How Will Decisions on the Debt Ceiling Affect the Small Business Owner?

How Will Decisions on the Debt Ceiling Affect the Small Business Owner?
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Too Many Opinions: But You Haven’t Heard Mine!

Politicans Love to Hide the TruthThere are many opinions on the Internet about the debt ceiling vote. I must admit I do read a lot of them, however, I do wonder how many of these posts are actually written by small business owners? I am a small business owner—by that, I mean a business employing 50 employees or less. So, if you want my opinion on the debt ceiling, read on!

Should the Business Owner Be Scared?

Take a Gander at the Debt Ceiling

If you’re a small business owner, you already know we seem to get the short straw when it comes to a break. Banks and lenders don’t like us. The federal government promises all sorts of loans and aid it can’t deliver unless you are in a specialized field and qualify for a program like SelectUSA (that may be cut too). And well, our laid-off employees are wrecking our experience mods when it comes to unemployment insurance and what we pay annually to fund our accounts.

So how much will the small business owner really be affected?

I do like the dollar-to-dollar rule, explained by freshman Republican Senator Rob Portman of Ohio in his Wall Street Journal story, Make the Dollar for Dollar Rule Permanent. The dollar match (if it happens) means if the debt limit is raised by one dollar, another dollar will be shaved from the budget, eventually balancing the budget in a decade according to Senator Portman—but he’s just a freshman, a new boy toy in D.C. so to speak.

House Minority Leader Nancy Pelosi appointed the final three politicians to the Debt Super Committee. The Super Committee is comprised of 12, six democrats and six republicans and they have until Thanksgiving (November 23rd) to come up with $1.5 trillion in shaved expenses over a ten year period. Tough to do, especially when most Democrats don’t want programs such as Medicare, Social Security and Medicare affected and Republicans don’t favor tax increases—a no win negotiation that could drag on, much like the debt ceiling vote itself. However, if this Super Committee can’t cut it, Alan Fram points out “$1.2 trillion in automatic budget cuts will be triggered.”

When I began this story, the debt ceiling debacle was still in its final stages, and many economic and politicians have been all over the Internet with ideas on what will happen next.

Political Tug of War

For example, Matthew Clair of PolicyMic offers neither the Republicans nor Democrats would never really “default” and if they did it would affect both the individual citizen and the economy as a whole. To him, it is only political theatre. Clair goes on to point out the disastrous display of arguing was just that—a display—and no matter the vote, neither Republicans nor Democrats “…would want to be blamed for further destabilizing our fragile economy.” Clair has a valid point here, especially with the 2012 elections coming up.

I also found a post on USA Today where the Tea Party is offering a poll on what the average American thinks should be cut. You can find the poll here but mostly it’s slow to load and locked up on me a lot; however, you guessed it—because it is the Tea Party, what I did get through was mostly about either making people work longer before they are eligible for Social Security and Medicare benefits or just cutting away at the heart of these programs.

There are other items you can choose to cut on the poll such as energy programs (estimated savings of $21 billion) or all foreign aid resulting in a savings of $25 billion. By reading the poll questions, the Tea Party obviously doesn’t like the V-22 Osprey aircraft and if we cut this out, the savings would amount to $6 billion. They want to cut out nuclear energy programs as well.

If you want to get into the meat and potatoes of the poll, you can vote to repeal the Davis-Bacon Act which requires set wages to be paid on public works projects (think a kid with a GED making $55 dollars an hour to climb a pole on a construction site here). Or, skip funding mass transit budgets; after all, Americans are overweight so why not just walk everywhere?

If you get through the entire poll, you’ll see where the small business owner is screwed (or could be). Another choice offers doing away with the Small Business Administration or reducing unused Federal building space. Come on here folks, what do you think will get cut here? The SBA for sure, and that means you and me have nowhere to turn for those small business loans—but aren’t they almost impossible to get anyway?

