Business Groups Attack Stimulus Plan

The president's temporary tax cuts won't help small employers over the long haul, critics say.

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A White House plan to boost the nation's sagging economy will do little to help small businesses over the long haul, critics say.

The proposed plan, which includes up to $145 billion in temporary tax cuts, is aimed at encouraging business owners to "expand their operations, create new jobs and inject new energy into our economy," President Bush said Friday.

Yet small-business advocates and policy watchdog groups say they doubt employers will react favorably to temporary tax cuts.

Instead, they say, businesses and investors would be better served by permanent tax cuts, including reductions in capital gains, dividend tax rates and small-business expensing, among other measures.

"Making those tax measures permanent would provide certainty and confidence to entrepreneurs," Raymond Keating, the chief economist of the Washington-based Small Business and Entrepreneurship Council, said in a statement.

According to Gerald O'Driscoll of the Cato Institute, temporary tax cuts are saved, rather than spent. As such, extra cash is unlikely to get injected back into the economy.

"Even if temporary tax cuts were effective, the proposed amounts are so paltry as to be laughable," O'Driscoll said. 

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