A handful of Republican lawmakers have tried to claim recently that extending all of the Bush tax cuts, including those for the wealthiest two percent of Americans, is free. “Continuing the [Bush] tax cuts isn’t a cost,” said Sen. Tom Coburn (R-OK). “It doesn’t score anything to continue them.”

Of course, back in the real world, Republicans designed the Bush tax cuts to expire at the end of this year, so relative to current law it costs more than $3 trillion over ten years to extend all of them. Extending the cuts for the richest two percent of Americans alone costs $830 billion.

Some Republicans, like Senate Majority Leader Mitch McConnell (R-KY), attempt to wish away this cost by claiming that revenues increase when taxes are cut (even though all of the data indicates otherwise). But Sen. Lamar Alexander (R-TN) has taken the tax absurdity to new heights, claiming that extending the Bush tax cuts is free, but President Obama’s latest proposal to cut business taxes by permanently extending the research and development tax credit may cost too much money:

Alexander, the chairman of the Senate Republican Caucus, said GOP lawmakers will consider Obama’s latest proposal to provide a research and development tax credit for businesses. But such a tax credit should come only after the White House agrees to extend the Bush tax cuts, including those on those earning more than $250,000 a year.

“The first thing we need to do is to make sure that we don’t raise taxes (by allowing the Bush tax cuts to expire at the end of the year),” Alexander said. “That is going to take most of September. Then we can turn our attention to seeing if we have money to reduce taxes.”

There are two problems with this. First, Alexander is clearly willing to hold the R&D credit hostage until he gets hundreds of billions in tax cuts for the rich (since Obama and the Democrats have already made it clear that they plan to extend the Bush tax cuts for the middle class). But second, why do we have to extend the Bush tax cuts for the wealthy before deciding whether or not we can afford the business tax credit?

Permanently extending the R&D credit will cost about $100 billion over ten years, and the administration said that it intends to (at least partially) pay for it by closing other tax loopholes. When you boil it down, Alexander is saying that we have to wait and see “if we have money” for $100 billion in research and development, but should be spending $830 billion on the very richest Americans without a second thought.

This dichotomy has been at play when it came to other measures aimed at alleviating the pain of the Great Recession. For instance, the same Republican lawmakers who said that extending $33 billion worth of unemployment benefits was too expensive also pushed to extend all of the Bush tax cuts. But they rarely, if ever, did so in consecutive sentences.

Tomorrow, the Obama administration will reportedly unveil a new measure allowing businesses to deduct 100 percent of their equipment investments from their tax bills until the end of 2011. The proposal is being paired with one regarding infrastructure investment (which I discussed earlier), as the administration looks for ways to boost the sluggish economic recovery.

The upfront cost of the proposal is $200 billion, though the administration estimates that the ten-year cost will be more like $30 billion, “because deductions that businesses would have taken in future years under current rules would disappear.” But the proposal is being met with some skepticism from economists, with Robert Reich noting that corporations need a tax break “as much as someone with a serious heart condition needs Botox”:

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt…[S]mall businesses don’t have enough profits against which to use these tax credits and deductions, and large corporations are sitting on over a trillion dollars of profits and don’t need them.

Small businesses cite economic conditions and lack of sales prospects as their reasons for not hiring — not a belief that their taxes are too high — so measures to spur demand will have more effect on whether or not those businesses expand. In fact, that’s precisely why the Congressional Budget Office ranked accelerating deductions as one of the least effective measures for boosting the economy:

The effect of the incentive may be smaller when the economy is weak than when it is strong: Firms may be less likely to increase investment when they have idle capacity and when they are less confident about the future demand for their products and services. In addition, when the economy slows, more firms incur losses and pay no income tax; some of those firms therefore get less benefit from immediate tax deductions, although firms that paid taxes in previous years may be able to reclaim some of those taxes.

When Sen. John McCain (R-AZ) proposed a similar measure during the 2008 presidential campaign, Brian Levine found that “the number of jobs created would be decidedly unimpressive relative to the size of the tax break.” CBO estimates that accelerating deductions creates between 20 cents and one dollar of economic activity for every dollar spent, providing far less bang for the buck than many other steps.

So while it will certainly put Republicans — who have sought a policy like this for a long time — in a political bind, the payoff in terms of employment is highly questionable. “Right now plenty of companies are making record profits without expanding hiring,” David Dayen pointed out. “And if that’s the case, why do they need such an enormous break in the not-so-well-grounded-hopes that it’ll lead to hiring?”

