White House Chronicle

News Analysis With a Sense of Humor

Political Lies and Small Business

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Brace for a storm of platitudes, recycled myths, and just old-fashioned
political lies.

It will all start with President Obama when he addresses a joint session
of Congress on Thursday about the jobs deficit. Whatever he says will be
followed by scorn and abuse from the Republicans. All the hoary old claims
about the absence of leadership, wasteful spending, punitive regulation
and the need to cut taxes will be regurgitated.

The president will have a TelePrompTer full of enchantment tales. He also
will talk of cutting some taxes; maybe because he thinks this will endear
him to the undecided voters, or mollify some Republicans, or because he
consistently tries to make his way in a viciously partisan political world
by endeavoring to sound like the voice of detached reason. It will make no
friends and infuriate the Democratic core. It will be another betrayal to
them.

All of the tax ideas, presidential and Republican, will be wrapped in cant
about small business. Oh, do politicians love small business. Apple pie is
good, mom is noble but small business, and small business alone, can cause
the entire Congress of the United States to genuflect.

They love the travel agent with six employees with the same passion that
they adore General Electric. The machine tool repair and maintenance
contractor with 40 employees – he is the very embodiment of American
exceptionalism. The woman with a wholesale jewelry business that she
operates with her husband and grown daughter — they are the stuff of
American legend.

Nonsense.

If Congress knew anything about the small business world, it would
stop forcing the wrong medicine on the patient. Incorrect therapies won’t
help, no matter how vigorous the applications.

To the political establishment, small business is suffering because of
taxation and regulation. Fiddle with these twin bugaboos, the political
narrative goes, and small business will bloom like the bluebells in
spring.

Have any of these people ever talked to small business operators? Small
business has many problems, but taxation is seldom one of them. Do they
really think the garment manufacturers on New York’s 7th Avenue are on the
phone, schmoozing about the rate of corporate taxation? More likely they
are talking about why the banks won’t lend, even against collateral, to
heretofore good customers; why imports from all over Asia are laying waste
to their customer base; and why the traffic in the cross-town streets is
horrendous.

Like all small businessmen, they don’t agonize over the frustration of
having to meet OSHA and EPA standards — these are irritants. Instead,
they agonize over whether there will be enough money to meet payroll.
Taxes, if any, come once a year, but the payroll keeps the small
entrepreneur anxious all year. It is the ogre that visits every two weeks.

To many, government is the problem; but not in the way legislators think.
The problem is the growing shortage of federal and state funds. This
affects many small businesses like builders, excavators, asphalt-layers
and the service industries that owe their survival to small contracts:
social service providers, translators, software writers, and consultants
in just about everything.

If you cut budgets, you cut small business.

Then there is the “chaining” of America. Local diners, hardware stores,
pharmacies and other retailing are crushed, annihilated when the chains
move in. The chains are not inherently evil, but they are manifestly
merciless. Walmart is but one of the chains putting small business to the
sword.

If those who administer government want to know something about small
business, they should spend a weekend at a strip-mall bakery or any other
firm with less than 50 employees. The experience would radically adjust
the rhetoric. It’s too late for Thursday, but don’t believe what you hear.

–For the Hearst-New York Times Syndicate

Political Lies and Small Business

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Brace for a storm of platitudes, recycled myths, and just old-fashioned political lies.

It will all start with President Obama when he addresses a joint session of Congress on Thursday about the jobs deficit. Whatever he says will be followed by scorn and abuse from the Republicans. All the hoary old claims about the absence of leadership, wasteful spending, punitive regulation and the need to cut taxes will be regurgitated.

The president will have a TelePrompTer full of enchantment tales. He also will talk of cutting some taxes; maybe because he thinks this will endear him to the undecided voters, or mollify some Republicans, or because he consistently tries to make his way in a viciously partisan political world by endeavoring to sound like the voice of detached reason. It will make nofriends and infuriate the Democratic core. It will be another betrayal to them.

