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Why Small Business May Get Short Shrift in State of the Union Address

While small business and entrepreneurs got top billing in State of the Unions past, don't expect Uncle Sam to roll out the red carpet this year.
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President Barack Obama is expected to cast inequality and immigration in starring roles in his State of the Union address Tuesday. But entrepreneurs likely won't get more than a bit part.

At the President's annual address to Congress, which marks the fifth of Obama's presidency, he is widely expected to push for legislation that would help close the gap between the nation's richest and poorest. He'll likely voice his approval for Congress's swift passage of a bipartisan spending bill this month, in addition to recent movement on immigration reform.

He is also expected to talk about using his own authority--bypassing Congress--to enact measures like requiring federal contractors to pay employees at minimum $10.10 an hour, up from the current $7.25 that's required under federal law. 

And while the President has spent ample time on small-business and entrepreneurship issues in previous addresses, if you're expecting to hear major policy changes in the world of entrepreneurship tonight, don't hold your breath.

"I think [the President] will talk about small business and entrepreneurs, but as far as I know there is no new initiative out there," says Zoltan Acs, director of the Center for Entrepreneurship and Public Policy at George Mason University and a former chief economist for the Small Business Administration. "I was at the SBA two years ago, and there was a big push on entrepreneurship small business and financing it."

A Supernova Fizzles
Indeed, small business and entrepreneurship have featured prominently in many of President Obama's previous State of the Union address. In 2010, for instance, Obama mentioned the terms "entrepreneur" and "small business" 14 times. By contrast, his two predecessors mentioned the terms, on average, just twice per speech in each of their 14 combined addresses.

Last year, Obama repeated his call for a full passage the Jumpstart Our Business Startups (JOBS) Act, a proposal that contained measures like tax incentives for small businesses, as well as funding for infrastructure projects. Aspects of the proposal became law in 2012 and 2013, but last year largely just came and went for many of the nation's small businesses looking for more help from the federal government.

"Despite their importance to the economy, in last year’s message, we heard the President mention 'small business' only twice," says Rep. Sam Graves (R., Mo.), chair of the House Small Business Committee. "I hope the President makes small businesses a higher priority this year, because they are the ones who will lead a true recovery."

Acs is skeptical that the President will feature entrepreneurs more prominently this year. "It's now six years into this [economic downturn] and it's not over. . . The number of businesses started and jobs created has continued to go down," he says. "People are still suffering with relatively high unemployment. Income is stagnating and growth is marginal. We're still not in a healthy state."

With Congress
An aging U.S. population would naturally lead to fewer entrepreneurs and jobs, says Acs. But an influx of new blood by way of immigration reform could give the economy a helpful boost, he adds.

Immigration reform is likely to make its way into the President's speech, and Republican lawmakers are expected issue an outline of their plans on the issue this week. The effort, which is expected to include proposals like changing the visa system and offering legal status to some immigrants, isn't expected to wind up in a comprehensive bill. The Senate passed a comprehensive bill last summer, but the House rejected it.

The President is also expected to issue an appeal for a more equitable distribution of wealth through a higher federal minimum wage, among other things. While a bill raising the minimum wage to $10.10 an hour over three years was introduced in the House in March, it hasn't gone anywhere. 

Without Congress
Watch for the President also to call for measures that won't likely get taken up by Congress. The window of time before lawmakers turn their attention to the midterm elections in November is slim. Once that passes, the talk of the 2016 presidential election will quickly take over--leaving precious little time to get things done on Capitol Hill.

In lieu of Congress's support, White House aides have suggested that Obama would attempt to make policy changes through presidential proclamation or other executive actions.

"President Obama has a pen and he has a phone, and he will use them to take executive action and enlist every American--business owners and workers, mayors and state legislators, young people, veterans, and folks in communities from across the country--in the project to restore opportunity for all," Dan Pfeiffer, a senior White House adviser, said in an email message to supporters over the weekend.

While Obama does not have the authority to raise taxes without an OK from Congress, he could issue orders that might affect businesses that work directly with the government.

The President has substantial regulatory authority in such areas as the environment and workplace safety, as well as negotiating on trade, says Dean Baker, co-director at the nonpartisan Center for Economic and Policy Research in Washington, D.C. Also, "he could impose some restrictions on government contractors, for example, $10.10 minimum wage and paid sick days for workers… But he certainly cannot raise or lower taxes or do any spending without Congressional authorization."

IMAGE: Official White House Photo by Pete Souza
Last updated: Jan 28, 2014

DIANA RANSOM | Articles Editor

Diana Ransom is Inc.'s online articles editor. She has been covering the never-dull world of small business and entrepreneurship for years, at a variety of publications, including The Wall Street Journal, SmartMoney.com, the New York Daily News, Fast Company, and Entrepreneur. She lives in Brooklyn, New York.




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