On the February 26 edition of MSNBC's Hardball, host Chris Matthews did not challenge former Gov. Robert Ehrlich's (R-MD) false suggestion that President Obama's proposal to let the Bush tax cuts for wealthy taxpayers expire would increase taxes on a large percentage of small businesses. Matthews had asked Ehrlich for an “assessment of this fiscal decision to go to higher taxes for the wealthy,” and, as part of his response, Ehrlich said, “This is all about class warfare. It's all about punishing success. It's anti-small business.” Later, Ehrlich asserted that the American Recovery and Reinvestment Act “meant nothing to small business, basically. And now we're going to punish them through the tax code.” In fact, Obama has proposed raising marginal income tax rates and reducing income tax deductions for individuals earning more than $200,000 per year and for couples earning more than $250,000 per year, and according to the Tax Policy Center's table of 2007 tax returns that reported small-business income, 481,000 of those returns -- about 2 percent -- are in the top two income tax brackets, which include all filers with taxable incomes that would be affected.

The media have repeatedly advanced or failed to challenge the widespread revival of this falsehood from the 2008 presidential campaign about then-Sen. Obama's proposal to increase taxes on those making more than $250,000. As Media Matters for America documented, Sen. John McCain falsely claimed that "[i]f you are one of the 23 million small business owners in America who files as an individual rate payer, Senator Obama is going to raise your tax rates."

From the February 26 edition of MSNBC's Hardball with Chris Matthews:

MATTHEWS: Governor Ehrlich, your assessment of this fiscal decision to go to higher taxes for the wealthy -- well off, I should say -- and use it to put together a trust fund to begin to accumulate enough money to fund a real national health care system.

EHRLICH: Well, I disagree with the policy here, Chris, but the politics should not be surprising to anybody. And I agree with the last statement, in fact. This is the platform he ran on. This defines him as a political being. It reflects his voting record in the state legislature. It reflects his voting record in the United States Senate. It reflects the hard left positions he took during the campaign.

JOAN WALSH (Salon.com editor-in-chief): They're not hard left, sir.

EHRLICH: So, I'm not going -- oh, punishing success, raising capital gains.

WALSH: They're not hard left.

EHRLICH: Wait a second. I gave you your time. Let me have mine.

WALSH: I'm sorry, you're right. You're right.

EHRLICH: This is all about class warfare. It's all about punishing success. It's anti-small business. But just say it all comes together and they raise all the taxes on the dividends and capital gains. It doesn't begin, Chris, to pay for what he's talking about doing. That's the problem. The numbers don't add up.

MATTHEWS: OK, thank you. We will be right back with Bob Ehrlich, who doesn't believe in punishing success, and Joan Walsh, who believes in national health care. You're watching Hardball, only on MSNBC.

[...]

MATTHEWS: Joan, are you shocked -- I know you're a liberal in your heart, but are you shocked by these numbers? Here's the federal budget that he just gave us today, the new president, two billion in receipts, two billion in deficits, and four billion in spending. We're only taxing the country enough to pay for half the budget. The rest is borrowed. Not since World War II have we lived like this.

WALSH: Not since World War II have we had a crisis like this, Chris. I think the man inherited a terrible fiscal, domestic, international crisis. It's a time of war. He's actually putting war spending on the books, instead of the secret way that the Bush administration accounted for it. He's trying to do a lot. And I think he's looking to -- he's looking to bring the deficit down.

But most economists say for these next two years, we should be much less concerned about deficits than about the utter collapse of our economy. So --

MATTHEWS: Well, this is --

WALSH: -- sure, they're shocking numbers. They've been shocking for a while. They were shocking -- it was shocking when the Bush administration took a surplus --

MATTHEWS: Right. OK.

WALSH: -- and then ran us into a deficit.

MATTHEWS: Well, this is what Warren Buffett says we have to do, Governor, is over-leverage at the federal level. But a $4 trillion outlay level and $2 trillion deficit -- we're only taxing people enough to pay half the cost of government here.

EHRLICH: It doesn't work, Chris, as you know, and the stimulus wasn't the stimulus as well. You know, Chris, I would have been much more positive about this if the stimulus was actual stimulate -- was an attempt to actually stimulate the economy, get small businesses going. It meant nothing to small business, basically. And now we're going to punish them through the tax code.

Bad policy after bad policy. As you know, Chris, you could have done most of that spending through the regular appropriations process.

MATTHEWS: OK.

EHRLICH: It was just an excuse to get [Senate Majority Leader] Harry Reid [D-NV] and [House Speaker] Nancy Pelosi [D-CA] to do their spending outside the regular process.

MATTHEWS: Do you like Rush Limbaugh, yes or no?