All of the tax ideas, presidential and Republican, will be wrapped in cant about small business. Oh, do politicians love small business. Apple pie is good, mom is noble but small business, and small business alone, can cause the entire Congress of the United States to genuflect.

They love the travel agent with six employees with the same passion that they adore General Electric. The machine tool repair and maintenance contractor with 40 employees – he is the very embodiment of American exceptionalism. The woman with a wholesale jewelry business that she operates with her husband and grown daughter — they are the stuff of American legend.

Nonsense.

If Congress knew anything about the small business world, it would stop forcing the wrong medicine on the patient. Incorrect therapies won’t help, no matter how vigorous the applications.

To the political establishment, small business is suffering because of taxation and regulation. Fiddle with these twin bugaboos, the political narrative goes, and small business will bloom like the bluebells in spring.

Have any of these people ever talked to small business operators? Small business has many problems, but taxation is seldom one of them. Do they really think the garment manufacturers on New York’s 7th Avenue are on the phone, schmoozing about the rate of corporate taxation? More likely they are talking about why the banks won’t lend, even against collateral, toheretofore good customers; why imports from all over Asia are laying waste to their customer base; and why the traffic in the cross-town streets is horrendous.

Like all small businessmen, they don’t agonize over the frustration of having to meet OSHA and EPA standards — these are irritants. Instead, they agonize over whether there will be enough money to meet payroll. Taxes, if any, come once a year, but the payroll keeps the smallentrepreneur anxious all year. It is the ogre that visits every two weeks.

To many, government is the problem; but not in the way legislators think. The problem is the growing shortage of federal and state funds. This affects many small businesses like builders, excavators, asphalt-layers and the service industries that owe their survival to small contracts:social service providers, translators, software writers, and consultants in just about everything.

If you cut budgets, you cut small business.

Then there is the “chaining” of America. Local diners, hardware stores, pharmacies and other retailing are crushed, annihilated when the chains move in. The chains are not inherently evil, but they are manifestly merciless. Walmart is but one of the chains putting small business to thesword.

If those who administer government want to know something about small business, they should spend a weekend at a strip-mall bakery or any other firm with less than 50 employees. The experience would radically adjust the rhetoric. It’s too late for Thursday, but don’t believe what you hear.

–For the Hearst-New York Times Syndicate

If only Tax Credits Were Answer for Small Firms

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The shutters are coming down at hundreds of thousands of small businesses, grossing between $1 million and $10 million. For them the question that hangs in the air, if not spoken, is: How much did we take today?

It’s the eternal question that haunts small business. Whether it is daily, weekly or monthly, the same brutal calculation has to be made: Was more money booked than committed?

Politicians, and certainly President Barack Obama, gathering from what he said in his State of the Union address, know that they need the support of myriad small businesses.

They need the husband and wife who drive an 18-wheeler across the country and the baker who rises at 4 a.m. to make doughnuts for city office workers. They need the suburban bicycle repair shop, the ethnic restaurant in the rundown strip mall and the Web design firm in a city loft.

These are real entrepreneurs who start businesses from dreams, not from textbooks in business schools.

Politicians know America needs the entrepreneurial class. But they are morbidly disinterested in the real needs of this class. They demonstrate this in their only answer to the question of helping small business people: tax credits. In the 33 years I operated a small publishing company, only one year were taxes close to being a problem.

The problems for small businesses, whether making gadgets for Wal-Mart, running a salon or operating a travel agency, are the same: Banks think you are a nuisance and are loath to lend you money, or even take the time to understand your business.

Banks’ lending criteria are created by MBAs in marble towers, far from the street below. That’s why so many businesses have been launched on credit cards with previously established credit. It’s risky and expensive, but it happens all the time.

Then, there’s the problem of providing health care for employees. It’s punitively expensive if you provide it, and you feel morally at fault if you don’t.

