Who's Good for Small Businesses?

Jeff Alworth

Forget states' and gay rights for a minute. Forget the whole Reagan-era social agenda. If you know one thing about the Republicans, you know that they're good for business, right? They're the small government and big market party, the free trade party, the no-taxes-on-business party. Dems, as we also know, are the party of labor, of protectionism, of pinko government control of utilities. Since Lincoln it's been this way.

It's time to revise your assumptions.

When we talk about "business," we should be thinking "small business"--because of the 85,000 firms in Oregon, 87% employ fewer than 20 employees (link is a .pdf). It's pretty clear the GOP's bona fides are warranted for businesses in the multinational crowd--one could say electing Bush was like putting a corporate lobbyist in the White House--but what about small businesses? Have they benefited from GOP dominion over Congress and the White House?

Not by a long shot. In fact, Bush and Congress have been actively antagonistic to the needs of small businesses.

Since taking office, Bush has directly slashed aid to small businesses, made it more difficult for small businesses to get government contracts, and created trade deals that favor corporations over smaller businesses. A July Harper's article (sorry, no link) detailed some of the White House's actions:

–Bush signed free-trade deals with Singapore, Chile, Morocco, and Australia, but at the same time terminated funding for the US Export Assistance Centers, an initiative to help small business benefit from free-trade deals like this;

–Under the Bush war machine, federal contracting jumped 7%, but contracts to small companies dropped by 14%;

–Under Bush, the Small Business Administration (SBA) saw the biggest percentage decline of any federal agency;

–Bush wants to get rid of the Advanced Technology Program, a federal initiative to encourage new technologies–75% of which goes to small business.

But that's just Harper's right? The most pinko of the pinko rags. Let's see what the Portland Business Journal has to say--they oughta be a little more balanced.

Since President Bush took office, he's slashed the Small Business Administration budget by 25 percent. Another cut is planned for next year, according to early White House budget documents.

Bush has asked the SBA's Small Business Development Centers to start charging their counseling clients. He believes Women's Business Centers should become self-sufficient after five years. He proposed abolishing the Microloan program, which provides small loans and technical assistance to low-income entrepreneurs.

The president also slashed the budget of the Department of Commerce's Manufacturing Extension Partnership, which provides business counseling and technical services to small manufacturers.

Whoops. The article does describe Bush's great plan to help out small businesses--more tax cuts--but these have (surprise!) disproportionately benefited large corporations. More bait and switch.

There was a time when the GOP were the absolute defenders of business--small, medium, and gigantic. But there was also a time when the GOP favored non-interventionist foreign policy, states' rights, privacy, civil liberties, and small government. But the Bush/Frist/DeLay regime ain't your father's GOP. Owners of small business need to recognize this fact and take appropriate action: vote Kerry. His plan for the economy looks a lot more friendly to their interests.

Incidentally, I intended to do some real journalism on this subject and interview small businesses around Oregon. Maybe when Kari starts paying me. In the meantime, encourage business owners to comment here or drop me an email (jeff_alworth(at)yahoo(dot)com. It would be great to hear it from the business-owner's perspective

  • brett (unverified)

    OTOH, the Bush administration has enacted far fewer onerous regulations than any recent other:


    And I'm sorry, but I don't think cutting federal bureaucracy is being "actively antagonistic to the needs of small businesses." Not by a long shot.

  • miles (unverified)

    The discussion of small businesses always sounds so folksy and friendly, but in reality small businesses can be quite large:

    "An independently owned and operated firm, certified, or certifiable, as a small business by the Federal Small Business Administration (SBA). Rule of thumb: small business is less than 500 employees (except for travel agencies; some manufacturers; and construction contractors/design professionals). If you are unsure of your size classification, call your local SBA office."

    When you hear Bush talking about small businesses are you thinking of 300 to 500 employee companies?

    It is my understanding (correct me if I'm wrong) that many of the justifications for supporting small businesses refer to very small businesses (under 20) (eg. job creation)... but many of the federal advantages alloated to small businesses benefit a few of the largest "small businesses."
    This (again, as I have heard it) enables Bush to appear to talk to the interests of the numerical majority of small businesses that are sub 20 person operations, but actually pass laws and regulations that are focussed on the interests of the fewer in number large scale "small businesses".

    Corrections, amplifications, appreciated.

  • Gordie (unverified)

    So what's Kerry's voting record regards small businesses...in what ways is his record superior (or inferior) to Bush's? Guess I'm a relic in wanting to compare the candidates' records.

  • Alexander Craghead (unverified)

    And as an owner of a small business, and having prior been involved with a small family business for basically most of my life, I can say that this is bogus. The SBA never did a damn thing for us, and is about as useful as a brick of moldy cheese. Everything we did we did without government help. Or government contracts.

    Republican administrations have always been viewed as more small business friendly because they tend to keep down regulations that are a pain for smaller companies to comply with, and they tend to keep tax burdens low so smaller companies can keep more of what they make.

  • (Show?)

    Brett, I'd be interested to know what you think of as "onerous regulations." Regulations are often vitally important to businesses with a competitive disadvantage due to size. If we let unregulated Darwinianism rule the markets, all the big fish will eat the small ones--which is bad for everyone but the big fish. Bush, in favoring corporations to the exclusion of all others, can't really be called a friend to "business." If you're going to float a generic charge about regulations, I'd like to know what you're talking about.

    As to "cutting federal bureaucracy," this is another canard, for the same reason. That NYT graphic to which your link points merely identifies regulation overall--there's no distinction among business size. As I said in the post, Bush is the poster child for big business--he carries their water like a lobbyist. But what's good for Enron may not be good for Hot Lips Pizza. I'd be interested to see your evidence that the Bush actions have benefited small business.

