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President Obama: Small Business is Part of His Reelection Strategy
Feb 7th
President Obama is urging Congress to support legislation to expand tax cuts for small businesses and free up capital for startups.
His proposed “Startup America Legislative Agenda,” would eliminate taxes on capital gains in investments in small businesses and provide a 10 percent income tax credit on for new hires or to spur job-creation, double the deductions a startup business could take from $5,000 to $10,000, and extend 100 percent first-year depreciation for qualified property. The President will offer details of his proposals in the fiscal 2013 budget that will be submitted to Congress on February 13.
In an election year in which the economy will likely be the determining factor, both Democrats and Republicans will want to be seen as supporting small business, and cutting taxes is always popular with the electorate.
The White House sees small business growth as a primary driver of the economy. In fact, my company has been providing data on loan approval rates at big banks, small banks, credit unions and other alternative lenders to the President’s Council of Economic Advisers for the past several months. While the economy has risen above the dark period in early 2009 when the country was in a tailspin, the recovery is far from complete.
Credit markets are still tight for entrepreneurs, and big banks, in particular, are making it more and more difficult for startups. For example, many ask for three years’ worth of financial data before granting loans. How can a startup provide such numbers? Therein lies the challenge.
President Obama is positioning himself as an advocate for entrepreneurship and innovation. It is a good platform for reelection. Recently, he elevated Karen Mills, head of the Small Business Administration (SBA), to be a member of his cabinet. The President called this decision:
“A symbol of how important it is for us to spur entrepreneurship, to help startups, to move aggressively so that we can assure more companies that create the most jobs in our economy.”
The SBA has been instrumental in getting funding for startups, particularly during a period when financial institutions have been reluctant to lend. The agency’s 90 percent loan guarantee program was very successful, and only a very small percentage of SBA-backed loans defaulted.
Although it is admirable that the President is trying to be innovative, I believe the government’s most effective vehicle to help small companies has been the SBA, which was created by President Eisenhower almost 50 years ago. Ironically, it has been the Republicans who have called for the scaling back of the agency. President Obama has repeatedly bolstered the SBA, and its loan programs have helped countless businesses get the funding they need for growth.
President Obama Photo via Shutterstock
President Obama: Small Business is Part of His Reelection Strategy
View full post on Small Business News, Tips, Advice – Small Business Trends
President Obama Elevates SBA Head to Cabinet, Sends Mixed Signals
Jan 16th
President Obama announced on Friday that he was elevating Karen Mills, Administrator of the U.S. Small Business Administration, to be part of his Cabinet. She already reported directly to the President. Elevating the position to Cabinet level signifies that he considers the role important and small business important.
Or at least, that is the way it initially sounded.
However, that announcement was made at the same time as another announcement: the President proposes combining fives agencies, including the Small Business Administration, into one. He proposes merging the SBA with the Commerce Department, the Office of the United States Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency.
The President said: “We’d have one department where entrepreneurs can go from the day they come up with an idea and need a patent, to the day they start building a product and need financing for a warehouse, to the day they’re ready to export and need help breaking into new markets overseas.”
The concern with that idea is that the mission of the SBA would undoubtedly get diluted. Up to now the mission of the SBA has been clear: ensure a lending source for small businesses. By combining it with other Federal agencies, that mission would have less visibility. It would be buried in a larger agency.
A lot of small businesses aren’t buying this proposal.
We’ve been fortunate that we’ve had an independent Federal agency focused primarily on small businesses and particularly small business lending. The SBA was founded by President Eisenhower in 1953. Its intended function? ”Aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.”
Over the years some people (most recently, under President Bush’s administration) have complained that the SBA doesn’t contribute enough, and that we don’t even need the SBA. But that is an equally short-sighted view. We need one agency with the words “Small Business” in the title to remind everyone of the commitment to small businesses.
We need it focused not on the so-called high-growth startups that so many policy-makers are so enamored with, but on the mainstream small businesses that keep body and soul together in the United States. It’s not the Startup Administration — it’s the Small Business Administration.
And we don’t need it diluted and distracted with Commerce Department concerns. Just take a look at this statement on the Commerce Department website, to see what the Commerce Department is responsible for. That department is responsible for ALL industry, here and abroad. It’s responsible for such things as conducting the Census and monitoring the weather. Small business would soon be a mere footnote.
The SBA has been a role model the world over for how to support small businesses. Let’s not change that now.
Big cheers for raising the SBA head to a Cabinet position. That is a great move. But small businesses would be much better off by ditching the idea of merging it in with other Federal agencies. Let’s keep a separate SBA.
