Last night the president laid out the American Jobs Act, an initiative aimed at lowering unemployment. What does it mean for small business owners and entrepreneurs?
In a persuasive speech before a joint session of Congress last night, President Barack Obama revealed his American Jobs Act, which he hopes will improve unemployment and get Americans working again.
During his 45-minute outline of the bold initiative, in which he repeated the phrase "pass this jobs bill" more than a dozen times, Obama described reforms to create new construction projects, restore American schools, and cut the payroll tax in half. "If you have 50 employees making an average salary, that's an $80,000 tax cut," he said.
President Obama announced tax cuts for small businesses that hire new workers or raise current workers' wages, and a special tax credit of $4,000 for employers that hire people who have been out of work for more than six months.
Small business was a theme throughout. "Everyone here knows that small businesses are where most new jobs begin," the president said. "And you know that while corporate profits have come roaring back, smaller companies haven't. So for everyone who speaks so passionately about making life easier for 'job-creators,' this plan's for you."
Small businesses could even be boosted by the public works project he described that hearkens back to a New Deal-approach to creating jobs and an effort to renovate 35,000 new schools. "The president talked about infrastructure improvements in roads and rail lines—these are all types of projects that get lots of small business involved," said Charles Green, the executive director of the Small Business Finance Institute.
Other specific drives he delineated to invigorate small businesses: Make it easier for small businesses to obtain—and get paid for—federal contracts, and facilitate start-up capital-raising and initial public offerings by eliminating red tape that can get in the way. The president said he will seek to speed up the patent process "so that entrepreneurs can turn a new idea into a new business as quickly as possible."
Since the August jobs report revealed earlier this month that the unemployment rate still hovered at above nine percent—double the rate from just four years ago—all eyes have been turned to President Obama.
Some experts are skeptical the initiatives President Obama identified will be actualized. Some crucial small business incentives were not addressed in his speech at all.
Robert Litan, the vice president of Research and Policy at the Kauffman Foundation, says that the president did not suggest any type of immigration reform, which can have a huge impact on the number of entrepreneurs who decide to start companies in the United States.
"The single most important thing to be done is to have an expansive entrepreneurs visa," says Litan. "That's the way we get more entrepreneurs—people willing to come to this country to start a business."
"I can't think of anything that would do more to enhance new business formation than that single thing," he added.
While the president's plan calls to reduce bureaucracy that gets in the way of capital raising, Litan is unconvinced, and noted that the president didn't even mention the Sarbanes-Oxley Act, which added requirements and paperwork for publicly-traded companies after scandals like Enron.
Still outstanding: How the president plans to pay for all of this. That will be announced a week from Monday. "A week from Monday, I'll be releasing a more ambitious deficit plan, a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run," the president said last night.
In reality, we may have to wait even longer to see any real substantive changes that could result from last night's speech. "We won't really know the impact of the speech until the super committee makes a decision—and that’s on December 23rd," Litan says.
Before then, various government deadlines include October 14, when House and Senate committees must submit American Jobs Act recommendations to the super committee.