President has not followed the recommendations of General Petraeus on the timing of our withdrawal from Afghanistan. The General was successful in Iraq by maintaining American momentum while the Iraqi army grew to the size needed to maintain long-term security. To repeat his victory formula in Afghanistan, we would need to maintain military momentum against Al Qaeda and the Taliban until the Afghan army reaches critical mass of 400,000 troops— estimated to be achievable by 2014. We withdrew our support and ignored Afghanistan in the 1990s and paid a high price in 2001. We should learn from that mistake and back the Petraeus strategy.”

I’m anxious to hear the reactions from General Petraeus and the other battlefield commanders.

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Economists and investors are alarmed by Obama’s reckless and wasteful spending

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Reuters reports on a statement by 150 economists backing Republican demands for spending cuts.

Excerpt:

More than 150 economists back House of Representatives Speaker John Boehner’s call to match any increase in the debt limit with spending cuts of equal size, according to a letter released by the Republican leader’s office on Wednesday.

The letter will give Boehner an important talking point as he and his fellow House Republicans meet with President Barack Obama at 10 a.m. to discuss the debt limit and other fiscal issues.

“An increase in the national debt limit that is not accompanied by significant spending cuts and budget reforms to address our government’s spending addiction will harm private-sector job creation in America,” the letter said.

Signatories include Nobel laureate Robert Mundell of Columbia University and economists from schools like New York University and Georgetown University, as well as conservative think tanks like the American Enterprise Institute.

The Treasury Department has warned that the country could face a default that could push it back into recession and roil markets across the globe if it does not raise the $14.3 trillion debt limit by Aug 2. Treasury has been tapping federal employee pensions and other funds to pay the nation’s bills since it reached the current debt limit on May 16.

Republicans say they will not back any increase that does not include steep spending cuts and other limits to ensure that debt stays at a manageable level.

The Republican-controlled House on Tuesday defeated a bill that called for a debt-limit increase without conditions.

This Wall Street Journal article quotes a few economists responding to the recent disappointing job report.

Excerpt:

–What appeared to be a sustainable level of job growth seems to have faded hard in May. Yes nonfarm payrolls increased for the month, but that increase is actually a net-negative considering population growth that adds 75,000 – 85,000 workers to the labor force in an average month. Job growth is (was?) the only thing going for consumer incomes and spending, and this most recent result will throw said spending, responsible for 70% of economic activity, into a questionable state. –Guy LeBas, Janney Montgomery Scott

–There is no way to put lipstick on that pig: That was an extremely weak employment report. Nonfarm payrolls rose at the slowest pace since last September and private payrolls (+83,000) even posted their smallest increase since last June. One important factor behind the sudden deterioration between April and May was the swing in retail employment. The latter fell by 9,000 in May after still rising 64,000 in April. That pattern corroborates our view that the unusually late Easter lifted payrolls in April and were a corresponding drag in May… One sector that has to be highlighted here is “leisure & hospitality”. After creating 132,000 jobs (44,000 per month) between January and April, the sector cut 6,000 jobs in May — a monthly swing of -50,000 jobs. The reasons for this could be manifold: Households had to cut back on spending for arts, entertainment etc. amid soaring gasoline prices, or they were reluctant to visit restaurants amid higher food prices. –Harm Bandholz, Unicredit

–The slowdown in the pace of growth has clearly rattled the confidence of small and medium size firms that have been responsible for much of the hiring over the past few months.. Beneath the headline the data was just as dreary. Goods producers essentially slammed the brakes on hiring, with manufacturers culling 5,000 workers from the payrolls. Seasonal adjustments at the BLS likely accounted for the increase in hiring in the food and beverage sector, thus negating whatever McDonalds effect on retail hiring that might have occurred. The only real positives in the report were hiring by health care firms and in business services which modestly decelerated below their respective three month averages of 40,000 and 56,000 respectively. –Joseph Brusuelas, Bloomberg

–It is fairly clear that in the face of increasing uncertainty, against the backdrop of a deep recession and shallow recovery, firms decided to stop hiring. The bigger question remains whether this is a temporary hold or the pause before renewed layoffs on a broad scale. Looking at the underlying metrics of the economy, the June employment report will likely be worse than May. Going past the next the several months the economy is in the nexus of a temporary squall today created by the supply chain disruption and higher food and energy prices. All else being equal these issues will resolve themselves and the economy should rebound later in the summer. All else is not equal, however, as China is slowing, QE2 is ending, and no one really knows what fiscal policy is beginning. In sum, these factors will build increasing headwinds to growth whose full effect on real activity is unlikely to be felt for several more months.–Steven Blitz, ITG Investment Research

–The critical importance of continued labor market improvement cannot be overstated, as the wage and salary income that a labor market recovery, even a sub-par one by historical standards, provides to consumers will be key in providing fuel for ongoing economic growth in 2011. Therefore, today’s payroll figures, along with other evidence pointing to labor market woes in May (higher initial unemployment claims and a reduction in small business hiring plans being the two most important) are bad news indeed. To be fair, all was not terrible in this report, as the average workweek held steady from an upward revised 34.4 hour level in April and the manufacturing workweek increased to a robust 40.6 hours. –Joshua Shapiro, MFR Inc.

We’re in serious trouble, and the Democrats are oblivious.