President Obama Elevates SBA Head to Cabinet, Sends Mixed Signals
View full post on Small Business News, Tips, Advice – Small Business Trends
Obama Persuasion & Speaking Skills Revealed
Nov 25th
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Obama Benefits From Good Luck Internationally, But Domestically It’s a Different Story
Nov 2nd
When a president takes office, sometimes luck is on his side, other times not.
Internationally, much progress has been made in bringing down some of America’s top enemies. The death of Osama bin Laden lifted spirits briefly but now seems like a distant memory. Muammar Gaddafi had long taunted the U.S., and the president’s patience and support of Libyan rebels has resulted in the dictator’s demise. Similarly, persistence paid off in the pursuit of American-born terrorist Anwar al-Awlaki. Soon U.S. forces will leave Iraq. These international events are positives for President Obama.
The stock market zoomed on October 27 as a long-sought agreement by European leaders to boost the bailout fund for struggling economies. While the Dow has been on a roller coaster ride this year, overall the market has recuperated nicely from its doldrums earlier in the year. This latest international news helps.
President Obama has said the country must tackle its greatest challenge as a nation: rebuilding our economy. He connected this task with the successes of the military, saying we need to create jobs with the “same urgency and unity that our troops brought to their fight.”
Meanwhile, fortune has not been on the president’s side domestically. International successes often do not translate into domestic success. President Obama inherited a down economy that has not truly recovered. On the one hand, the recession helped him defeat his Republican challenger since the party in power usually takes the blame when the economy tanks. However, since unemployment has not improved all that much, the president needs an economic recovery or else his reelection prospects will be grim. Just ask George H.W. Bush.
President Obama has tried a number of initiatives with mixed results. The SBA has largely proven effective in providing capital to startups and growing businesses. However, less than half of the banks eligible to take advantage of the Small Business Lending Fund did so, and a number of those institutions used the available capital to repay their TARP obligations, which was not how the money was intended to be used.
The president’s first stimulus plan spent a lot of money, but did not yield the anticipated results in jump-starting the economy. His opponents argue that the initiatives have made things worse, and the fact that the country’s deficit has gotten larger does not help in the long term. He is having trouble selling his current jobs package.
Still, scaling back on the expense of the war in Iraq should reduce military spending significantly, and the president is likely planning an exit strategy for Afghanistan – if one is possible without hurting U.S. security. The new StartupAmerica is getting off the ground with a goal of stimulating economic recovery.
The entrepreneurial spirit remains part of the fabric of America. The president is doing everything he can to harness it and help small businesses, which generate a majority of the new jobs in the economy.
Obama Benefits From Good Luck Internationally, But Domestically It’s a Different Story
View full post on Small Business News, Tips, Advice – Small Business Trends
How to Protect Your Money from the Coming Obama Inflation-Grab
Sep 16th
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Obama, Jobs, Zuckerberg, and Schmidt: Don’t Discount the Lobbying
Feb 17th
President Obama is slated to meet with software captains of industry this evening. The most notable players include Steve Jobs, Mark Zuckerberg, and Eric Schmidt. A lot of media commentary seems to be treating this as a celeb gathering, or some kind of running joke. What are they really going to talk about? Isn’t the 26-year-old Zuck a little young to be involved in this?
The point missing from this dialogue is that Silicon Valley software companies have become a major political force in the last decade. They spend millions on lobbying, hire hotshot lobbyists, and have people on both sides of the revolving door. (Al Gore is an Apple director and a Google adviser. Facebook COO Sheryl Sandberg used to be a Google VP and worked in Larry Summers’ Treasury Dept. before that.)
Though this meeting sounds glamorous on the surface, in execution, it’s the same let’s-scratch-each-others’-backs that you might see in a manufacturing or big oil meeting. Just call it Big Software.
OpenSecrets has more on the Silicon Valley lobbying tour de force:
In 2010, the computer and Internet industry as a whole was the seventh biggest lobbying spender among all industries and special interest areas, investing more than $120 million on related expenditures, the Center for Responsive Politics finds.
“What we can do — what America does better than anyone — is spark the creativity and imagination of our people,” President Barack Obama said. “We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook.”
For Google and Facebook, the president serving as their pitchman is indicative of their meteoric rise both outside and within Washington, D.C. And it marks how the political landscape has rapidly shifted for computer and Internet companies, with Washington nonentities of just a few years ago now ranking among the most prominent players in the capital.
TechCrunch has specifics on what each company is interested in:
Policy areas of focus for Facebook include global regulation of software companies and restrictions on internet access by foreign governments; internet privacy regulations, cyber security, and FCC regulations on net neutrality. In total, Facebook spent $351,390 on lobbying in 2010.
