Small businesses to Obama: Less stimulus, more tax cuts please 

Bloomberg columnist Caroline Baum observes that small business are getting increasingly impatient with the White House's economic agenda:

“Washington doesn’t get it.”

That generic statement is tripping off the tongues of populists and Tea Partiers, business groups and bankers alike. In short, the public is peeved at the politicians.

I heard it this week from William Dunkelberg, chief economist of the National Federation of Independent Business, who used his group’s latest survey to opine on Washington’s deaf ear for helping small business.

The president and Congress “pay lip service to the fact that small business generates half of private-sector GDP and employs 60 percent or more of private-sector workers,” Dunkelberg says. As far as Washington’s efforts to help this sector of the economy, “instead of stimulus, give consumers a tax cut,” he says.

President Barack Obama has proposed using $30 billion of repaid government bailout funds to help community banks lend to small business, part of a “jobs bill” working its way through Congress.

Each month the NFIB tallies small-business optimism, or pessimism, which has been the dominant emotion of late. At 89.3 in January, the index is up 8.3 points from its March low, yet it’s languished under 90 for a record seven quarters. The only other time the index plumbed those depths, and for one quarter only, was during the 1980-1982 back-to-back recessions.

Baum also observes that small businesses are less than impressed with the administration's latest plans to create more jobs:

Small business owners list “poor sales” as the numero uno problem. And the jobs tax credit for hiring new workers, proposed by President Obama and embraced by Congress, won’t do much to help. 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, Dunkelberg explains. That’s Econ 101 (see “marginal revenue product” or “profit maximization”), a course most of our elected representatives seem to have missed.

The tax credit for hiring “has absolutely no impact on our decision-making,” says Phil Kenny, president of Trucks Unique, an Albuquerque, New Mexico, company that customizes pick-up trucks for commercial and individual purposes. “We have no tax liability to take a credit against.”

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