Does the GOP Really Love You?
The Republican primary debate smackdown in Las Vegas on Tuesday underscored a couple things you already knew about the GOP candidates. Mitt Romney doesn't like Rick Perry. Herman Cain doesn't like people to ask what a 9 percent national sales tax would do to demand. (See the Inc.com take on the 9-9-9 plan here). And Michelle Bachman doesn't like to be bothered with standard syntax. But nobody on the Republican stage doesn't like entrepreneurs. In the hierarchy of GOP applause generators, "job creators" rank just below SEAL Team 6.
A lot of business owners return the affection. Republicans dominate among candidates endorsed by the National Federation of Independent Businesses, the nonpartisan small-business lobby, and serial entrepreneur and Inc. magazine columnist Norm Brodsky spoke for many of his peers when he told me, "we feel like we've done some good for the economy, and we don’t think we should be punished for it" with higher taxes and new regulations. Not surprisingly, proposals to reduce those two scourges are the foundation of the Senate Republicans’ jobs plan unveiled last week.
So, who loves ya, job creator? Republicans do.
Or do they? If the GOP truly loved job creators, especially in this economy, you'd think they'd focus more on, well, job creation. Regulation and taxes are a pain in good economies and bad, but survey of small business owners last month by McClatchy newspapers, and even last week’s release of the NFIB’s Small Business Optimism Index, suggest that in this economic crisis, weak demand is far-and-away the primary concern. In a review of past data from the NFIB index, Economic Policy Institute economist Lawrence Mishel picks apart the claim that there has been any recent surge in small business angst over taxes and regulation.
... small businesses have always complained about regulation and taxes and not especially so under Obama. For instance, the share concerned about regulation under Obama (13.9 percent) is not substantially higher than under George W. Bush (9.9 percent and 11.0 percent) or Ronald Reagan’s second term (12.8 percent). There is also less concern about regulation under Obama than under Bill Clinton or George H. W. Bush. Recall also that there was rapid employment growth in the second Clinton term, so high concerns about regulation...are not necessarily associated with poor employment growth.
There is a similar story on taxes. Sure, there are 20.8 percent of respondents, on average, in the Obama years who see taxes as the primary problem facing their business. Yet, that intensity of concern about taxes is not all that different than under George W. Bush and is less than that reported during the first Reagan term through Clinton’s second term.
But what about the millionaire's surtax, recently proposed by Senate Democrats? Wouldn't that dampen the animal spirits of job creators? Well, only those who clear more than a million dollars in profits and pass it through as personal income—which means, essentially, very few.
Waverly Deutsch, a clinical professor of entrepreneurship at the University of Chicago Booth School of Business, pointed out in an interview with Inc.com that of the six million businesses in America that have employees (as opposed to being sole proprietorships), 76 percent have sales of less than $1 million. "Once you take out the business deductions, it's clear that these businesses aren't paying taxes on anything close to $1 million," she says. Look at your own tax return: Your wealth is in your company, not the cash you pull down every two weeks. In its ferocious opposition to a surtax on million-plus incomes, the GOP seems to have owners confused with corporate titans.
It's hard, too, to find much love for owners in the GOP’s recent attacks on the Federal Reserve. The Fed's decision last month to try to nudge the economy at the margins by swapping short-term debt for long-term debt drew an unprecedented letter from GOP leaders in the House and Senate. Political meddling with the Federal Reserve serves no one's interest, as Barron's Randy Forsythe points out, and how is it in business owners' interest in particular to squelch a modest attempt to boost the economy? Seriously, now: When was the last time you postponed hiring plans because you thought the weighted average maturity of the Fed's balance sheet was too high?
Any self-respected job creator needs to ask just how sincere their suitors are, especially when those suitors are politicians. Could it be that the GOP doesn't love you for your real qualities—your perseverance, innovation, faith in free enterprise, drive, and guts? Could they instead just be using you to get close to their real crush, which is smaller government?
The GOP right now has the perfect stage on which to prove this suspicion false: the Congressional budget supercommitte. A truly business-friendly party would take the lead in facilitating what every small business advocate and every mainstream economist has been urging Washington to do since Washington began to drain confidence from the economy during the budget debate this summer. Compromise on a responsible economic package that promotes growth in the short run and credibly reduces the deficit in the long run. The icy reports coming from the secretive supercommittee so far suggest no such thing will happen before November 2012.
That's a long time to keep a job creator waiting.
An earlier version of this post appeared on The Fiscal Times
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