    (You also ignore the points in the post that show favoritism to big businesss--trade deals and contracting.)

    I'd also be interested to know if you have colleagues or friends who own small businesses. What do they say?

  • (Show?)

    Miles, you're right about the definition of "small buisness"--it is 500 employees or fewer for the purposes of federal tracking. But it's possible to parse out the numbers by looking at the data--that's why I mentioned the under-20 category, which seems a bit more useful as a measure. In Oregon, those businesses make up 87% of all "small business."

  • rich (unverified)

    FWIW, this small (2 owner-employees)business has received no benefit from GWB's meandering economic & agricultural policies.

  • john (unverified)

    Jeff- I didn't see your description of Kerry's plan for small business. Did I miss it? Rich- What kind of benefits are you looking for?

  • (Show?)

    John, toward the end of the post there's a hotlink to Kerry's proposal. I'll let Kerry speak for himself.

  • john (unverified)

    Jeff- But you'll speak for GWB?

  • (Show?)

    Ignoring your provocation (difficult!), this was a post about Bush's record, not either candidate's plan. Sometimes apples and oranges shouldn't be compared.

    But, since you asked, here's an MSNBC article on the candidates. (This is the MSNBC that fired Donahue because he was too liberal.) In this case, it's apples to apples--what are the candidates saying they'll do:

    Bush -Proposes budget cuts for the Small Business Administration and the Manufacturing Extension Partnership. -Believes lower taxes and less-burdensome regulations are more important to most small businesses than the SBA -Wants tax cuts made permanent so business owners can finance more of their own growth.

    Kerry -Would increase funding for SBA and MEP -Would make SBA administrator part of Cabinet -Favors expanding government-supported venture capital programs for small businesses.


  • Becky Miller (unverified)

    If Democrats want to be the party of small business owners, , the first step would be to boot out - or at least get some control over - the American Planning Association. How many times have we seen planners destroy local businesses by taking away convenient access to them, limiting their on-premise signage so that it can't be read unless it contains some recognized franchise's logo, or blocking their storefront with street trees so people can't even see the businesses anymore? The excessive land use requirements, design review, and big brother restrictions ad infinitum result in an onerous burden on "mom and pop" and can destroy their ability to compete with corporate chains. It never ceases to amaze me that the party of the 1960s rebels puts up with such a heavy-handed regulatory approach as that taken by so many urban planners. Republicans may be favoring corporations and cutting funding for the SBA in favor of private business groups, but Democrats are smothering small businesses. It's a great opportunity for Democrats if they'll take it.

  • brett (unverified)

    I'll let the better-informed commenters above speak for me, as I don't run a small business. But I would not equate cutting SBA funding with "active hostility" towards small businesses. At all.

    [Bush:] -Believes lower taxes and less-burdensome regulations are more important to most small businesses than the SBA -Wants tax cuts made permanent so business owners can finance more of their own growth.

    You really think those are less attractive than Kerry's proposals you outline? What good does making a bureaucrat a Cabinet member do? That's exactly the kind of more-government, feel-good, hollow proposal that turns businesspeople off the Democratic plans.

  • Becky Miller (unverified)

    Brett -

    I work with the SBA and I know that they are truly dedicated to helping small businesses, and are very effective at doing so. I also know that they have very high standards for research and opinions that they will promulgate. When information comes from the SBA, it is credible. That is not necessarily the case with the groups like NFIB and others that are stepping in to fill in the service gaps left by the SBA. These groups can be politically biased and can offer slanted information that is based on biased research. The loans the SBA has given to small businesses have really helped independant companies stay competitive in an increasingly franchise-dominated business world. So I would have to agree that cutting SBA funding is actively hostile to small businesses. It certainly works to help corporate interests gain a greater foothold in the marketplace.

  • (Show?)

    You really think those are less attractive than Kerry's proposals you outline?

    I really do. In part because of Becky's reasons. In part because, as I noted in the original post, most of the federal largesse--and there is MASSIVE federal largesse--Bush wishes to divert will go to massive multinationals.

    But we also have a very different attitude toward government. You believe it is all, without exception, malign. I, having looked at historical evidence here and abroad, believe that governments have a generally positive effect. Look at the period between 1932-1968, the engine of 20th-Century American economy and the great period of progressivism (read: government involvement).

  • John (unverified)

    Jeff- Sorry for the provocative tone. It was not intended. Bush's record and each candidates' solutions may be apples and oranges. Kerry has no record he's interested in discussing. For that reason, I thought a side-by-side of their proposed solutions might be more fair and enlightening. -John

  • The Prof (unverified)

    I guess I don't consider Bush or Kerry that relevant for small business. Much more relevant are the proposals of the mayoral candidates; our relative rates of regulation and taxation vs. Clark County; and state policies.

    Bush and Kerry? At most they wield big macroeconomic instruments that have a very distant relationship to Oregon's economic fortunes.

  • brett (unverified)

    Government is not malign without exception. But it is a drag on the economy, by definition; the higher the percentage of GDP that goes to the government, the less money available for private investment and consumer spending. There are certain tasks that only government can do: public infrastructure, public safety, environmental regulation, etc. Government should be as small as possible while still getting those tasks done. Doesn't that make intuitive sense? Why pay higher taxes than is necessary?

  • Becky Miller (unverified)

    Prof -

    Unfortunately, the Administration can have a tremendous impact on local small businesses.
    For example, the last two Administrations have supported the American Planning Association's efforts, supplying the organization with sizable grants through HUD and the EPA to produce The Legislative Guidebook - model land use regulation statutes that are so instrusive that most people would be shocked. The statutes are now being adopted all across the country by well-meaning but poorly educated cities. You really should check out the kind of big brother stuff it includes. And the way Oregon loves planning, I'll wager we'll see a bit of it here, too.


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