June 16, 2010

SMALL BUSINESS: THE BACKBONE OF OUR ECONOMY

By Idaho Senator Mike Crapo

The Idaho National Laboratory (INL) was recently recognized by the U.S. Department of Energy as its 2009 Mentor of the Year for its "commitment to mentoring small business." INL was given this honor for its work with small businesses through its Mentor-Protégé Program, which seeks to enhance "the capabilities of small businesses to perform contracts and subcontracts for INL, other DOE Laboratories and federal agencies." There is a very good reason why INL and DOE seek to support and mentor small business. In addition to providing valuable and unique services to DOE Laboratories and other federal agencies, the combined efforts of America's small businesses provide jobs, growth and an incredible boost to our economy---so much so that small business is often referred to as the backbone of the American economy.

Statistics for the latest year available (2006) from the Small Business Administration (SBA) show that Idaho has 38,596 small employers (500 employees or fewer) and 114,338 nonemployers (owner-operated businesses). According to the SBA, "[they] make significant contributions to the state's economy, and they bring innovative products and services to the marketplace. They are an important source of employment and opportunity throughout the state…The number of small employers in Idaho was 38,596 in 2006, accounting for 97.3% of the state's employers and 58.6% of its private-sector employment." Since the early 1970s, small business has, on the average, created about 2 of every 3 net new jobs in the economy. Also since the 1970s, according to the National Federation of Independent Businesses (NFIB), small businesses have produced about half of America's privately generated GDP. American small business comprises what would be the world's third largest economy, behind America and Japan. Clearly, small business is a driving force in the Idaho economy, and the same is true in each state, nationwide.

Unfortunately, given all that small business does for the American economy, America's federal government doesn't seem to be too concerned about returning the favor. While the economy continues to struggle and job growth continues to lag, small business continues to come under assault from all directions by misguided government policies. Small businesses are left to guess at where they are going to be hit next. Uncertainty about future tax policy and the financial burden of increased taxes, fees and compliance costs resulting from the new health care law and upcoming energy regulation and financial reform legislation make it hard, if not impossible, for small businesses to make sound financial decisions. With all of the uncertainty and the increased cost of doing business, they are understandably unwilling to invest, expand and hire, which, in turn, will only add to and extend the problems already facing the economy.

To give our small businesses some certainty and incentive to grow and be competitive in the domestic and international economies, we need to keep their taxes low and not overburden them with expensive new regulations. Rather than continuing the federal government's unsustainable spending spree and its unreasonable plans to pay for it by increasing taxes, we must stop the spree, reduce the spending and keep taxes at a low and reasonable level. We need to get the government out of the way of the small business engine of our economy. Removing the disincentive of high taxes and costly regulation will allow small business to go out and do what they do---create jobs and growth in the economy by providing valuable goods and services to their customers.

Word Count: 572