Small business owners across the country overwhelmingly have supported President George W. Bush during this election year. Reports from the TEC Group and U.S. Chamber suggested its members supported Bush by wide margins in September. In our own poll, Who Would You Want to Be Your CEO?, 44% of 1,128 users who have responded would choose Bush as their CEO. Kerry came in at 32%.
So, it's safe to say, Bush is well-liked amongst business owners. But how has the Bush administration really fared thus far on small business issues, and what can small business expect in a second term?
Bush's first term was marked by a succession of tax cuts intended to stimulate the economy out of the post-bubble recession. He cut the capital gains tax, repealed the death tax and increased expensing levels. During the campaign, Bush held the line on tax breaks while Kerry set his sights on tax increases that could have hit a lot of small business owners. In his second term, Bush will need to finance an increasingly costly war and control a ballooning federal deficit. There is little doubt of his personal commitment to permanent tax cuts, but he faces the challenge of paying the bill after a profligate first term, testing his ability to maintain those tax cuts in the face of a projected revenue shortfall.
Bush now has to find a way to curtail soaring gas and oil prices. While the price of oil has stabilized in the past week, its recent surge has eaten into the profits of many small businesses. The Iraq war has so far had the short-term effect of contributing to the rise in oil prices, as U.S. forces struggle to maintain order long enough to get the country's oil operations back on line. A longer-term drop is largely contingent on the Bush administration finding a way to stabilize Iraq. Beyond Iraq, the President's plan to reduce reliance on foreign energy focuses on opening up the Arctic Wildlife refuge to oil drilling, but even that would still supply only a small percentage of America's future energy needs.
Health care costs also skyrocketed during the first Bush administration. Bush responded by creating health savings accounts that allow individuals to contribute tax-free dollars toward future medical expenses. Looking ahead, Bush supports capping damages in medical liability lawsuits, aiming to create a trickle-down effect that would lower the cost of liability insurance and reduce health care costs across the board. But there are few precise estimates of whether such a cap would produce significant cost savings in the health care system as a whole. The health savings accounts provide a good supplemental insurance option but do not address people who are uninsured to begin with. During his second term, Bush will face severe budgetary limitations that are likely to impede any significant, systematic efforts at reducing health care costs.
SMALL BUSINESS ASSISTANCE
Bush, for the most part, has negatively affected critical small business programs during his first term, most notably in the form of capital assistance. Bush has slashed the SBA's budget by 25% since he took office, and in January 2004, it was announced that SBA 7(a) loans were going on "indefinite holiday," which turned out only to last a few weeks, but still stalled hundreds of loans from being guaranteed. (Despite his actions, a record number of loans were guaranteed last year due to the agencies emphasis on making smaller loans.)
Furthermore, the Bush Administration's 2005 budget calls for further cuts to the SBA as well as axing funding for microloans and reducing funding for Small Business Development Centers and the Manufacturing Extension Partnership. Under Congressional pressure, the MEP did receive emergency funding this fall. After Congressional prodding Bush did pay renewed attention to small business' access to capital and cut the SBA some slack, but it for the most part, he's campaigned on the platform of creating. One can only hope the prodding continues, and Bush sees more value in these critical programs during the coming term.
So, did small business really win? Let us know.
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