"You didn't build that." A single phrase, uttered by Obama more out of frustration than prejudice, has become a rallying cry for the Republican Party, which wants American voters to believe that Obama is implacably hostile to small business.
There's no denying that Obama's poorly chosen words have stoked the GOP's long-standing depiction of the president as a "tax-and-spend liberal" who privileges government initiative over the "genius" of the private sector.
But the fact is, Obama has -- to borrow a term from Bill Clinton -- a "sterling" record when it comes to promoting small business. If you haven't heard about it, it's largely because Obama -- with characteristic diffidence perhaps -- hasn't touted some of his most noteworthy policy achievements. And that's allowed vocal business groups like the American Chamber of Commerce to fill the messaging void with their own anti-Obama vitriol, virtually uncontested.
First, consider these simple facts. Of the 4.5 million private sector jobs created since Obama took office, about 2.6 million -- or 60 percent -- were created by small businesses. How impressive is that number? George H.W. Bush, by comparison, created just 1.8 million small business jobs during his full four years in office. And if we add the paltry number created under two terms of George W. Bush, we arrive at a startling conclusion: Obama has created as many small business jobs in one administration as his two GOP predecessors did in three.
These jobs and the revival of the small business sector didn't just happen spontaneously. From the day he took office, Obama has deliberately stoked its development, providing some 18 different tax cuts: some under the banner of the 2009 American Recovery Act (the "Stimulus"), others through the Small Business Jobs Act of 2010. Obama also established the Small Business Lending Fund (SBLF) which made it easier for community-based banks to provide critical start-up loans that most fledgling businesses need to get off the ground, or to finance their expansion, hiring more workers.
That's right, even though it's business owner CEOs that provide the drive and innovation to push their businesses forward, they rarely take that risk alone. In the short-term term, the issue isn't so much whether businesses need roads or schools but whether they need investment capital. It's commercial institutions -- or the stock market, when start-ups go public -- that help them pool that vital capital, and those institutions are ultimately sustained by their depositors or shareholders. No, small business alone doesn't build that.
In fact, even the private sector alone, operating collectively, is often not enough. The rise in commercial lending to small businesses, which began in late 2011, and has accelerated since, was itself triggered by Obama's loan guarantee policies. In 2010, he set up an unprecedentedly large fund, totaling $30 billion, under the Small Business Administration (SBA), to help underwrite commercial lending to small businesses. The SBA doesn't actually provide the loans but it signals to banks the kinds of businesses that are likely to be promising and profitable enterprises.
And it's paying off, big-time. To take just one example: SBA's Dallas/Fort Worth district office approved an unprecedented 666 loans and $399.8 million in loan guarantees to small businesses during the first three months of 2012. That's a whopping increase of 83 percent and 42 percent, respectively, over the same period in 2011.
To give some sense of the magnitude of the shift that's starting to occur, and that's expected to accelerate over the next two years, consider these figures:
Even more telling perhaps, is the renewed confidence of small business owners. While the Romney campaign has made much of polls showing that most small business owners favor him over the president, in surveys owners are remarkably satisfied with their progress, and where they see things going.
Gallup, which has surveyed business owners for years, recently found that the satisfaction index among owners was at its highest level since July 2008. That means Obama has largely restored small business confidence to its pre-recession levels, a remarkable feat, but like so many others, one that's been largely under-reported, or distorted by partisan warfare.
Perhaps no aspect of Obama's pro-active support to small business is less well known than his stewardship of the Jumpstart Our Business Start-Ups (JOBS) legislation that passed the Congress in April. One reason: Obama had to reach across the aisle to work with Republicans to balance opposition he faced from within his own Democratic ranks. The bill relaxes federal security regulations to make it easier for small start-ups to gather investment capital, and many consumer groups saw it as a step backwards in terms of maintaining transparency and protecting investors from being swindled.
But for the bill's legislative supporters, it was a clear recognition that the IPO sector, which may be the economy's leading source of business innovation as well as job creation, will never fully recover unless extraordinary -- and yes, risky -- new steps are taken.
It was a handful of Silicon Valley investors -- many of them prospective Obama donors, of course -- who spearheaded the JOBS legislation, but it stands as one of the true bipartisan achievements of Obama's first term. Even Rep. Eric Cantor (R-VA), the GOP's second most powerful voice in the House and one of the presidents leading Republican critics, had nothing but praise for Obama's stewardship of the JOBS bill. It may well be the clearest sign that Obama, far from shying away from supporting small business, has emerged as its true champion.
