One of the key justifications that Republicans use to support extending the Bush tax cuts for the richest two percent of Americans (at a ten-year cost of $830 billion) is that allowing those particular tax breaks to expire will disproportionately harm small business and job creation. “This is about stopping a job-killing tax hike on small businesses during tough economic times,” argued Sen. Orrin Hatch (R-UT).

This is a completely bogus argument, as just three percent of people with income from a business large or small would be affected if the Bush tax cuts for the rich expire. Republicans eventually conceded this point, only to begin disingenuously arguing that half of small business income would be affected by the tax increase. Today, CNBC’s Joe Kernen helped Rep. Paul Ryan (R-WI) spread this falsehood, and threw in the incorrect Republican assumption that extending the Bush tax cuts for the rich would spur job creation:

KERNEN: They say it every time, because only two percent of small businesses fall into that. So they say that and they know through their teeth, that they know they’re dissembling…Half the income of small businesses is hit by it!

RYAN: Drive to any town in Wisconsin, go to the outskirts and you’ll see an industrial park. And in that industrial park, nine times out of ten it’s going to be a sub-S corporations that has 50 to 250 employees, who are all in this category of making $250,000 or higher. They’re pass-through entities, they’re partnerships, sub-S’s, they’re the people who are creating the jobs. That’s where the economic engine rests, and that’s who’s getting the tax increases. [...]

KERNEN: But what I don’t understand is if they want jobs, if they want to help the country, with its 10 percent unemployment, why do they dissemble?

Watch it:

First, Kernen is flat-out wrong that half of small business income would be affected by the expiration of the Bush tax cuts for the rich. The Congressional Joint Economic Committee has estimated that half of net business income would be affected, and that its figures “do not imply that all of the income is from entities that might be considered ‘small.’”

As I pointed out in this column today, a lot of these “small businesses” are simply large businesses that are organized as “pass-through” entities, which means they don’t pay the corporate income tax, but “pass-through” their profits to the owners, who then claim the profits on their personal income tax returns. They include the Bechtel Corporation, which is the fifth-largest privately owned company in the United States, posting gross revenue in 2008 of $31.4 billion; the Wall Street buyout firm Kohlberg, Kravis and Roberts, which has more than $54 billion in assets and 14 offices around the globe; and the auditing firm PricewaterhouseCoopers, which has operations in more than 150 countries.

Also included in Ryan’s definition is every partner in a law firm, every passive investor in an oil or gas venture, and anyone with a trust fund. The GOP wants you to picture the local dry cleaners and hardware store, but the truth is much more complicated.

The fact remains that exceedingly few small businesses will be affected if the Bush tax cuts for the rich expire. And, contrary to Kernen’s assertion, such an extension is the least effective tax or spending step the government could take to boost the economy. CNBC is helping Ryan distort the facts of the debate, to advocate continuing unaffordable and ineffective tax breaks for the very wealthiest Americans.

Yesterday, the American Bankers Association (ABA) explained that it is eagerly anticipating working with the incoming Republican House of Representatives to slow down regulation affecting the financial services industry. “We had been disappointed with a number of legislative outcomes with the past Congress, and so we look forward to better outcomes with this Congress,” said Peter Garuccio, a spokesman for the ABA.

To that end, Republicans on the House Financial Services Committee have been warning regulators implementing the Dodd-Frank financial reform law that the GOP is in no mood to see regulations that actually rein in the predatory and risky practices of the banks. And Reps. Spencer Bachus (R-AL) and “Young Gun” Kevin McCarthy (R-CA) have now fired a shot across the bow of the Securities and Exchange Commission, telling SEC Chairwoman Mary Schapiro to tread lightly when it comes to implementing Dodd-Frank:

Despite its sweeping scope, the Dodd-Frank Act does little to spur the type of capital formation that is essential for any real and lasting economic recovery to take hold. Without access to capital, business slows, and without regulatory certainty, capital disappears…In the 112th Congress, promoting capital formation that leads to the creation of jobs will be at the forefront of our agenda for economic growth. We look forward to your prompt response on the actions the Commission plans to take to implement these important recommendations.

Before Congress left for its pre-election recess, the federal bank regulators — including the SEC — requested funding to begin implementing Dodd-Frank, but Republicans balked and blocked it. And it’s becoming clearer that they intend to deny the agencies funding if the rule-making process isn’t to their liking.

Under Dodd-Frank, the SEC is responsible for laying out new rules of the road when it comes to derivatives trading, credit-rating agencies, and corporate governance — all key areas where regulatory failure contributed to 2008′s financial meltdown. The SEC is also tasked with setting up new offices, like the Office of Women and Minority Inclusion, which will be charged with ensuring fair access to markets.

During the regulatory reform debate, Republicans consistently claimed that any profitable activity that a bank undertakes — even if the profits come via ripping off consumers — is not to be restricted. As Sen. Richard Shelby (R-AL) put it, “[Bank] safety and soundness trumps everything. It trumps the consumer finance whatever.” And the incoming Republicans in the House are taking that sentiment to its logical conclusion, telling the regulators tasked with policing the financial marketplace to ease up or face the consequences.

Back in June, Rep. Jan Schakowsky (D-IL) — who is serving on President Obama’s debt commission — told me it was unlikely that the commission was going to come to an agreement, because the commission’s Republican members were opposing all tax increases. “[They] give some lip service to ‘everything should be on the table,’ then, when it actually comes to what kind of revenue can we raise, are closing that door and taking it off the table,” Schakowsky said.

In October, another commission member, Sen. Judd Gregg (R-NH), echoed Schakowsky’s warning, saying that “there is no chance fellow Republicans on the president’s deficit commission will endorse tax increases.” And during an interview with Bloomberg’s Al Hunt, Rep. Dave Camp (R-MI) — a commission member who is also in line to chair the House Ways and Means Committee next year — made Schakowsky look prophetic by saying that tax increases of any sort are indeed “off the table“:

HUNT: Let me get this straight. Would you rule out any — any — net revenue increase as part of this package?

CAMP: I don’t like the idea of tax increases, and the reason I don’t is that we have not demonstrated that we’re serious about reducing spending. There’s been a really dramatic run-up in spending the last couple of years. We need to demonstrate to the American people that we’re serious about reducing spending and if we raise revenue, we’ll never get to the reductions in spending that we need to see to have a more sustainable government, a government that can be supported. [...]

HUNT: So revenue’s off the table for now?

CAMP: I think revenue’s off the table, particularly now, in a recession, and when we haven’t been serious about cutting spending.

Watch it:

Of course, the whole premise of the commission is that it would force Democrats to swallow spending cuts that they oppose and Republicans to stomach tax increases that they oppose. And the proposal put forth by the commission’s co-chairs last week already tilts heavily in the direction of the former, with 75 percent of the overall deficit reduction coming from spending cuts.

As CAP economists Michael Ettlinger and Michael Linden laid out, just trying to get the budget into primary balance by 2015 without any tax increases requires draconian cuts in important programs, including “big cuts to highway funding, cuts to medical research, the Federal Aviation Association, defense, Pell grants and much more.” And at the moment, the United States is one of the least-taxed industrial nations; only Turkey and Mexico are lower-taxed amongst Organization for Economic Cooperation and Development countries.

But for Camp, any tax increase, even with the deficits that the country faces over the next decade, is a bridge too far. And that doesn’t bode well for the deficit commission coming to anything resembling a consensus.