Backbone of Economy Aches

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“Small businesses are the heart of the American economy,” President Obama said at an event at the White House attended by small business owners. “They’re responsible for half of all private sector jobs and they created roughly 70 percent of all new jobs in the past decade.”

Representative Kevin McCarthy, R-Calif., agrees but argues that the president’s proposals harm these enterprises. “That’s where we should focus and grow this economy and make sure the government controls their spending that we don’t put this debt on future generations,” Rep. McCarthy said at a recent Conservative Bloggers Briefing.

Unfortunately, he says, “Obama’s budget takes us into large deficits—the largest debt—and doesn’t have a path for getting us out of these deficits and growing America.” “Republicans [have] solutions that focus on small businesses,” the GOP congressman said.

In a report handed out at the Conservative Bloggers Briefing, McCarthy quoted Victoria McGrane of the Politico internet news service: “According to NAM’s [National Association of Manufacturers] data, 196,000 manufacturers file as so-called pass-through entities, meaning that the owner pays the firm’s business taxes at the individual income tax rate. That is a full 68 percent of all American manufacturers.” She, in turn, quotes Bill Rys, the tax counsel for the National Federation of Independent Business, “The businesses that are most likely to be hit by this tax increase employ about a quarter of the U.S. work force.”

“Structure dictates behavior,” Rep. McCarthy pointed out. “You either adapt to the structure or you leave.” He argued that this can be seen “in every walk of life,” but the principle also applies on a very broad level across America: “If we change…the structure of America that we’re going to go in debt the behavior will be different. If we change the structure that we don’t reward entrepreneurship, we don’t reward small businesses, we won’t get the behavior of creating more jobs. If you change the structure that we become a welfare state, that people are living more off government than providing into it, we’re changing what has made us great in the long run.”

“An American loses their job every 4 seconds.” McCarthy said, “It’s not a time to play politics; it’s a time to find solutions.” The House Republicans released their own alternative to the budget on March 26th.

Heather Latham is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.