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Obama Blows Off Small Business -- Again

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Douglas Holtz-Eakin found himself in something of an awkward position last Friday afternoon, as he sat before an audience of some of the nations most successful growing entrepreneurs. Holtz-Eakin is John McCain's top economic adviser, and he was invited to the Inc. 500 conference in Washington, DC, to debate economic policy with his counterpart from the Obama campaign, Jason Furman. Moderator Carl Schramm had just asked Holtz-Eakin to sort out his candidate's position on tax policy.

But there was a catch. Obama's man, it turned out, wasn't there. Wall Street was imploding and the Bush Administration was shopping a bold plan to bail out debt-holding banks, so at the last minute the Democratic senator had called a meeting of his chief economic advisers in Florida. Instead of addressing the Inc. 500, Furman was meeting with Obama, Robert Rubin, Lawrence Summers, Paul Volcker, and others. So Schramm asked Holtz-Eakin for some "straight talk" -- on behalf of both sides. "You probably have debated the folks from Senator Obama's campaign enough to actually tell us if you can, in kind of a worthy way, what their thinking is," Schramm explained.

McCain's deputy dutifully obliged. Sitting, appropriately, to Schramm's right, Holtz-Eakin described the McCain plan, which would retain all of the Bush tax cuts, as "our attempt to keep the system as flat as possible, to keep it as competitive and pro-growth as possible." Then he got up and took the empty chair at Schramm's left. "That's eight more years of George Bush you're hearing," he began. "And we've tried, and that's failed." He described Obama's tax cuts for those making less than $250,000, including the credits and incentives for the working poor. "We're going to jump-start this economy by growing it from the bottom up," he said. "We're going to put money in the hands of people who deserve it, not those rich people."

It was funny and mostly gracious, and worked to McCain's advantage not just for the impression of magnanimity it conveyed, but because it also allowed Holtz-Eakin to gently place the Obama agenda in an unfavorable frame. Returning to his original seat, Holtz-Eakin gave himself the last word. The Obama plan "is just a flat transfer program, and it is worse than that in my view," he said, because it simultaneously undermines incentives at the top and the bottom. "You have to fight the intellectual case that it is better to have a job, the foundation of a future, the ability to run an enterprise, growth in the economy than have a short-run gain." A less partial observer might have pointed out that a job alone is not enough to guarantee improved living standards. As we've noted in this space before (here and here), the U.S. economy grew 15 percent between 2000 and 2006, but household income actually fell slightly.

Furman's absence clearly hurt his boss -- at least among the several hundred people who'd gathered at the Gaylord Resort. At dinner that night at the National Portrait Gallery, the Inc. entrepreneurs tried to make sense of the absence, said Amy Nichols, president and CEO of Dogtopia, which franchises canine daycare centers. "Does it mean they don't care about small business owners? Or does it mean they didn't actually want to deal with us?" she said. "People were offended almost. Especially being in DC. There's really no excuse not to have somebody available."

Worse, this is not the first time the Obama campaign has ignored the small business constituency, and in D.C.: When the National Federation of Independent Business held its own summit back in June, John McCain came to address the group, but Barack Obama declined the invitation.

It wasn't at all clear, by the way, that this crowd was wholly predisposed toward McCain. At a general session earlier in the day, speaker Seth Godin announced his belief that the election would be an Obama landslide. He never mentioned the Democrat by name, but he said, "I think that people of this country are sitting up and saying, wait a minute -- how did we talk ourselves into what we talked ourselves into? And how can we get back to the point where we can stand up straight and say to someone ten years from now or 20 years from now, 'I did something I'm really proud of that day'? The audience erupted in applause. "There's a lot of us that I think feel like Seth Godin feels," said Nichols. "I'm kind of on the edge, because the business owner in me says I need to make money, and I don't want to get taxed, but I also feel the other side, that the country's in trouble."

As for the rest of Holtz-Eakin's spiel, he didn't say much that hasn't been said before. You will certainly find a more detailed summary of the aspects of the candidates' platforms most relevant to small business at Inc.com's election pages. There was, however, one interesting tidbit, right at the very beginning. Schramm noted that while the candidates frequently nod to small business, they very rarely speak of entrepreneurs. Schramm wanted to draw a distinction between the two on behalf of the audience. "People are forever confusing what entrepreneurs do with what small business people do," he said. "Small business people are critical, but the growth and the job creation that's consistent and, I think, in the long term will be important in getting out of a recession -- or any slowdown -- comes at the hands of the folks these people represent."

"To be frank about the language of the campaign, 'entrepreneur' is too many syllables to fit into the sound bites," replied Holtz-Eakin. "And that's the reality in which we live."

UPDATE -- THURS., SEPTEMBER 25, 9:00AM: Turns out Barack Obama is not the only one to dis a critical constituency. Last night John McCain called off an interview with David Letterman, denying face-time to millions in the mid-40s-arrested-development crowd.

But what if McCain skips the debate tomorrow night, ostensibly to "[take] action to address this crisis"--essentially Furman's excuse to miss the Inc. conference, but writ much, much larger? If the Obama campaign was blowing off small business, as many in the audience seemed to think, isn't McCain himself blowing off the entire country?
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Last updated: Sep 22, 2008




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