Strengthening Constitutional Self-Government

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The President's Deaf Ear for Small Business

Caroline Baum notes that in Washington there is broad agreement--or, rather, there is seeming broad agreement--for the notion that small business is the engine of the American economy.  After all, it is responsible for creating more than 60% of American jobs and generates at least 50% of our GDP.  When ordinary people look at statistics like that, they probably walk away with the sound opinion that folks who are capable of this sort of accomplishment probably know a thing or two about what makes for a sound business climate.  People who have the gumption to create a business, take the necessary risks and responsibilities of operating that business, manage to generate profits and sustain that business and, in the process, provide livings for countless numbers of Americans--those people probably have richly informed opinions about the economy that are worthy of the attention of policymakers and, certainly, of a man who happens to be President during a recession and claims to be doing what he can to reverse it.

Yet Baum's story notes the frustrations of small business owners who, not without good reason, believe that Washington and, in particular, the President is only paying them "lip-service," actually looks upon their ideas with derision and condescension and, instead, offers a litany of head-pats and unsatisfying pacifiers.  For example, the proposal from the Obama administration for a $5,000 tax credit for hiring new workers does not impress most small business owners.  As Baum, through chief economist for the National Federation for Independent Business, William Dunkelberg notes, "Employers aren't about to pay a new worker $40,000 to earn a $5,000 credit unless that worker generates $35,000 of revenue . . . That's Econ 101 (see 'marginal revenue product' or 'profit maximization'), a course most of our elected representatives seem to have missed."  Alternatively, consider it in another light, as I heard Rush Limbaugh do it yesterday, "These guys are smarter than you, Mr. President," he (rightly, in my view) opined.  What, Limbaugh asked, is to prevent a business owner from laying off workers for 60+ days, promising to keep them above water, and then re-hiring them in order to get these tax credits without actually creating any new jobs or creating any additional expense for themselves?  When you set up the playing field like a game of Candyland, it shouldn't surprise anyone if it's too easy for Washington to get played.

But the thing that ought to concern Washington and the President more than anything else is the record pessimism coming from small business owners.  According to Baum, the NFIB index which tracks this pessimism has not been this low--and then, for only one quarter--since the back-to-back '80 and '82 recessions.  We're now at a record consecutive seven quarters of this pessimism.  Is it time to listen yet?

Anecdotal evidence from this story seems only to support the hard evidence that the answer from the President is, "no."

Pat Felder, who co-owns Felder's Collision Parts Inc. in Baton Rouge, Louisiana, went to the White House in October, along with members of the U.S. Chamber of Commerce.

"Obama came in, talked at us, shook a few hands and left," Felder says. "I was foolish enough to think small- business owners would have some sort of dialogue." [ed.--emphasis mine]

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