Also according to choices on the poll, you can forget Fannie Mae or Freddie Mac or choose to cut ethanol tax credits—tough decisions people!

The job training assistance no one ever really qualifies for could be cut according to the poll and that would hurt the small entrepreneur, if indeed he could get the money for training. It’s already too hard to qualify for. I must tell you here, I agree with Mr. Clair of PolicyMic, this is all much like a Broadway play and now with the vacationing politicians out of Washington, when they all regroup they will most likely laugh and laugh on who won and then it’s on to the next battle—getting those 12 Super Committee members to agree. Perhaps it won’t be so hard with all the posts on the Web making fun of the entire political arena. Where’s Sarah Palin when you need her?

Is There Hope for Small Biz?

Is He Praying or ThinkingPresident Obama isn’t happy about the vote on the debt ceiling and he’s made that clear. Our Washington politicians are fighting and it’s a grand old war of bipartisanship, meaning not one Republican will side with a Democrat or the other way around. In fact, it’s like Kiddie Land in Washington. No one’s sharing or playing nice together and that’s an embarrassing shame.

I know what the experts are guessing will be addressed in trimming the budget, but I still think the agreed upon 2.4 trillion in cuts will hurt the small business owner. These are my opinions but actually, because they directly affect the small owner, I think I could be right on target here.

As a small business owner, I’ve won contracts for repairs to government vehicles and I’m sure there are other small entrepreneurs out there who have landed the smaller government contracts as well. I expect these will go away and large corporate America will take all of this business away from us. If you have a government contract in place and it’s up for renewal, expect to lose the bid.

Expect the federal employee hiring assistance to go away as well. These programs reimburse the employer for hiring workers and pay a portion of their salaries and taxes. This is something likely to be cut, so the entire burden of payroll will fall to the business owner—also ending a tax break for hiring under this program.

I also think the good old Feds will find a way to start making businesses pay for what used to be free. This could include all the labor law posters you need required by the Department of Labor and US Wage and Hour Division. If they begin to charge for these once free must-haves, even local department of labor spending will face cuts, meaning they won’t be able to offer anything free either. Look for other once free items such as those from OSHA also cut—no more free forms, manuals or help if these areas suffer funding cuts. Hope you have extra forms lying around you can copy!

In my opinion, if a small business owner receives any support from any government venue, I really don’t think those types of things will be “free” in the future.

Because the deal is to cut DOMESTIC spending, that means where the government spends money in America folks. Any time domestic funding or spending is cut, all businesses suffer, especially the small business owner.

It’s a worry we all face. Our profits won’t increase—they’ll decline, but our operating expenses and payroll will either increase or stay the same. That’s not really a viable option for the small company trying to keep its doors open. We don’t have the reserves to pull from and our lines of credit have dried up a long time ago.

Democrats and Republicans FightThe winners here shall be big business who will still be eligible for government contracts, incentives and tax breaks. I don’t even want to think about the tax code for the small business owner changing, but if the US Government can find a way, they’ll hit us first.

Election time should be fun in 2012 (more like a joke). I bet you can’t wait for more of those town hall Tweet sessions and it’s reported Obama will ride the train to ensure average Americans all is well. I bet he’s got some grand new ideas. Is it “Yes we can” time again? I doubt it. Perhaps the President should consider a new slogan? “Well I found out we can’t, but isn’t America great?” Some slogan, huh?

Speak up, small business owners everywhere. Now is the time we need to band together. If you’re not a member of the National Federation of Independent Business (NFIB), I’ve provided a link in the reference section where you can join and find an office located in your state. Join and fight now, before we are left in the dust all garnishing “for rent” or “closed” signs on our storefronts.

I love to end this on a happy note, but I just can’t find one that is encouraging. What problems do you think your small business will face now that the debt ceiling has been raised?

I’m sure you’ve thought of many and perhaps a few I haven’t mentioned here and I’d love to hear them—shoot me a comment on your opinion.