Wednesday, October 28, 2009

Loan Them Back Their Own Money?

Politicians, when faced with a faltering economy and the collapse of the small business sector in particular, love to devise loan programs to trumpet their concern for the economy's most vulnerable. We have commented on the effort of Mike Bloomberg in this regard, and have pointed out just how it avoids the central issue of high taxes and over regulation.

Why can't these leaders simply lower the cost of doing business? They can if they eschew a big government, high tax agenda. Which brings us to President Obama's-and sidekick Pelosi's-replication of the Bloomberg game plan. As the Foundry points out: "Obama promised that the stimulus would “create or save” 3.5 million jobs, and significantly tempter the rising unemployment rate. Now that it is clear that his plan has failed to save or create jobs, and unemployment is still rising, Democrats are reaching out to small business. “Small business is the engine of job creation and capital creation in our country,” Nancy Pelosi said yesterday. Their plan? Use more taxpayer money to increase Federal loans to small businesses—those that qualify according to government guidelines, of course."

But the Heritage Foundation website agrees with our position, and says that the effort is misguided: "Why first burden small businesses with taxes and regulation, and then turn around and use that tax money to give them loans? Why not instead first lower the tax rate, simplify and let go of some of the red tape, and then—if they are still struggling—consider using tax money to make special loans? Wouldn’t that make more sense?"

It would, but it is an approach discordant with the world view that sees the aggrandizement of government as the solution to the country's ills-and not the essential cause of them; at least from the economic side of the ledger. We'll give Foundry the last word: "Indeed, does it not make sense to first reduce existing tax and regulatory burden before jumping to subsidize?"