A Gift, on Loan

By Mark David Blum, Esq.

The President of the United States has proposed increasing lending to small business as the solution to our nationís employment problem. He argues that banks need to lend small business more money so that larger payroll can be met. The plan is for the federal government to give large sums of money to local banks conditioned upon the local banks making loans to local small business. The business then gives the money to an employee.

To me, this approach to the employment problem would be a boondoggle. First of all, why not just give the money straight to the small business person without the middle man. Cut the self employment and corporate tax rates and you have the same effect as increasing the supply of capital in the company. Why should the banks make money on the deal?

A second and far more important reason is that it is too dangerous for small business to take loans. In fact, we need to reduce debt and overhead. Luring us with easy loans is exactly the behavior that brought down the entire financial house of cards. Now, instead of homeowners, it will be the risky small business that will be in hock and under partial ownership of a bank, Why should a business take a loan? We need customers. People need jobs so they can buy my goods and services. Borrowing to cover payroll seems to me as the inappropriate response We need to be treated like our larger brethren. Let us be given grants from the TARP fund and let us invest in our business and open others. Donít make me borrow money when others are getting grants.

Finally, as a taxpayer, I am at the end of my proverbial rope in hopes that the federal government is going to stop spending money. There was the stimulus package, the bank bailout package, the auto bailout, and cash for clunkers, There were the banks and Wall Street and automakers. Larry Flynt and the porn industry came calling for money. Several newspapers have outstretched hands. Everybody who is anybody is seeking a piece of the pie.

Trillions of tax dollars have been pumped into the economy by the Obama Administration. The money is from yours and my pockets and given to large institutions, States, and large employers. Hundreds of billions of dollars was up for grabs. Twelve trillion dollars is our current national debt.

The goal behind the stimulus package was to create jobs, keep people in their over mortgaged homes, and to encourage spending. Right now, fear and panic have gripped our nationís economy and nobody is spending. Layoffs by the tens of thousands are happening every day.

I will not venture to say that the lucky ones are the ones who lost their jobs. But for most, there is a social safety net in place to catch them. We have job training and unemployment insurance benefits that give free money to the jobless. I have no doubt that trying to survive on an unemployment check is miserable and a terrible crash from a once thriving career. The Obama stimulus package was designed to get them back to work by creating jobs.

But a class of people in the nation was entirely overlooked. We are the self employed, the small business owner, the real backbone to our nationís economy. Unlike our employed brothers and sisters, if we lost our business or suffered serious financial setbacks, we did not get a piece of the stimulus pie. As a self employed person, if I go broke, I cannot just quit and collect unemployment. I am not eligible. If my retirement savings has been depleted, I have to wait until I am 62 and hope I can survive on social security. The rule in place requires me to work until I drop or end up homeless and on welfare.

Every day for the past ten months I have listened to and witnessed dozens of super rich corporate leaders get handed billions of our tax dollars. Every day I hear of tales of how these tax dollars are wasted on corporate jets, two thousand dollar trashcans, and unbelievable severance packages. Soon the insurance industry is going to receive a mass infusion of cash from millions of new mandatory insurance policies being purchased.

The self employment tax scheme is a killer to small business. We are the ones paying the highest tax rates around; in amounts greater than any State of Federal withholding of a paycheck. At the same time, nobody is around to throw a few million dollars in our direction to keep us stable. My President and my government have turned their back on me. Sending me into deeper debt is not the solution or in my best interest.

It is the small business owner who provides the bulk of the jobs and the bulk of the tax base. Even this, the President acknowledges. We are the ones who keep the community thriving and contribute to everything from local arts and culture to the development of new technologies and systems. But come April 15, the hand of government reaches into our pockets and takes away a huge portion of our earnings. Those are the dollars that flow into the Presidentís evening cocktail parties (to which I have yet to be invited) and his whirlwind trips to Copenhagen.

It is a horrifying prospect to be self employed these days. Nobody has any money and spending nationwide is at an all time low. Competition for the few available dollars is fierce. But I have nowhere to turn for help. Do I have any faith that my Senators would issue me a stimulus check to keep my business in the black? Not an iota. Will my congressperson draft a Bill that provides shelter or a safety net for me? Nobody is likely to listen to anything I have to say unless I contribute to their re-election campaign. New York State certainly wonít step in because they are already a billion dollars short in their expected tax revenues. The outlook is bleak.

The small business owner should have the chance at being stimulated the same way the big companies do. We should be given a pot of money from which we can expand and grow our businesses. If the government is giving away hundreds of billions of dollars, perhaps a few hundred thousand thrown my way is not such a bad idea. Pump money into small businesses and there will be a huge benefit to local economies. At a minimum, the small business owner, the person who takes the greatest risk of all in society, should have in place a safety net should we fail.

If I have learned anything these past twenty years, failure is not an option. It is an option for large corporations, banks, manufacturers, and government employees. There is no risk to them for failure as legislative largesse will just refill bank accounts with tax dollars. We small business owners need to share in this largesse. It is us who should be at the forefront of legislative thought. The failure of small business in America is a blight and a shame upon our collective conscience.

We thrive or die by our own abilities. We exist in the dark and outside the attention of news media. Under the current scheme, formerly known as Ronald Reaganís trickle down economic theory, government has pumped up the big boys and hoped they and their employees spend enough on small business services and goods to keep small business alive. By getting people back to work and creating confidence in the consumer so as to encourage spending again, government is hoping that people will begin investing again.

I would thrive with a massive infusion of free money. I could make a large advertising and marketing buy. I could give people jobs. I could expand my offices. There is nothing I couldnít accomplish.

Small businesses need to be stimulated as much as the big boys. Unless government changes its approach, the real failure will be found in the faces of hundreds and thousands of people who risked everything and lost. While Wall Street and Detroit may thrive from a bazillion tax dollar life support system, we small business owners have to just suffer in silence. Apparently we are just not that important.

If you think for a moment the nation can do with or without the small business owner, take a look around you. Without the small business owner being healthy, the community itself can fall ill. Washington, so far away from Main Street, is making decisions for the benefit of Wall Street.

Stimulate small business. Make gifts and grants and other packages available to us as well. After all, what is a little stimulation among friends? We deserve no less. Or, give nothing at all. Worst of all would be to put small business into debt. We just do not need to have higher bills when income has so diminished. That would be bad for business.

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