December 10, 2009
Small Businesses: The Key to Our Jobs Market and Economic Recovery
When President Obama addressed the Brookings Institution on Tuesday,
December 8th, he seemed to be offering some rather attractive carrots to
the small business sector. He said that he wanted to: expand or extend
some of the tax breaks provided by the stimulus bill, including a 100
percent exclusion from capital gains taxes next year; propose an
“employment tax cut” that will encourage small businesses to start
hiring again; cut fees and increase government backing for Small
Business Administration programs.
What he didn’t mention is that there are some administration officials
waiting in the wings who are carrying some pretty big sticks. They are
the ones who support the House version of health reform, which includes
an employer mandate for coverage, and the Senate’s version of health
reform which amounts to nothing more than new taxes, new mandates and
new entitlement programs, all of which will be paid for on the backs of
small businesses. They are also the ones who are backing congressional
efforts to cap carbon emissions, which would only raise the price of
energy and force a lot of businesses to start moving jobs overseas.
Additionally, they want to see legislation passed that will expand paid
leave and have lawmakers counter the expiration of the Bush-era tax cuts
with a broad range of tax increases.
The President insists that jobs creation remains a top priority of his
administration. But as former Speaker of the House Newt Gingrich
recently pointed out after holding his own “Real Jobs Summit,” not one
small business owner or such business organizations as the American
Chamber of Commerce and National Federation of Independent Businesses
were invited to participate in Obama’s discussion on jobs creation.
Small businesses create three out of every four new jobs and even the
President himself noted in his Brookings speech that 65 percent of all
new jobs created in America over the past few years were generated by
this group. But it’s the policies of the decision-makers in the Obama
administration, nearly all of whom have very little real world
experience, which will have “a job killing effect,” as Gingrich said.
“Their energy tax increase is a job killer. Their willingness to send
taxes back up next year is a job killer. Their health plan is a job
killer. And this will become the worst job killing administration, I
think, in American history.” To exclude both the American Chamber of
Commerce and National Federation of Independent Businesses, the largest
organization representing small businesses in America, from
participating in Obama’s jobs creation summit “is like trying to have a
pro-football meeting without the NFL,” Gingrich maintained. “It wouldn’t
make any sense.”
Meanwhile, reality is taking its toll. The day before the President’s
speech, Federal Reserve Chairman Ben Bernanke warned that the economy’s
recovery remained fragile and unemployment will continue to remain high
for some time. Despite indications that the economy is emerging from two
years of recession, the unemployment rate for the nation is in a holding
pattern of ten percent. For California, the news is not much better.
According to a UCLA Anderson Forecast released Wednesday, December 9th,
our unemployment rate, which hit 12.5 percent in October, will probably
peak at 12.7 percent this quarter, and most likely won’t start falling
below 10 percent until 2012. According to Anderson Senior Economist
Jerry Nickelsburg that means little or no growth for the state for the
rest of the year. On the other hand, he believes that the keys to the
California recovery are exports of manufactured and agricultural goods,
increased public works construction and increased investment in business
equipment and software. The recovery could alter the employment
landscape in Southern California.
Simply put, small businesses are key to the jobs market, and I fully
agree, as a businessman and elected official, that it’s the innovative
vision of California entrepreneurs that will help power our state’s
economic recovery.
