Like many people across the country, I watched for the better part of a year as economic aid – “stimulus money” – was funneled to the mega banks, car manufacturers and financial service firms that were “too big to fail.” I kept wondering if anyone who had any kind of power or influence really understood that small firms are in fact the economic drivers of this nation.
As more time passed, it became clear that the helping hand extended to small business was one with a very narrow reach. There was a bit of fanfare about some energy tax credits that touched very few small businesses. And the ARC loan program and other measures intended to ease the credit crunch for small businesses came with numerous strings attached. Besides, many businesses were simply not in the position to qualify for these loans, and in some cases the banks themselves chose not to participate in the programs. The government message to banks has certainly been mixed: on the one hand banks are being encouraged to lend; on the other, regulators are enforcing higher lending standards.
I’m not a fan of huge government spending in the first place, but if the money was going to be spent, why wasn’t the critical small business sector seeing anything on a scale that might make a difference? I began to wonder: If Wall Street was “too big to fail,” is the working entrepreneur “too small to help”?
Then along came double-digit joblessness, and someone must have whispered in the Administration’s ear that small business accounts for two-thirds of the country’s net new jobs. The President and lawmakers seemed to get the message loud and clear – in last month’s State of the Union address, President Obama called for a bill to facilitate job creation. Since then, several new pieces of legislation have been introduced that specifically target and incent small businesses to hire.
The Obama administration’s renewed emphasis on small business as the economic engine of the American economy and the bills’ focus on employer incentives to spur job growth is welcome. I have spoken in favor of tying job creation to payroll tax incentives before, and have been quoted in the Wall Street Journal about the merits of that idea. Some might consider this a small, one-time measure. And in and of itself, it certainly is.
While such a proposal is a positive step, the President and lawmakers must remember that business owners remain reluctant to hire when sales are anemic and uncertainty abounds with regard to other pending legislation that will strangle small businesses with higher taxes, mandates and regulations. It does no good, for example, to encourage business owners to hire, and then to saddle them with health care mandates for the person they’ve just hired. (Side note: For those of you who consider that an “anti-reform” comment, think again. We do need health care reform because the spiraling cost truly is hurting small businesses. The bills on the table don’t do anything to control costs though.)
Congress and the President must work quickly and in a bipartisan fashion to create policy that instills confidence in the business community. As I said in an earlier blog, uncertainty is eroding confidence right now. A decision a business owner makes today could very well be undermined by legislation that’s passed in the coming months – and there’s a lot of pending legislation out there that could negatively impact small business.
Pro-business policies, combined with incentives for job creation, will create an environment that gets the economy moving forward and encourage businesses to start putting Americans back to work. Only when businesses are creating permanent, sustainable jobs are they truly growing. When they’re growing, they’re paying taxes and bolstering the government’s revenues, as are the employees they hire. That’s what we need for true growth as a country, not unsustainable government spending.
The bottom line is that small businesses are “not too small to help.” In fact, it is small business that will help turn this economy around.