John LeBoutillier, the former U.S. Congressman and author
of Harvard Hates America joins Mike Siegel on the Boss Business Brief to discuss tax reform and how it impacts small business. What will congress do? What impact will it have on you?

About John:

John LeBoutillier is a former U.S. congressman and a nationally recognized political commentator. LeBoutillier has been a prolific writer and he has contributed to many major newspapers and magazines. In 1980, LeBoutillier was elected to represent New York's 6th District becoming the youngest member of the 97th Congress. He also has been a frequent commentator, host and guest of many media programs.

Transcript:

Siegel: Hi Folks. Mike Siegel here for Boss Business Brief. We are here every single week talking about the small business advocacy that you need. You are not getting it from government, you are going to get it here. We talk with people all of the time about issues of the day that affect you in small business, features stories about small business people who have struggled to survive, what they have done to make it work for them and to be successful, and good to have you with us here at the BOSS Business Brief. As we get into the conversation, tax policy. Aren't you tired of those two words? Tax policy. Former Congressman John LeBoutillier is with us and has been doing a great job of doing commentary and analysis about where we are with tax policy. Of course, now the uncertainty about the extension of the tax rates that we had under George Bush and all of the mess that we have, mess in terms of ambiguity and uncertainty in economic policy, and it all affects small business dramatically because how can small business make any plans without knowing the blue print of where we are going with respect to policy. Congressman, it is good to have you with us on the program. How are you today?
Congressman: Well, Mike, I am happy to be with you and I think we are all confused day by day by what is the policy of the United States government. It seems to change every five minutes.
Siegel: One of the big issues here is the massive amount of spending by government in mostly large corporations, also the unions and some of the public employee benefits from the stimulus package, but not a lot for small business. It seems to be, Congressman, that when the government puts a lot of money into the economy, it means that it has to pay back that money by basically printing money, printing treasury bills, and then they have to pay interest on that. So, that sucks a lot of the money out of the private sector and the small business doesn't get access to it. What about that?
Congressman: Well, it is true. You know, the rich and the poor get all the attention one way or another from our political class. The middle class and the small business person/owner gets the shaft every time. It is amazing. I would like to think it is going to get reversed, but I am not sure that ever will happen. I would like to think my party, the republican party, pays more attention to small business owners than the democrats do, but I am not even sure they do.
Siegel: It hasn't looked like that, but the hope is that some of the tea party candidates, people like maybe Rand Paul and some of the others that have been elected, might help in that regard, but even as you know…. And let's talk about that, because it has direct impact on small business. The fact is that you had primary elections where Sharon Angle won but did not get support of the republican party (she won in Nevada). Joe Miller won in Alaska and he didn't get support from the republican party initially. Christine O'Donnell won in Delaware and she really didn't get republican support at that point initially. In other words, the people were saying they wanted these options and the republican party wasn't getting it. So, when you say your party may not be understanding it, I wonder what your thoughts are about that, and what small business can look forward to with a republican House. Will it make any difference?
Congressman: Well, it will probably be better than what has been the last four years under democrats. I would think it would be somewhat better. But, you know, we have a balancing act here. The economy is not growing at all, really. I mean, it is at around 2%, but that is not creating any new jobs. There is a panic in Washington over the fact that this economic recovery is not recovering. But at the same time, you get this other movement going on which the tea party is a major driver of to cut the national debt, cut the deficits, stop the spending, maybe even cut back on spending, and the two don't mix, because this tax cut plan , which is designed to juice up the economy and create jobs, that is going to cost 900 billion dollars over two years, added on to the already unbelievable 14 trillion dollar national debt. So, the tea party wants to cut the debt, and I am with them, but then when this bill comes along that we are debating right now that is going to add on almost another trillion. So, what comes first? Do you add more debt on in hopes that it will generate economy growth, and when the economy gets back on the beam then we start cutting spending and raising taxes a little bit so that we can pay down the debt? That doesn't sound like a very inviting choice to make.
Siegel: You know, Congressman, (we are talking with Congressman John LeBoutillier, former member of the United States House), what you just described is actually pretty scary, because, again, it affects small business dramatically, but it also affects the overall economy, which would then have a major affect on business in this country because…. If you get to the point of having 100% relationship between your national debt and your gross domestic product, you start looking like grease, and actually we are at 13 trillion national debt. What you are talking about brings us over 14 trillion of national debt within a year and we have 14 trillion of gross domestic product. My numbers tell me that 14 to 14 is 100%. Isn't that pretty scary?