Corporations — all corporations — are inclined to seek monopoly. Therefore, they squeeze small companies, whether it’s Target pressuring the local toy shop or Borders putting the old neighborhood bookshop out of business. They close those lines of endeavor to countless people.

For every chain restaurant, count one family restaurant that didn’t open. The family-run hotels and motels that dotted U.S. highways are gone. Things of the past.

Congress’s normal response, and one given by the President, is to give tax breaks to small businesses. Most small businesses would be glad to do well enough to pay taxes.

Once, there were many small business people in Congress. Now, there are few. The last congressman I knew who knew something about small business was Rep. Chet Holifield, D-Calif. Powerful and hardworking, he chaired the House Government Operations Committee. He also operated a haberdashery in California. Are there many haberdashers left in the age of Banana Republic?

The Small Business Administration underwrites loans for small business, but it is a slow business. I knew a printer who qualified for assistance, but he was out of business by the time the agency agreed to help. Government is not nimble enough to help the person who can’t make payroll next Friday.

Obama should stop further complicating the tax code, which is a burden to small business. Instead, he should put together a brain trust on revitalizing small business. Forcing the banks to lend to small business is a good first step. The main problem for small business isn’t taxes, it’s credit.  –For the Hearst-New York Times Syndicate

Politicians and Small Business—just Lip Service

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It’s right up there with Mom and apple pie in the political lexicon: small business.

Everyone knows that small business creates jobs and it creates them quickly. Ergo, politicians are constantly proclaiming their adoration for small businesses. However, their idea of how to foster new businesses seldom extends beyond tax cuts.

Politicians believe small business carries a heavy burden of tax. By implication, the only impediment to the success of small business is tax. In reality, tax is a minor ache in the small business body. To pay taxes, small businesses must show profit. Most are in profit intermittently. So a bill proposed by newly elected U.S. Rep. Betsy Markey (D-Colo.), which extends the period over which income can be averaged from two to five years, should bring some relief.

In the decades since the end of World War II, the owners of small businesses—from restaurants to light manufacturing—have been pushed to the wall by government action at the local, state and federal levels; all of which have favored the growth not of small business but of big business. At the state level, the big lobby and the small are voiceless. At the federal level, big businesses are on the congressional doorstep with campaign contributions, while small business is an abstraction.

In particular, the kindly treatment of chain retailers in local planning has pummeled and even destroyed small businesses. The arrival of a Home Depot in my semi-rural neighborhood meant summary execution of about 25 hardware stores.

Lower prices and some convenience sucked the customers out of the locally owned hardware stores. But it was a dubious bargain. After the initial enthusiasm, indifferent service and total ignorance of the stock reminded those customers that they had traded away expertise and service for a few cents of initial savings.

The big box stores–some of which are now going out of business–not only crush their small retail competitors, but they also crush their American suppliers by demanding prices that compete with those of cheap-labor competitors in other countries.

Got a great idea for a new type of oven mitt? OK, you will have to try and get your product on the shelves of the big retail stores. There are not enough other outlets. Gird your loins because you are about to go into a bruising negotiation with these retailers. To them, you are no more than a sharecropper. They want low prices and you, the small business manufacturer, are going to deliver them or perish–or, maybe, deliver and perish anyway.

How about the predicament of the travel agencies? Like bookstores, there was something genteel and very appealing about operating a travel agency. It was a lot of work for a small income, but travel agencies provided an independent living for tens of thousands of individual operators, and sometimes families. With deregulation the airlines took against the agents, refusing to pay commissions. This parsimony has not saved the airlines, but it has greatly undermined the travel agents and the service they provided.

It is not just the entrepreneurial class that has suffered from chains. We all have. Just look at their natural habitat: the shopping center. From Miami to Seattle, shopping centers are offensive in their sterility and their replicated chain-store banality. Is this the American Dream? Architecturally challenged, bland, homogenized, remotely owned shopping centers. They are not American Main Street replacements.

