DANNER: Speech failed to revitalize job creators – Washington Times

DANNER: Speech failed to revitalize job creators – Washington Times.

Gushers of federal cash, temporary tax breaks don’t help small business

By Dan Danner – The Washington Times

In another attempt to show he understands the plight of job creators, President Obama appeared before a joint session of Congress on Thursday to outline a plan to put Americans back to work. Again, he proved he does not understand – or does not want to acknowledge – the biggest problems facing small businesses.

The president continues to emphasize the important role small businesses play in our economy. He is right on that account. According to government statistics, small businesses create about two-thirds of net new jobs and employ more than half of the private-sector work force in this country. But research by the National Federation of Independent Business shows small-business optimism is in recession-level territory and the president’s pep talk to Congress on Thursday gave small-business owners little reason to feel encouraged.

Take the centerpiece of his plan: a new, multibillion-dollar federal stimulus program focused on infrastructure and building. Despite two failed stimulus programs, the president still thinks this is a good idea. Unfortunately, we already know pumping federal cash into construction projects is a Band-Aid approach to job creation that did not work the last time he tried it and will not work again. Even with all the evidence against it, the president still seems to think the government can spend its way out of the recession.

The other half of the plan consists of short-term tax breaks for workers and businesses. A payroll tax cut is a welcome help to reduce the cost of running a business, but it is not clear if it will be enough to persuade firms to hire. Few businesses are making new investments today because of a lack of customers and an uncertain tax and regulatory environment. If a business owner does not need a new worker, a temporary tax break may not be enough to push that owner to hire.

The temporary tax cuts outlined in the president’s plan are emblematic of a larger problem with the tax code. Small businesses simply can’t plan with confidence in the current tax environment. Taking the long view is essential for small-business owners to weigh the costs and benefits of investments, such as hiring a new employee. And with the cuts outlined in the president’s plan, business owners know there will be an expiration date. The president avoided discussing meaningful business tax reform in favor of a more short-term approach. This leaves a cloud of uncertainty over small businesses’ plans for the future, especially considering that the president provided few details of how the government will pay for his plans.

In addition to the constant flux of the tax code and the threat of tax increases, the president failed to meaningfully address one of the top issues facing small businesses. A tidal wave of new regulations is bearing down on them from Washington. More than 4,000 new regulations are in the pipeline, with no sign that the pace of rule-making will let up, reflecting a 60 percent increase in major federal regulations since 2005. Last year, pending major regulations jumped 22 percent over the year before. The National Federation of Independent Business is leading a new campaign, Small Businesses for Sensible Regulations, to give a strong voice to the small businesses affected by overregulation because the scale of the problem seems to be lost on this president.

Small-business owners hoped to hear something bold from the president but instead heard more of the same. A mixed bag of temporary tax breaks and an ill-advised stimulus program do little to address the problems facing the engine of America’s economy – small businesses. Rather than the retread, failed ideas we heard from the president on Thursday, what small businesses want is actually relatively simple. We want government to get out of the way to let us do what we do best: create jobs.

Dan Danner is president of the National Federation of Independent Business.