Editor's Letter: David vs. the House of Representatives
At the heart of a new Inc. special report, the State of Small Business, is a survey: We ask Inc. 5000 CEOs about their outlook, then add our own reporting on the economy. You quickly come to two conclusions: The state of small business is strong; entrepreneurs are as resilient, creative, and unstoppable as ever. But the economy in which they operate is under siege by morons.
That is obvious to any business owner who lived through this fall, when congressional radicals threatened to default on U.S. debt. But in fact, Congress has been a drag on the economy ever since it began its fitful recovery in 2009. Even the fiscally conservative Peter G. Peterson Foundation is dismayed: According to a study commissioned by Peterson, Congress’s obsession with fiscal austerity has cost the economy 0.7 percentage points a year in growth since 2010. Uncertainty--in large part a product of our legislators’ inability to pass a budget or much of anything else, not to mention their habit of threatening default every few months--has trimmed an estimated 0.3 points a year from GDP.
What could possibly justify throwing such obstacles in the path of small businesses? The radicals say federal spending is out of control and must be reined in right now. But that far overstates reality. Discretionary spending is falling as a share of GDP; the Congressional Budget Office says by 2023, it will be lower than it has been in more than 50 years. Meanwhile, the deficit has fallen 60 percent since 2010. “Deficits become a problem when they drive up interest rates,” University of Oregon economist Mark Thoma told me, “but there isn’t a shred of evidence this is happening.”
The far more urgent problem for your business in 2014 is lack of demand. But when members of Congress threaten to devastate your customers’ life savings and paralyze the global economy by defaulting on U.S. debt, are your customers more eager to spend or less?
Inc. has no interest in taking political sides, but we care about small business. And this much is clear: Because of Congress, the state of small business is far more precarious than it needs to be. Another debt-ceiling deadline comes up in February. If Congress chooses to bring the economy to the brink of disaster again, whose interests would be served? Certainly not yours.
We also just named Aaron Levie, co-founder of Box, our Entrepreneur of the Year. Levie is every inch a founder for our times: He’s 28. He launched out of his dorm room. And he got where he is by seeing technology trends sooner and more clearly than anyone else. He also got where he is by working harder than anyone else, and he is beating the skinny jeans off giant rivals in the process. At Inc., we like to see that.
ERIC SCHURENBERG | Staff Writer | Editor-in-chief, Inc.
Eric Schurenberg is the president and editor-in-chief of Inc. Before joining Inc, Eric was the editor of CBS MoneyWatch.com and BNET.com and managing editor of Money Magazine. As a writer, he is a winner of a Loeb and a National Magazine Award.