Small Business ‘Advocacy Group’: Raise Taxes Now!

Back in early August, we drafted but did not post a blog entry about a peculiar cross current within the tax policy debate created by the activities of The American Small Business League, or ASBL. We found the ASBL peculiar because it is allegedly a business advocacy group, but it has been vocal in its support of some of candidate Obama’s poorer economic planks. As it turns out, its advocacy is not on behalf of small businesses per se, but for firms below a specific size that want a greater share of government expenditures (they’re clearly not a taxpayer advocacy group either). In other words, the objective of the ASBL is to secure greater access to the public trough to its constituency of piglets. That’s a harsh metaphor — we recognize that governments will always have to buy goods and services from the private sector, and that the ASBL allows its members to pool their interests and thus compete more effectively in the lobbying game against the full grown pigs — but we think it’s an honest and accurate enough comparison. 

The ASBL came to our attention again today, because they’re now charging Obama with back tracking from some of those favored economic planks:

One such tax proposal was to enact a windfall profits tax on the oil and gas industry to provide a $1,000 emergency energy tax rebate to American families. Another campaign promise would have ended the diversion of federal contracts for small businesses to corporate giants…

"In terms of these small business issues, say for example, restoration of the SBA budget, staffing, business contracting, and those types of issues, we’ve worked with the Obama campaign, but we haven’t seen any movement to coming to some kind of plan or a strategy," said ASBL spokesman Christopher Gunn. "We haven’t seen the type of substance we’ve been looking for in terms of the small business community in this time of economic recession."

These piglets are incredibly brazen. First, they speak about "the small business community", when it’s quite clear that they only act on behalf of a small percentage of small businesses. Second, a $1,000 transfer from energy companies to households will do nothing to lower the long term cost of energy to households, businesses, or governments (i.e., the net long run effect of such a policy is inevitably negative). Further, any households that own a share of energy company profits — through pensions, mutual funds, 401(k) or 403(b) accounts, IRAs, etc — will be punished to an additional degree, as will many small businesses whose customers are energy firms. Finally, diverting government contracts to small businesses, without any constraints or protections that serve the interests of taxpayers (e.g., a large business can often provide better pricing thanks to greater economies of scale), is an unsound practice in public expenditures, and would have a negative net impact on the economy in the long run.

We hope the ASBL is right about the Obama team ‘transitioning’ away from some of the ASBL’s favorite policies, especially "in this time of economic recession".

This episode also supports the argument we’ve made that a President Obama cannot be all things to all people — he made promises during the campaign that ranged from ineffective to downright harmful, and that pitted multiple constituencies against each other, which would cause plenty of dissatisfaction within the ranks of Obamanation. The ASBL has offered an early salvo:

"He hasn’t been inaugurated yet and we are already witnessing the elimination of policies that would have greatly benefited the middle class economy in the midst of one of the worst economic downturns in our lifetimes," President of the American Small Business League Lloyd Chapman said.  "I endorsed him, I voted for him, and I supported him and now I feel betrayed. He is obviously already going back on campaign promises. I think all small business owners should be concerned…"

All small business owners, Mr. Chapman? Or just the ones who want to nip at the public trough? 

URLs:

http://www.asbl.com/ 

http://tinyurl.com/ABSL-FP 

http://www.asbl.com/showmedia.php?id=1203