At the small business bottom line, where it matters most, 1981 has been a year of mixed results at best. Bankruptcies escalated and high interest rates continued to plague some of the best-managed small companies. But other small businesses, those we might call "supergrowth" companies, continued to forge ahead despite the odds. A report on the cream of that corp, the first INC. Private 100, begins on Page 35.
The INC. Private 100 is an extraordinary group of companies by any measure. But perhaps the most important statistic in our report on them is the number of jobs created during the past five years by these 100 firms: more than 30,000. That's job creation at a rate roughly 100 times that of the Fortune 500 companies. What a powerful argument for national policies aimed at a better balance in the size of businesses all over the country.
Some progress was made on the national policy level this year. Most notably, President Reagan took a position that even the most ardent small business advocate could happily endorse. Rejecting potshots from academic, bureaucratic, and big-company worrywarts, the President wholeheartedly endorsed the Small Business Innovation Research Act of 1981, a measure initially sponsored by Sen. Warren Rudman (R-N.H.) and often mentioned in these pages during past months.
In his letter of support to Senator Rudman, the President said in part:
"Your concern that small firms be able to participate equitably in federal research and development is shared by this administration. In the long run all sectors of the economy are likely to benefit from the increased competition and research incentives your legislation would provide. I congratulate you on the leadership you have shown in advancing those small businesses which are the jobproducing lifeblood of our economy."
We particularly liked that last phrase.
The Senate's version of the bill must still be reconciled with a House measure and the differences ironed out in conference. At this writing, prospects for final passage are excellent. The congressional budget office estimates that the Senate version (unless it suffers from budget cuts or bureaucratic sabotage) could mean a set-aside for small businesses of more than $1.4 billion in federal research and development funds over the next five years. The current House version could increase that amount by a factor of two or three.
For several thousand former delegates to the 1980 White House Conference on Small Business, the actions of the President and Congress are particularly gratifying. The new law would implement another one of the 15 key recommendations they made for the "Small Business Decade." Those same delegates, now active on their respective home fronts, have helped push innovative programs aimed at helping small business through the state legislatures of California, Indiana, and Oregon, among others.
Progress is being made, but not enough. The year's biggest failure lay in the opportunities missed in the course of hammering out the Reagan tax cut measure. In particular, failure to enact a more graduated corporate income tax -- a longneeded change and still a top priority for the future -- is disturbing.Even more distressing was the fact that neither the Senate nor the House tax-writing committees made public data about the anticipated relative benefits of their actions to small and large firms, and the differences between them. We've had more than enough tax pigs in pokes.
Progress made during 1981 was therefore hardly uniform or universal. Awareness of how critical small business growth is for the achievement of a host of national, state, and local goals did continue to grow. Given the need of the new administration to take time both to order its own priorities and to sort out the inevitable early-stage internal conflicts, small business did well in 1981 to keep its momentum. Year two of the "Small Business Decade" can be called a qualified success.
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