Small Businesses: The Key to Our Jobs Market and Economic Recovery

Anaheim, CA, Dec. 10, 2009
By Anaheim City Council Member, Harry Sidhu

When President Obama addressed the Brookings Institution on Tuesday, December 8th, he seemed to be offering some rather attractive carrots to the small business sector. He said that he wanted to: expand or extend some of the tax breaks provided by the stimulus bill, including a 100 percent exclusion from capital gains taxes next year; propose an “employment tax cut” that will encourage small businesses to start hiring again; cut fees and increase government backing for Small Business Administration programs.

What he didn’t mention is that there are some administration officials waiting in the wings who are carrying some pretty big sticks. They are the ones who support the House version of health reform, which includes an employer mandate for coverage, and the Senate’s version of health reform which amounts to nothing more than new taxes, new mandates and new entitlement programs, all of which will be paid for on the backs of small businesses. They are also the ones who are backing congressional efforts to cap carbon emissions, which would only raise the price of energy and force a lot of businesses to start moving jobs overseas. Additionally, they want to see legislation passed that will expand paid leave and have lawmakers counter the expiration of the Bush-era tax cuts with a broad range of tax increases.

The President insists that jobs creation remains a top priority of his administration. But as former Speaker of the House Newt Gingrich recently pointed out after holding his own “Real Jobs Summit,” not one small business owner or such business organizations as the American Chamber of Commerce and National Federation of Independent Businesses were invited to participate in Obama’s discussion on jobs creation. Small businesses create three out of every four new jobs and even the President himself noted in his Brookings speech that 65 percent of all new jobs created in America over the past few years were generated by this group. But it’s the policies of the decision-makers in the Obama administration, nearly all of whom have very little real world experience, which will have “a job killing effect,” as Gingrich said. “Their energy tax increase is a job killer. Their willingness to send taxes back up next year is a job killer. Their health plan is a job killer. And this will become the worst job killing administration, I think, in American history.” To exclude both the American Chamber of Commerce and National Federation of Independent Businesses, the largest organization representing small businesses in America, from participating in Obama’s jobs creation summit “is like trying to have a pro-football meeting without the NFL,” Gingrich maintained. “It wouldn’t make any sense.”

Meanwhile, reality is taking its toll. The day before the President’s speech, Federal Reserve Chairman Ben Bernanke warned that the economy’s recovery remained fragile and unemployment will continue to remain high for some time. Despite indications that the economy is emerging from two years of recession, the unemployment rate for the nation is in a holding pattern of ten percent. For California, the news is not much better. According to a UCLA Anderson Forecast released Wednesday, December 9th, our unemployment rate, which hit 12.5 percent in October, will probably peak at 12.7 percent this quarter, and most likely won’t start falling below 10 percent until 2012. According to Anderson Senior Economist Jerry Nickelsburg that means little or no growth for the state for the rest of the year. On the other hand, he believes that the keys to the California recovery are exports of manufactured and agricultural goods, increased public works construction and increased investment in business equipment and software. The recovery could alter the employment landscape in Southern California.

Simply put, small businesses are key to the jobs market, and I fully agree, as a businessman and elected official, that it’s the innovative vision of California entrepreneurs that will help power our state’s economic recovery.