Does Washington Get it?

Recently President Obama presented initiatives aimed at small business – primarily focused on hiring employees.  He proposed tax cuts to encourage the hiring of employees, and that monies left over from the Trouble Asset Relief Program (TARP) should be redirected toward small businesses.

OK, it sounds good from 60,000 feet – but does this idea really have legs?

Our friends in Washington (Austin, Topeka, Jefferson City, Oklahoma City) need to understand that before you can hire individuals you must have customers buying product.  Small businesses don’t have the latitude to increase their payroll (overhead) on the basis of a tax break. 

And the idea of using TARP money so that financial institutions can target small business is somewhat ludicrous.  Just ask the management team at one of our Dallas members.  Although the company had not missed a note payment, the bank decided they didn’t really need a small business/printer in their portfolio (probably due to exposures in the commercial real estate market).  After minimal discussion with the member, the bank called its note, leaving the printer only one way out — bankruptcy.  As we’ve seen with many of the banks who were recipients of TARP money, providing them with government funds does not mean small businesses will be the recipients.

So, wake up and smell the coffee Washington! 

We’re looking at a slow return from the abyss.  If you insist in creating programs which are going to further burden business (health care, green house gas regulations, higher payroll taxes), don’t be surprised when employment and the economy flounder around at the bottom of a L shaped recovery. 

This country needs to  find ways to create an environment in which small business owners are not afraid of making decisions.   Read Will Deener’s recent editorial on small business for some additional insights which need to be heard in Washington.

Our present economic straits are bad enough, but when you add the spectre of higher taxes and more restrictive regulations, don’t be surprised when we end up with an economy that looks much like Japan’s, which showed no growth for a 10 year period.


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