Congressman: Yes, and you have an interest payment next year of 1 trillion dollars on that 14 trillion dollar national debt. So, before we play soldier, before we issue a social security check, or do anything else at a federal level, we are going to pay 1 trillion dollars of our annual tax that we all pay just to servicing that debt. Now, that is just disgraceful. It is untenable. It has got to change. We all, I think, on following the tea party, we know that is why they have risen up. They have seen this and have said, "we have got to fix the problem." But our political leaders of the two parties, the republican leadership that made this tax cut deal, they don't seem to be paying much attention to the national debt either.
Siegel: You know, the thing is, if you look at this proposal that Obama agreed to with the republicans and the democrats rejected in the House, the fact was that the republicans agreed that the unemployment benefits would be extended without having to cut any place else. The original republican position was, if you want to extend the unemployment benefits, we can do that, but then we have to cut from some other place in the budget so that we have a zero effect.
Congressman: Yes, the money has to come from somewhere else. Absolutely.
Siegel: But the republicans themselves advocated on that by going along with the president and now the democrats, maybe to the benefit of small business, said "no." Maybe if nothing happens it is better than something like that happening.
Congressman: Could be. I don't know what happened with that 13 month thing. Have we the republicans given up on demanding that the money from that come from already appropriated funds?
Siegel: Yes. As a matter of fact, the agreement that they made with the president included the fact that it would not have to cut any place else. That there would just be the expenditure of those unemployment benefits for 13 months. One thing that I reported, which is very important again for small business, is that when people get unemployment benefits, they spend almost 100% of the money, which means that those are very good consumer dollars, because they are going to go to small businesses and spend money. So, there is some legitimacy to that. But why can't this government learn to cut some place else in order to do that? Certainly, you don't want to put people in the street and paying unemployment benefits, most people would agree, is a good thing to do especially since we know that most of that gets spent with small business in the private sector, but then if you do not cut some place else you are just padding the problem. It is a shell game. Then you pad the problem in another place by having to then pay back more debt, because in order to create those unemployment benefits you have got to borrow more money.
Congressman: Well there is no doubt. I think politically you have got to pay the unemployment. We just cannot throw all these people in this economy out with nothing. And it is not like they are getting rich on unemployment. They get like 300$ a week. But this adds up. I think we have already spent 160 billion dollars on unemployment insurance in the last year or two. So, it is a lot of money when you add it all up. So, the key is, can we take it? Is there still unspent stimulus money? Is there unspent TARP money? Can we get into that money and pay this unemployment insurance out of that? Rather than printing more money and creating more debt. That is what the republicans have been saying, and I hope they push for it. The democrats, you know, as we sit here tonight, they are killing this deal in the House. They refuse to allow the deal even to be brought to the floor of Congress unless it is changed and the White House and the leadership has said it is not going to be changed. So, let's just say they don't bring it to the floor, it doesn't get voted on, Christmas and New Year's come and guess what, we get a republican House of Representatives and a more even US Senate with the republicans having a lot more power, and the republicans are going to be in a stronger position to make a stronger deal with Obama that the democrats like even less. So, they are cutting off their nose despite their face. They really are at the moment hurting their own cause.
Siegel: You know, you have got the democrats with some inflammatory language. They are outraged about the deal the president made. But if the president is now… he claims that he is still confident that it is going to pass, although Representative Lloyd Daggot from Texas said, "If it is take it or leave it, we will leave it. Just say no." Those are his words.
Congressman: Well, if they don't let it come to the floor for a vote, it is obviously not going to pass.
Siegel: See, then you raise the question about the damage that it is doing not just to the economy, of course, or to small business, but also the damage that it is doing to the political process – not even being able to get a deal through that the president and his opposing party agree on. His own party undercuts him. We will come back on that point, and I want to continue with another segment of this conversation. Talking with Congressman John LeBoutillier who is a former member of the United States House, where it has become pretty vitriolic over there, as well as in the Senate. Kind of a sad commentary on our political process these days. Good to have you with us. Mike Siegel with you with much more coming as we really get in to the underpinnings of what will turn this economy around, what will help small business to do its job and do job creation.