California’s Republican gubernatorial nominee, former Ebay CEO Meg Whitman, has been touting her economic platform, calling job creation “the number one thing we have to do.” Today, on Fox News, Whitman once again asserted that she will create two million “new, good, private sector jobs,” and when asked by Fox’s Bill Hemmer how she actually planned to do that, she claimed that eliminating fees and regulations will magically create a flood of job creation. Watch it:

Whitman’s assertion that she’ll create two million jobs in five years looks a tad less impressive when you consider that the California State Department of Finance estimates that “California should gain 1.25 million jobs by 2015 without any of Whitman’s policies.”

This isn’t surprising, as tweaking on the edges of tax policy traditionally doesn’t have much effect on job creation, particularly when demand is as weak as it is right now. In fact, economist Terry Buss has concluded that when it comes to California, “tax literature, now in hundreds of publications, provides little guidance to policy makers trying to fine tune economic development.”

However, Whitman’s plan most certainly will cost California revenue, at a time when it is trying to dig out of a huge fiscal hole. As UC Berkley economist Michael Reich found:

Whitman’s proposed cuts in taxes and fees paid by businesses are likely to have little positive effect relative to the number of jobs that would be lost by the resulting drop in public investment. These cuts could result in a loss of revenue of $6 billion to $10 billion a year or more, depending on how they were implemented. These tax cuts would add substantially to the state’s budget crisis.

There is, of course, something to be said for eliminating fees and regulations that make no sense, but Republicans this year have seized upon them as one of the main impediments to job creation. But the elimination of a fee doesn’t save a small business that’s suffering from severe lack of customers or that can’t find a line of credit. And the number one thing holding back small businesses from hiring, at the moment, is poor economic conditions and lack of sales prospects.

Plus, some of the regulations that Whitman wants to do away with — including one guaranteeing overtime pay to workers — “would transfer over $1 billion from workers to employers,” reducing the ability of those workers to purchase goods and increase demand, while lining the pockets of employers. Such a step doesn’t create jobs, but simply exacerbates income inequality and gives employers the upper hand in labor relations.

This week, the Obama administration is rolling out a pair of proposals aimed at boosting the economy: a $50 billion infrastructure package and a $200 billion measure allowing businesses to immediately deduct the cost of their investments from their taxes. I’ll revisit the latter later, but the former is actually a good idea, especially considering the way in which it will (at least partially) be paid for.

The administration wants to finance the package by cutting taxpayer subsidies to oil and gas companies, including one that’s meant to preserve U.S. manufacturing jobs but that oil giants like Exxon continually claim. Federal subsidies to oil and gas companies amount to $45 billion, so there’s ample room to pay for an infrastructure package by getting rid of some of them.

Of course, this is hardly a new idea: the administration has been proposing an end to these subsidies since it came into office, and Congress has yet to go along with the idea. In June, Sen. Bernie Sanders (I-VT) proposed cutting $35 billion in oil subsidies, and was soundly defeated in the Senate on a 35-61 vote.

And pushback from the Big Business community to Obama’s latest proposal was predictably immediate:

One influential lobbyist in the business community told The Hill that trying to use the oil and gas tax incentives to pay for the infrastructure spending is going to be a big problem. “Right now we’ve got considerable consternation about the payfors,” the lobbyist said. “Way to take something that should be bipartisan and make it partisan.”

“I would just say that increasing the tax burden on the oil and natural has industry has consequences,” said a spokeswoman for the American Petroleum Institute, Big Oil’s lobbying arm. “If you make it too expensive to do business here in the states, you run the risk of driving investment and American jobs overseas.”

This is the common refrain oil companies and their defenders use to defend their corporate welfare, but it doesn’t hold much truth. According to Citizens for Tax Justice, “to the extent that tax loopholes targeting the oil and gas industry boost their profits, there is no evidence that the additional profits lead the companies to explore for more oil so that they can increase the supply.” In fact, the Office of Economic Policy at the Department of Treasury has found that removing subsidies for the oil industry would affect domestic production by less than one-half of one percent.

It seems like cutting subsidies to a mature, hugely profitable industry in order to finance infrastructure improvements would be a fairly easy choice, but Congress has found no reason compelling enough to justify actually doing it. And Republican leaders have already voiced their opposition to the Obama’s proposal, with House Minority Leader John Boehner (R-OH) calling it a “double-down on more of the same failed ‘stimulus’ spending.”