How Have Small Businesses Fared Under the Obama Administration?
Many small business owners feared President Barack Obama's election to office would force them to cut staff and raise costs. His policies conjured images for pundits of a reversal of the small business growth experienced over the last 25 years. His healthcare reform seemed like a leech in the pockets of America's small business entrepreneurs.
Too early to tell
So far the verdict is still out on the long-term effects Obama's initiatives will have on small businesses. With each step forward, an equal step is taken backwards, but that's still better than most small business owners anticipated when they reluctantly accepted Obama as president. Everyone must remember most of what's proposed in Obama's plans will not take effect until 2010.
More taxes or tax break?
The debate heated up in June as Obama kept the door open to tax employer-provided benefits as part of compensation in order to fund the $1 trillion budget for a universal health care plan. Many experts feel Obama's taxes will not affect most small businesses, but instead tax individuals making over $250,000 per year from 33 to 36 percent. Some say that's basically the same thing, taxing only successful small business owners making over $250,000 for working hard and thinking outside the box. Another drawback is the added taxes diminish the owner's ability to reinvest in their business, stymieing growth.
Some experts say this is misguided information placing small business owners into the over $250,000 income bracket, which many are not. Some estimates calculate only 10 percent of small business owners make over $250,000, so therefore the middle-class tax breaks for those making less would go directly toward 90 percent of small business owners.
Cobra causes fear
Small business owners typically prefer Republican presidents. Democratic presidents have a reputation for raising taxes. Taxes cut into already small profit margins for small business owners.
So far Obama's initiatives have been a mixed bag. He routed stimulus funds to Small Business loan programs. He urged banks to release credit, a necessity for small business expansion. He pushed health-care reform through the mandatory COBRA benefit program. He pushed COBRA without tax breaks, leaving small businesses responsible for a bill many can't stomach.
Those make workers more expensive than ever at a time when many small businesses are gripped by declining sales and higher costs for goods.
Yet Obama stresses he intends to offer tax incentives for companies to hire new employees, to get so many who have lost jobs over the last 2 years back into the workforce.
Stimulus funds need time
At the core of the debate is how much stimulus funds benefit small businesses. They often stimulate government projects, but small businesses struggle to outbid large corporations with more capital and better flexibility to bid low for government projects, knowing they can absorb small profit margins.
Small Business Administration lending helps businesses obtain needed capital, but the benefit is decreased by mandatory COBRA participation.
The dollars and sense of Obama's new policies will be come to light more in 2010 at the earliest and maybe later, once stimulus funds get distributed and small business owners have time to absorb the effects of new policies.
The best advice on analyzing Obama's policy is to wait and see. Reserve judgment until at least a year.