Why, then, would small businesses be so hostile politically to the president when they're starting to have it so good? Partly, it's the deeply-ingrained perception that Democrats, because they also support stronger business regulation, are less sympathetic than Republicans are to free enterprise. But recent polls suggest that small businesses actually support increased regulation, especially on the environment. There's also a simple lack of education. For example, while clearly worried about the cost of health care reform, a recent survey found that a majority of small business owners remained completely unaware of the large subsidy and tax exemption actually afforded them under Obamacare.
Apparently, groups like the National Federation of Independent Businesses (NFIB), which claims to represent the small business sector -- but critics say is a right-wing front group -- isn't in a hurry to tell them, either. NFIB was part of the original pro-Obamacare negotiating coalition but pulled away to join the fight against the individual mandate, even filing its own Supreme Court brief opposing the law. Eventually small businesses may figure out that they stand to gain mightily under Obamacare, assuming that the law's key provisions, including their own benefits, survive an expected GOP onslaught.
The fact is, Republicans, while shoring up big firms, have often neglected the small business sector, except, of course, as a convenient ideological symbol. Most economists know that the GOP's attempt to portray its tax cuts on high-income earners as an investment capital "stimulus" to small businesses is a fraud. Only 3-4 percent of small business owners report annual personal income in the $200,000-$250,000 bracket. Tax cuts at this level will have only minimal impact on the nation's economy, except as a subsidy for the luxury purchases of the rich.
The small business sector? Don't look to Mitt Romney, any more than his GOP predecessors, to help build that.
This article is adapted from the author's forthcoming e-book (with John Barton), WHY THE RIGHT IS WRONG: Setting the Record Straight about President Obama's First-Term Policy Accomplishments.
 |
 |
|
| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
Article suggests that small business voters can swing the swing states. In latest poll, Romney still leads by double-digits, but Obama has narrowed the gap a bit since May.
http://blogs.reuters.com/small-business/2012/10/17/swing-state-small-businesses-could-loom-large/
Worth noting that the latest poll has President Obama leading Mitt Romney among small business owners. This is a reversal of earlier polls.
http://www.bizjournals.com/bizjournals/washingtonbureau/2012/09/17/poll-obama-leads-romney-among-small.html
http://www.entrepreneur.com/article/205410
If small business is recovering it's not because of Obama.
4. You're factually incorrect when you claim Obama "set up an unprecedentedly large fund, totaling $30 billion, under the SBA to help underwrite...." The fact is: THAT was the amount of SBA loans that were guaranteed that fiscal year... and it was partly made possible by fee waivers, (long-overdue) expanded loan sizes, and 2 (soon-to-be-expiring) SBA 504 loan programs (refinance and FMLP). If Obama wanted MORE SBA funding, he'd use his bully-pulpit to get behind (at least) a one-year extension of these 2 budget-neutral loan programs.
5.While only 3% to 4% of SBOs make over $250,000, what hasn't been well explained is that this same 3% to 4% employ 93% of ALL employees in the SB sector. To raise their taxes is truly to punish those job creators who are supposedly so sacrosanct.
6. The JOBS Act was a good one (passed with bipartisanship), but it was partly a case of new legislation "fixing" the over-reaches of past legislation (SarBox).
1. CNN's fact-checkers have burst the "4.5MM jobs created" embellishment. The REAL number: just 300,000 net since Obama took office. While I didn't look up the job creation numbers for Bush I or Bush II, I'm pretty sure they exceed 300M.
2. All 18 "tax cuts" were either temporary or far-too targeted, and I guess "tax credits" get counted as a "cut" here, too. SBOs have LONG tried to explain to all pols (including Obama) that PERMANENT and BROAD-based (REAL) tax cuts are what lead to business planning and hiring decisions. THIS is why these didn't really work. Obama was only as tone-deaf to this as everyone else on Capitol Hill. Citing 18 "cuts" is disingenuous at best -- no employer makes a long-term hiring decision based on temporary "tax credits" or $3K or less.
3. The SBLF was not terribly effective... worked better in theory than in practice. Only CAMEL 3-rated banks would apply; CAMEL 1's and 2's need not; while CAMEL 4's and 5's could not. Some of your statistics are merely the result of gains off of low (or lowered) baselines. And increasing your SB lending by 10% (minimum required) isn't exactly a "sterling" move.
MORE to come in another post...
The failure of one promising solar panel project is being trumpeted by conservatives to try to discredit Obama's entire "green" energy initiative, which was supported by a congressional legislation with the support of the GOP. In fact, the Solyndra project itself was first approved by the Bush administration, and then re-approved by Obama. It is only one of 140 federally-supported solar energy development projects, 90% of which are succeeding. I believe the losses represent 1% of the entire DOE energy program. To single Solyndra out is unfair, and prejudicial.
