By Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council
With a few days left before Election Day, here are the main questions the small business community has regarding the presidential election, economic and small business plans of the candidates, and what entrepreneurs are looking for in the first 100 days of the next Administration.
1. What are the major concerns and fears of the American small business community this election season?
The clear concern is the moribund economy and the need for strong and sustainable growth in order to drive sales and revenue growth. On top of the tough and uncertain economic climate are the business climate issues – new regulations, tax complexity and spiking health insurance costs, which continue to squeeze small businesses making it tougher to compete and survive. Government is taking a bigger share of small business resources – both time and money – and the economic pie is not growing fast enough to keep up with regulatory costs and compliance, including the tax burden.
2. What are the major differences between the two candidates?
While both say they are champions for small businesses, the agendas dramatically differ in terms of how they would fix or address the pain points of small business owners. For example, Hillary Clinton would address their tax concerns through unspecified tax credits and post-card compliance. But how she would do this and the actual rate that small businesses would pay, and what firms this would apply to, are not known. Donald Trump plans to fundamentally reform the tax system and dramatically lower small business rates to 15%, eliminate death taxes and simplify through full business expensing and a two-rate individual system. His proposed reforms are more specific and more dramatic.
On regulations, Clinton said she would make agencies be more ”sensitive” to small business concerns and re-look at regulations that may be a major burden. In addition, she said she would incentivize local governments to streamline and modernize licensing requirements. Trump plans to dramatically overhaul the regulatory process and embed reforms across all agencies including cost-benefit analysis, sunsetting rules and stopping some of the major regulations advanced by the Obama Administration that are either being contested in the courts, or due to their dramatic costs on the economy.
On Obamacare and health insurance reform, Trump plans to repeal the law immediately while Clinton would make some fixes – for example, liberalizing the small business tax credit so that it is more practical and usable for small businesses. Currently, that tax credit is too complex and restrictive for the vast, vast majority of small businesses to use it. Trump would vastly expand Health Savings Accounts, create a national marketplace for health coverage and institute other changes that he says will promote competition and choice, thus lowering prices.
Obviously, there are many other differences, but that is just a small snapshot.
3. In the remaining days of the election, what should the candidates focus on?
They need to focus like a laser on the economy and how they will strengthen entrepreneurship and small business growth. New business creation has tanked and without people taking risks and starting new businesses, our economy, quality job growth, and investment will continue to drag along. Excessive government regulation and interference is weighing down the economy and having a negative effect on entrepreneurship and the candidates need to be specific in terms of how they will restore the healthy levels of growth that are needed to create more opportunity and financial security for all Americans. Government regulation is negatively impacting access to capital, business costs, and new business creation. It is essential that the candidates specify how they will get government in control and look at how rules and regulations are disproportionately impacting the success of small business and entrepreneurship in America. Also, Obamacare! There is truly panic among small business owners and the self-employed it terms of how they are going to deal with 15%, 25%, 50% and 100% increases in their health insurance premiums at the same time that they are getting less for those increases.
Lastly, we have not heard enough about education. Our educational system is not preparing most of our young people for the type of skills that are needed to compete, succeed and start businesses in the modern economy. American needs a “Marshall Plan” for our educational system and learn from our best schools and find a way to apply their practices everywhere.
4. During the first 100 days of the next Administration, what are the major issues that should be addressed?
In addition to those above, there needs to be a full court press on fully reforming government – that means the tax and regulatory system and identifying government impediments that are undermining new business creation and successful small business growth. A new Administration can identify opportunities for bipartisan action – there are many! But it will take focus and bold leadership in order to move the needle on key issues and reforms that will allow all Americans to fully realize their potential and financial security.
KEY ECONOMIC RESOURCES
- The workforce has lost over 8 million jobs, according to the 6th GAP analysis report, “America’s Lost Jobs.”
- The fifth report – “Gap Analysis #5: Americans’ Lost Income” – it was reported that if per capita real personal disposable income grew at the average historic rate since 2009, real per capita personal disposable income in 2015 would have been $2,000 higher (2009 dollars) on average for individuals, and $8,000 higher for an average family of four.
- In the fourth report – “Gap Analysis #4 – The Productivity Shortfall: Causes and Results” – it was noted that dramatic slowdown in productivity growth in recent years, with annual labor productivity growth averaging a woeful 0.4 percent from 2011 to 2016, compared to average annual growth of 2.0 percent from 1956 to 2016.
- And the third report – Gap Analysis #3 – Entrepreneurship in Decline: Millions of Missing Businesses – points to an estimated gap or shortfall of between 867,000 and 4.8 million businesses in the U.S. economy.
- The second report – Gap Analysis #2: Lost Decade of Private Investment – reported a historic gap or shortfall in private-sector investment over the most recent decade, for example, with real fixed nonresidential investment (or business investment) coming up $1.1 trillion (in 2009 dollars) short of where it should be in 2016.
- The first analysis – Gap Analysis #1: The GDP Shortfall – estimated a GDP shortfall of $2.7 trillion (in 2009 dollars) in 2016 thanks to real GDP growth running at less than half the rate it should during a recovery/expansion period.
About the Small Business & Entrepreneurship Council
SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years, SBE Council has advanced key policies and initiatives to strengthen the ecosystem for startups and small business success. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil.
