The Wizards of Central Planning

Question: it's campaign time. How do you make your anti-business appear to be pro-business for campaign purposes?

Well, you fly all over the country touting your new Small Business Loan Program. People clap, cheer and go home.

The small business folks you supposedly are trying to help (actually you are trying only to help yourself) take a look at your program and say "no way!". Why is that?

Read it all here.

And if you've been paying attention over the last 18 months, you're probably asking, what's the catch?

Glad you asked: most of the tax cuts are so narrowly targeted as to be economically trivial. The list includes bonus depreciation, small business expensing and a temporary zero capital gains tax rate for small business start-ups. These would be in place for a year or two and then vanish, which means they'll do little to change business behavior.

The bill authorizes Treasury to purchase up to $30 billion of stock in small, community banks across the country. The banks in turn would agree to issue as much as $300 billion in loans to small businesses that they wouldn't otherwise lend to.

Here's the best part: The whiz kids at the Congressional Budget Office and Joint Committee on Taxation estimate that this program will raise $1.1 billion for the federal government. So there really is a free lunch.

The false assumption here is that banks are reluctant to lend because they lack the capital. This ignores that small business lending is also down because the business demand for loans is weak. Businesses don't typically expand when Washington is raising dividend, capital gains and personal income tax rates while piling on the new costs of ObamaCare and other regulations.

So what is the bottom line for all t his bureaucratic sleight of hand?

The tax cut in this bill will provide $12 billion in relief over 10 years. The tax increase that Mr. Obama favors for 2011 would raise what the Joint Committee on Taxation figures will be $600 billion of revenues, about half of which comes from the coffers of small business. So the tax hikes, which are permanent, are about 50 times larger than the tax cuts, which are temporary. And the Obama Administration wonders why some people think this President is antibusiness.

More Hope than Change.............