In fact, losses from clean energy projects like Solyndra are already covered by funds specifically set aside by Congress for this purpose. It was expected that one or two projects would fail; losses of this kind are always figured into exploratory ventures like these.
Finally, a recent audit of the entire DOE loan guarantee program by former John McCain national finance chairman Herbert Allison found that it had been highly cost-effective, greatly reducing the costs of loans from private banks for the same technologies and projects.
It's not a 100% perfect program, but it's created some 60,000 jobs, and it's a critical part of why solar energy production, and other "renewables," are way up, as part of Obama's "all of the above" energy strategy which includes LOTS of oil and natural gas drilling, too.
http://thinkprogress.org/climate/2012/02/10/423270/doe-loan-guarantee-program-will-cost-2-billion-less-than-expected/
You are referring to a specific aspect: small business CONTRACTING with the federal government, and Obama's record in ensuring that small businesses get their fair share of these contracts. That's an important issue, I agree. There is an entrenched culture inside the federal government dating back many administrations that allows big companies to misrepresent their size and to pretend to be small businesses - thereby qualifying - when in fact, they are sometimes multimillion dollar firms with 500 employees.
Since 2005, Fairness in Procurement Alliance, the organization cited in the document you reference, has been in the forefront of exposing these abuses and calling for greater transparency and accountability. This is not an Obama administration problem, per se, though, but it's certainly one that Obama needs to address moving forward.
Here's a more general article on FPA and the issues involved -- http://www.americasbestcompanies.com/blog/gov-procurement-small-business.aspx
Again, though, this issue, while critical, is about government contracting, that is, small businesses operating in the public sector with government as their sole customer.
It is a separate arena from government support or commercial bank lending support to small businesses operating in the private sector, the bulk of the economy.
For this reason to say "The Obama Small Biz Track Record is atrocious" seems, well, extreme. I would say that Obama has done no better than past administrations, Democratic and Republican, is ensuring fairer representation for small businesses in government contracting.
Hiding over $100 Billion in contracts from the set-aside provisions of The Small Business Act and allowing Billions in small business contracts to be awarded to ineligible giant firms - during his watch - is unforgiving. There is no Going Forward! If you want proof, view this short NBC investigative report, http://bit.ly/Np10d8
Lloyd Chapman, President of the American Small Business League (ASBL) and prominent HoffPost blogger has said, “I endorsed Barack Obama for President in 2008, but I couldn’t be more disappointed.”
Yes. Obama is good at making promises, but not at delivering results. The comments you will find on this short video from the National Association of Federal Contractors (NaFCA) is very revealing, http://bit.ly/vZMTRe
Since it is Hispanic Heritage Week, I will conclude by citing another Obama blunder. This one it is about 'diversity and inclusion' in the Federal workplace. Obama issued an Executive Order, to promote a policy pioneered by Republican presidents, dating back to the late 1960s, yet none of the Obama key appointees who oversee contracting and Recovery spending at the Federal Agencies (i.e., Office of Small and Disadvantaged Business Utilization (OSDBU) and The Recovery and Reinvestment Act) are Hispanics!
Thank you for the opportunity to clear up a vital issue on the 2012 elections.
You should ALSO checkout this article "4 Tax Law Changes We Need To Make Permanent" on my blog - http://www.YourSmartMoneyMoves.com
Ted Jenkin
CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc - The Leaders in Gen X & Y Financial Advice and Services
"In 2010, he set up an unprecedentedly large fund, totaling $30 billion, under the Small Business Administration (SBA), to help underwrite commercial lending to small businesses. "
The more important point, perhaps, is that the banks that did get SBLF funds dramatically increased their small business lending compared to the banks that didn't get SBLF funding. There is very clear and stark evidence of this, and it's been confirmed by Treasury and others.
The program "worked" - extremely well, in fact - when banks actually took advantage of it.
Even so, the SBA has vastly increased its loan guarantees outside the SBLF framework. Some people who argued against the SBLF basically said the existing SBA system is fine, we don't need an SBLF. In the end, both routes have made a lot of new loans available to small business.
I think like so many other critical economic indicators - new housing starts, auto sales, rising business confidence in the construction industry, the double of the stock market, to name several - there are very clear signs of a sustained economic revival - but they're under-reported.
The economy seems poised for something of a take-off next year - whomever is elected, actually, and whoever is in office will get the credit.