Here we go again. This week the United States Senate continues debate on a bill that will raise more taxes on job creators, even as economic growth lags and 15 million Americans remain unemployed.

As bad as the policy is, the process may be even worse.  By forcing floor votes on new tax provisions without committee hearings or sufficient independent analysis, my colleagues risk multiplying the unintended consequences of their legislation, and further delaying our economic recovery.

The American Jobs and Closing Tax Loopholes Act of 2010 has been labeled the “tax extenders bill” but it’s really a deficit extenders bill.  Although the bill has rarely stayed still long enough for the nonpartisan Congressional Budget Office to score it, the most recent version will increase the deficit by about $55 billion.

The bill continues Washington’s addiction to more spending, and includes tax increases that would greatly reduce capital formation, the lifeblood of our economy and small businesses.

For example, the bill would alter more than half a century of partnership tax law in at least two ways.  First, income from “carried interest” in a partnership would partially be taxed at individual rates, and no longer receive full capital gains treatment.

Second, owners of certain investment firms and real estate partnerships would be singled out for higher taxes, as the enterprise value of their businesses would be taxed as ordinary income when they are sold, not as capital gains.  In other words, sweat equity in some partnerships will get preferential tax treatment, depending on the whims of Washington.

Several unintended consequences of these higher taxes have already been identified.  For example, millions of family businesses organized as partnerships would be denied capital gains tax treatment if even one family member provides investment management services to the partnership.

Family farms received a last-minute carve-out in the House version, but family partnerships in manufacturing, real estate, and other business sectors would still face higher taxes.

Another unintended consequence would be a perverse new incentive that favors debt financing over equity.  An entrepreneur who creates a new business and recruits an equity partner to help finance it could now be denied full capital gains treatment on the sale of the business.

On the other hand, an entrepreneur who finances the same business with debt would continue to qualify for capital gains treatment.  After years of excess leverage in business and finance, the last thing Washington should be doing is encouraging businesses to take on more debt than they would otherwise.

Perhaps the greatest unintended consequence of this bill would be increased uncertainty for job creators across America.  The complexity of the new legislation would increase the potential for disputes with the IRS, and therefore the costs of compliance for millions of impacted businesses.

Even those enterprises exempted from the current legislation could fear that the next shoe might drop on them, as a new precedent for denying capital gains tax treatment will have been set.

Once again Washington seems determined to pass a bill to find out what’s in it, as House Speaker Nancy Pelosi famously said during the health care debate.  This is poor leadership in any context, but especially irresponsible during an economic crisis.  Markets are unstable in part because Washington is unstable, seemingly expanding the size and scope of federal power spasmodically. 

A better approach begins with a deep breath, and continues with a thoughtful, principled commitment to economic growth.  Congress must help restore a stable investment climate, in which taxes and regulations are predictable as well as reasonable.

Congress must cut the spending that has created a $13 trillion national debt.  Above all, Congress must signal to entrepreneurs that private sector job growth will be rewarded, rather than ignored or punished.

Sen. John Cornyn is a Texas Republican.