A thrill goes through me when I find a strip mall showing its age. There I know I will find small businesses with a fist full of employees booking cruises, repairing televisions and vacuums, and selling things from crystal to to yarn. In old industrial parks, small companies make everything from custom chimney pots to industrial fasteners.

This is where American dreamers have found self-employment and have the sense of possibility and the certain knowledge that they are small enough to fail. It is also where the jobs are, my political friends. Small business is driven as much by romance as profit. It offers the individual a chance. It also hires quickly.

 

Crocodile Tears for Small Business

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There has been a death in my neighborhood. I speak of another independent, small business killed by an influx of chain retailers. In this case a grocery store, which opened its doors in 1875, has expired.

No more will I stop there to buy meat, talk to the butcher about the various merits of New Zealand and American lamb. No more will I ask the manager

to see if he can get yellow corn rather than the white corn favored in Northern Virginia.

One could shrug off another small business going to the wall as a sign of life in the age of chain retailing, if it were not for the relentless rhetoric from politicians about the need for and virtue of small business. John McCain lauds it. Barack Obama genuflects to it. And all 535 members of Congress get weepy about it.

Their argument for small business is that it creates jobs. To me, the job creation is a given. My argument is that entrepreneurism and small business define who we are as a nation and how satisfied millions of Americans are with their lives.

Yet small business is under relentless attack, mostly lacking the basic tools to defend itself. Credit is an important ingredient, but it can be overrated. Startup small businesses have never been able to look to banks for seed money. Banks do not do that kind of lending, which is why so many small businesses are started with credit cards, family loans, or out of the earnings of a working spouse.

In my mind, after credit, habitat is the great burden of small business. By habitat, I mean a place to work out of at a rent that is not exorbitant. If there is a new shopping center in your neighborhood, look and see if there is any new small business there. Probably not. It will be as bland and homogeneous as the last shopping center you visited. It will be as dead, as lifeless, as predictable, and as antithetical to small business as its developers could make it. All right, they let in a sandwich franchise. Those are not really small businesses: they are big businesses that have laid off their risk on the unsuspecting franchisee. Franchisees, in my experience, are the most unhappy and exploited people in business, the victims of a pernicious system of sharecropping.

If you want to feel the life and vitality of small business doing its thing, you must seek out the older strip malls–often awaiting demolition–or the crumbling warehouse district. The lucky new entrepreneur is the one who can operate from the kitchen table, the basement, or the garage.

The next great burden comes with the hiring of staff. It is the high cost of health insurance. This should not involve employers, but it does–and it involves the small as brutally as the large.

For 33 years I operated a small publishing company, which I founded. It was a success, but we were sorely tried by insurers who charged a lot and would not fill all of their obligations (a cancer patient had the care paid for, but not the pain killers.) Rents also escalated, based more on our ability to pay. I hope there is a special enclosure in hell for property company managers and health insurers.

Where then are the politicians, those who weep so copiously for small business? They are mostly between the sheets with big business facilitating the destruction of the small entrepreneur. Mom-and-pop operations do not have lobbyists, cannot afford white shoe law firms and do not run political action committees. The ability, upheld by the courts, of local authorities to use eminent domain to condemn areas of low economic activity in favor of new developments is an example of the war by the big against the small. It would be biblical, except in this case, David looses and Goliath triumphs.

The damage to who we are as a people is hard to calculate, but it is there. Who would rather not run their own restaurant than manage a chain outlet? Ditto a bookstore. Ditto a hardware store. Ditto an auto-repair shop. Ditto every line of endeavor from exporting to consulting. I have yet to meet one individual who preferred being employed in a behemoth to being self-employed.

For me, the latest outrage is learning that airlines are charging $25 for tickets bought through travel agents. The airlines, in good times and bad, have had it in for travel agents: the quintessential small business. Shed a tear for the travel agencies, along with every courageous individual who wants to have the real promise of the American Dream: a business of one’s own. With that comes a dignity, a sense of worth that is good both for the nation and the individual. And,yes, small businesses make life richer for the consumer while creating jobs.