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Small Business Needs Government Progress

Author: Bill Dunkelberg Date: January 03, 2014

Washington remains gridlocked on issues that matter most to small business.

It’s not rocket science: Since small business produces half of the United States’ private GDP, the health of the small business sector is critical to the entire economy’s performance.

But when the government functions poorly, as evidenced by the shutdown last fall, it creates uncertainty and discourages small business owners from hiring and investing in the future. The debate about how big government should be in terms of its spending, how to finance it, and whether it should tax more or borrow more continues.

The most important issues for small business owners, according to NFIB’s most recent “Small Business Problems and Priorities” survey of more than 3,800 small business owners include:

  • Healthcare costs
  • Uncertainty about the economy and about government policies
  • Energy costs
  • The cost of regulation and red tape
  • The complex tax code

Progress on these issues would greatly improve small business owners’ outlooks in 2014. Unfortunately, there’s little hope for change.

Healthcare remains a political and economic mess, with countless delays and glitches complicating the rollout of The Patient Protection and Affordable Care Act. After the botched launch of HealthCare.gov in October, the Obama administration fell 80 percent short of its projections for enrollment in the first month.

Odds are that healthcare costs will increase substantially under Obamacare. Some consumers will get subsidies and might even see lower insurance costs, but those subsidies come from tax revenues and higher insurance costs for others. Some business owners will find it’s too expensive to provide the basic insurance coverage required by the government and will drop their plans.

Current energy policy isn’t particularly conducive to lowering costs. Oil prices have been lower, but because world economies are weak, demand is low. The Keystone XL pipeline is still not approved, coal is under attack by the EPA—meaning higher electricity costs—and the government is still wasting taxpayer money on green ventures that ultimately don’t reduce energy costs.

Complicating matters is the regulatory tsunami rushing out of Washington. Ninety percent of NFIB members support reforming the regulatory process, which costs the economy an estimated $515 billion. But according to the Office of Information and Regulatory Affairs’ Unified Agenda, there are 3,503 federal regulations still in the pipeline, more than 800 of which affect small business—meaning there’s little reason to believe that the tide of red tape will be stemmed anytime soon.

Tax reform—which is much needed—is also unlikely to occur. The president has made it clear that if there is any reform, the bottom line must be more tax revenue for the government.

Unfortunately, the outlook for this year is more of the same: political confrontation over basic issues, weak economic growth, more concern over the Federal Reserve’s policies and its trillion dollar bond purchase program, and mountains of regulations and changes. This will be the wet blanket of bad stuff that smothers economic growth and job creation. And though our private sector is very resilient, employment may well still be below the 2007 peak by the end of 2014.

We could do so much better with good management in Washington.

 

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