Google spent $5.2 million on lobbying in 2010. Google’s lobbying strategy for this quarter focused on online advertising regulation including privacy and competition issues, patent reform, cyber security and online privacy, renewable energy, freedom of expression and censorship, tax reform, free trade, Congressional Internet service usage rules and broadband access.
Apple is notoriously secretive, but here Macrumors and Politico have some hints about its policy interests:
Apple and these other major players are reportedly stepping up lobbying efforts to try to get the federal government to offer a one-year “tax holiday” that would allow them to bring the profits back to the United States while only being subjected to 5% tax, with the rationale being that the money could be put to work in the U.S. to stimulate the economy rather than simply sitting in foreign bank accounts.
Official lobbying disclosures show the company picked up the firm Fierce, Isakowitz and Blalock on Feb. 1 to handle “innovation” issues in Washington. It’s an unexpected expansion for a company that typically keeps a low Washington profile.
Apple has received scrutiny from regulators, who have eyed its App Store guidelines and its handling of Flash video on the iPhone. At the same time, Capitol Hill has ramped up debate over issues such as online privacy and competitiveness – topics that could affect Apple’s bottom line.
Apple’s 2010 lobbying forms reflect the company has been an active participant in those conversations, speaking to lawmakers and federal regulators about patents, research funding, free trade agreements and taxes. It’s new outside firm, Fierce, Isakowitz and Blalock, has handled some of those issues for other industry clients such as CTIA, the National Cable and Telecommunications Association, Time Warner Cable and the Coalition for Patent Fairness.
To some extent, Apple, Google, and Facebook’s rootsy brand images veil the fact that in execution, they count as Corporate America. Apple has the charismatic Jobs and still holds that anti-Microsoft, outsider image, even though its status has really changed in recent years. Google has its “Googliness”–art on the homepage, innovative software programs, and a reputation as a really “different” place to work. Facebook still appears young and hip, with that college association. But these companies are real players. Discounting that is avoiding the truth.
View full post on Business Pundit
Obama Budget: Draft May Not Resemble Final Result
Feb 14th
The 2011 Obama budget is out. It proposes far-reaching government spending cuts, lower oil and gas subsidies, and higher fees to reduce the deficit. Bloomberg BusinessWeek has the details:
The poor would receive less help paying their heating bills, and graduate students would pay more for their student loans. The budget also cuts $1 billion for airport grants and $950 million in water-treatment plants and other infrastructure.
Obama is calling for the elimination of a dozen tax breaks for oil, gas and coal companies to raise $46 billion over 10 years. These funds would be diverted to help pay for putting 1 million electric vehicles on the road by 2015, doubling the share of electricity from clean energy by 2035 and increasing the efficiency of energy use in buildings by 20 percent.
The administration is calling for $85 billion in new or increased fees over the next 10 years that would affect a number of industries. It wants to raise $28 billion by more than doubling airline security passenger fees. Another $16 billion would come by raising fees companies pay to the Pension Benefit Guaranty Corporation to insure their pensions. Oil and gas companies would see their inspection fees more than sextuple, to $65 million, to cover the costs of increased oversight in the wake of the BP Deepwater Horizon oil spill. The government would charge new or higher fees for patents, generic-drug reviews and manufacturers seeking to label products with its “Energy Star,” among other changes.
The budget proposal also calls for spending on high-speed rail systems, better emergency services and Internet infrastructure, more money for the Pentagon, and less money for the war in Iraq, according to Bloomberg BusinessWeek.
But it’s too early to go hog wild over contentious pieces of the proposal. It’s basically a first draft of a budget, aimed at cultivating bipartisan support. The Washington Post explains:
Even as the administration said it wants to reduce the deficit by more than $1 trillion over the next 10 years, it declined to propose major changes to Social Security, Medicare or Medicaid, which combined account for more than 40 percent of federal spending. And the proposed increases in funding for education, science and research, while significant, don’t match the ambition of the policies Obama pursued in his first two years in office.
…at least for now, Obama has not laid out a major legislative proposal that would occupy weeks or months of time on Capitol Hill, and it’s not clear whether he will. His proposals to reduce spending are in part to preempt congressional Republicans, who are calling for much larger cuts.
Salon’s Andrew Leonard goes so far as to call the Obama budget irrelevant. Up next: more partisan infighting.
View full post on Business Pundit
Obama Proposal Aims to Cut Unemployment Tax Payments
Feb 12th
The idea of raising taxes in the midst of what continues to be a rocky time for small businesses is understandably anathema to many entrepreneurs. After all, keeping the doors open and the lights on is hard enough as the unemployment rate continues to hover around 9 percent and many shoppers are still pinching their pennies.
On the flip side, forcing states to pony up for unemployment spending might eventually cause an unwanted financial impact for business owners.
