House Republicans have already conceded the point. They have offered up reduced deductions that will raise as much as the administration claims increased tax rates will raise. They are clear. They want to keep tax rates low so as not stifle new business creation and growth, which is for a variety of reasons is highly sensitive to personal tax rates. These products of the entrepreneurial renaissance that started in the last 1970s or early 1980s have created all the net new jobs in the U.S. over the past three decades.We tend to think that everyone agrees that small business entrepreneurship is a good thing. It's the American Way, after all. But that's not really true, is it? The type of person that starts a small business is anathema to the Democrats, because he's independent of and generally opposed to government interference in the economy. To that entrepreneur, Big Government is the enemy and the arranged marriage between Big Business and Big Labor is a competitor.
If today’s were a normal White House, administration officials would have grabbed the GOP plan in a DC minute.... But the Obama White House is not a normal White House....
So what more is behind the president’s demand?
Some believe it is political. They contend the president wants to take the government over the cliff, which, thanks to media protection, he can get away. He can blame Republicans for the financial chaos and universal tax hikes that follow, force a complete GOP surrender and take back the House at the next election.
How about this as an explanation though? He wants exactly the opposite of what Republicans want – and does so not out of pride or economic ignorance, but for the simplest and most direct of political motives – a key constituency wants it.
The constituency I have in mind is organized labor and the motive would be to put a break on the very entrepreneurial renaissance that Republicans so prize....
But why? Why should labor go after the major source of American job creation? It has to do with the simple, classic approach of unions to all competition: stop it.
Here is the business problem, if you will, of the U.S. labor movement. They are losing market share. They talk a lot about jobs – meaning union jobs – moving overseas. But at least as big an issue for them is the American entrepreneurial renaissance. By and large, its workers have rejected the movement’s attempts to organize them. And in industry after industry, these new and energetic non-union firms have been expanding at the expense of old unionized ones. In other words, one of the president’s major sources of support sees America’s entrepreneurial renaissance as competition and wants to, if not stop it, slow it drastically down....
If I’m right, that’s why he won’t move on tax rates.
If you've ever heard an Ivy League liberal arts major talk about fellow students who are going to "sell out" after college, you know what I mean. They mouth support for the small business entrepreneur. But liberals really hate them.
This actually makes a lot of sense. We say "don't raise marginal tax rates because it will slow down new business startups and private sector job creation."
Liberals say: "Exactly."