How Big Gov't Strangles The Job Creators

Budget: The secretary of the Treasury says taxes must be raised on small business so the federal government can stay big. With that breathtaking statement, he helpfully mapped out the key difference between the parties.

While testifying Wednesday before the House Small Business Committee, Timothy Geithner told Rep. Renee Ellmers, R-N.C., that hiking taxes on small businesses is the only "alternative" that will allow "a balanced approach to reduce our fiscal deficits."

"If you don't touch revenues," Geithner said, "you have to shrink the overall size of government programs, things like education, to levels that we could not accept as a country."

Some factions just won't accept shrinking the size of government. Most in them run in the same tight circles as Geithner. Never hearing anything other than support for increasing the size of government, they assume that's what Americans want.

But quite a few Americans have been wanting to cut government for decades, and that number is growing as the almost intractable problems created by overspending have become more obvious.

From Social Security and Medicare to housing assistance and farm subsidies to, yes, even education, federal programs need to shrink or be eliminated. There's not a single item in the budget, including defense, that can't use some judicious trimming.

In fiscal 2011, Washington will spend more than $3.8 trillion, according to the government's historical tables. The federal debt, caused by lawmakers' habit of spending money they don't have, will exceed $15 trillion by the Sept. 30 end of the 2011 fiscal year. Washington cannot tax its way out of this hole.

Yet Democrats never give up hope they can raise taxes, and this particular Democrat wants to slap higher rates on small business. This is an especially poor choice. Small businesses are America's jobs engine.

Even more appalling is the fact Geithner didn't back off his position when Ellmers told him that 64% of new jobs in this country are created by small businesses. In fact, he acknowledged that she is correct.

While the number Ellmers used is compelling, we believe the rate is actually higher, around 85%. We base this estimate on our own database of public companies, which shows that over the last 25 years, big businesses created no net new jobs. That leaves small business as virtually the only job creator.

Geithner's unabashed statement helps explain the sorry situation in which America finds itself. But in so doing, he has also provided the clarity that voters will need when his boss comes up for re-election.