So far, 30 states have exhausted their unemployment insurance trust funds and have already borrowed an estimated $41 billion from the federal government to help jobless residents pay their bills, according to a report released yesterday from the Center on Budget and Policy Priorities and the National Employment Law Project. That tally is expected to reach a record $65 billion by 2013, according to the U.S. Labor Department.
So what does all this mean? Employers of all sizes could face a significant increase in their tax bills.
Here’s how: To repay the principal on those loans, federal unemployment insurance taxes on employers are set to rise automatically in a number of states this year or in 2012, and tick up higher over the next few years, according to the joint study. The minimum taxable wage base in 18 states has already risen to $15,000 from $7,000 where the wage base has been for decades.
But President Barack Obama has a plan — which he expects to detail in his 2012 budget due out next week — to give employers and states a much needed break by deferring those federal loan interest payments into 2014. He also proposes to postpone automatic tax increases for two years.
Response to the proposal has been mixed. Some republicans are against it since they say a number of states will be forced to raise unemployment taxes on businesses in the future. Meanwhile, a number of think tanks have thrown their support either behind the President’s plan or similar reforms citing bigger problems if nothing gets done.
Indeed, with this proposal, small-business owners in states that owe the government money can avoid paying $5 billion to $7 billion in higher federal unemployment insurance taxes before the end of 2013, and $16 billion to $24 billion over the next five years, said the joint study.
Is President Obama on to something with this? What’s your take?
View full post on Entrepreneur.com – Daily Dose
How Obama Tax Cuts Benefit the Rich vs. Middle Class
Dec 7th
When it comes to keeping tax cuts for the wealthy during a recession, I will echo one poignant statement: “The American economy thrived in the face of much higher taxes on well-off families during the 1950s and 1960s” (Paul Krugman/1993). Obama’s plan to keep Bush-era 35% tax rate caps in place is a spineless compromise, considering there’s no proof that trickle-down economics improves the national deficit or even the economy. Here’s the lowdown on what wealthy and middle class citizens might like in this tax proposal, which is akin to whipping the economy into shape with a wet noodle:
What the Middle Class Will Like
13 more weeks of unemployment benefits for those who have been on UI for 99 or more weeks.
Right now, middle class and poor taxpayers have higher values on the tax credits they can file, including the college cost tax credit, child credit and earned income tax credit, according to CNN. These credits would stay in place for the next two years.
For one year, reduce the amount of payroll tax that goes to Social Security from 6.2% to 4.2%. This is known as a payroll tax holiday.
What Wealthy People Will Like
Two more years of Bush-era tax cuts. Tax rates for singles, for example, will remain:
* 10% for those making less than $7,000/year
* 15% for people making up to $28,400
* 25% if you make up to $68,000
* 28% up to $143,500
* 33% up to $311,950
* 35% if you make more
Keeping taxes historically low for the rich has been doing nothing to stimulate the economy, so Democrats don’t want this plan to stick around. The plan, by the way, costs $458 billiion.
Estate tax exemption would have a top rate of 35% and increased exemption of $5 million per person. Without these changes, the estate tax would go back up to 55%/$1 million in 2011. In other words, it’s more tax relief for the wealthy.
Capital gains taxes will continue to have a top rate of 15% for the next two years (though this is especially good for wealthy investors, it’s not bad for everyday investors, either).
The alternative minimum tax is set to increase in tax year 2010 because AMT income hasn’t been indexed for inflation, according to the Wall Street Journal. “So a tax designed in 1969 to hit about 200 taxpayers may sock families with incomes as low as $60,000 a year.” The Obama plan proposes to stop the AMT from hitting for another two years.
View full post on Business Pundit
Obama Plans 2-Year Federal Pay Freeze
Nov 29th
Civilian federal government employees will have their pay frozen for 2011 and 2012, according to a New York Times report:
The president’s proposal will effectively wipe out plans for a 1.4 percent across-the-board raise for 2.1 million civilian federal government employees in 2011 and 2012. The military would not be affected. The president has frozen the salaries of his own top White House staff members since taking office 22 months ago.
While a pay freeze will make only a small dent in the federal deficit, it represents a symbolic gesture toward public anger over unemployment, the anemic economic recovery and rising national debt. By announcing it on Monday, the president effectively will preempt Republicans who have been talking about making such a move once they take over the House and assume more seats in the Senate in January.
The number of federal workers making more than $150,000 a year has grown ten-fold in the past five years and doubled since Mr. Obama took office, USA Today reported earlier this month. Since 2000, federal pay and benefits have increased 3 percent annually above inflation, compared with 0.8 percent for private sector workers, according to data cited by the newspaper.
Reading those stats, it’s about time federal workers had their pay frozen.
View full post on Business Pundit
