When President Trump steps behind the podium to deliver the State of the Union this evening, America’s entrepreneurs and small-business owners will be listening carefully.
After a year of solid economic growth and optimism, the word “uncertainty” has begun to creep back into their outlook. According to a monthly survey of small-business CEOs by the business advisory group Vistage Worldwide, optimism has dimmed from a year ago, with 29 percent believing the outcome of the 2018 elections will negatively impact economic growth in 2019. Policy wins that address small business pain points will help to negate this concern.
For their own firms, according to the survey, outlook remains pretty strong. Seventy percent anticipate higher revenues and 60 percent higher profits in the coming year. Only 6 percent expect a decline in revenue and 9 percent a decline in profits.
A slight majority (51 percent) believe the pace of economic growth will “remain unchanged” from 2018, while 33 percent believe economic conditions will “worsen.” In his State of the Union address, President Trump needs to replenish the optimism of those who believe partisan politics will hurt economic growth in the coming year.
America needs entrepreneurs to remain confident, to hire — and to invest. After all, small businesses are the backbone of the U.S. economy. More than 98 percent of U.S. companies operate with fewer than 100 workers. These firms support more than 58 million American jobs and account for nearly half of U.S. GDP. They are the heart and soul of American innovation and economic dynamism.
In his State of the Union address, President Trump is expected to tout the bipartisan policies and legislation that his administration has enacted under his watch. He will call for more bipartisanship to solve pressing challenges. The good news is that there is plenty of “low hanging fruit” when it comes to bipartisan bills the president can get behind in 2019 to provide small businesses with a booster shot of optimism.
Health coverage costs continue to be a major challenge for small businesses, or for people who want to start businesses. One immediate way the president can positively impact high costs is to call for quick action on a bipartisan Senate bill, S. 172, that would extend the current moratorium on the health insurance tax (HIT) for 2020 and 2021. We are talking about $16 billion in unfair sale taxes on the health insurance plans of small businesses, the self-employed and seniors. Half of the entire tax is paid for by people with incomes between $10,000-$50,000.
Congress must address the HIT right away so that insurance companies can begin to make adjustments to premiums for next year. Small business owners will start receiving insurance premium rates for 2020 in early to mid-summer 2019, and including this relief into the new rates would be a big relief for the self-employed, small businesses and their employees. Congress must act now, and President Trump can urge them to do so by advancing S. 172 immediately.
In his call for bipartisan solutions that “unlock the promise of America” President Trump must focus on capital access, as it is the fuel that makes entrepreneurial opportunity a reality. Access to capital is one of those issues that traditionally receives bipartisan support in Congress, and leadership from the White House can help push key initiatives over the finish line and to the President’s desk.
For example, the massively bipartisan JOBS Act 3.0 Act, which passed the House by a whopping 406-4, languished and died in the Senate late last year. The legislation addresses an array of regulatory barriers and costs — from launching a firm to exit — that impede entrepreneurial opportunity and growth. The package will improve the competitiveness of U.S. capital markets and directly help entrepreneurs access the capital they need to start a business, buy a business, scale their firms, more effectively compete and expand, and exit more efficiently.
In addition, investment crowdfunding, a byproduct of bipartisan collaboration when it was made legal in 2012, can be improved upon to leverage its early success. Making smart adjustments to impractical compliance requirements, and increasing the dollar amount that can be raised (up to $10 million) would boost startup activity and pair nicely with efforts to revitalize areas designated as opportunity zones.
Strengthening existing trade relationships — and aggressively forging new ones — would be a huge boost in terms of giving small businesses the green light they need to grow through global markets. Regulatory complexity, high tariffs, lack of intellectual property protections and other barriers are holding small business back from growth markets.
President Trump can use this important address to educate on the win-win attributes of trade agreements, the bipartisan support they’ve received in the past, and the need to approve USMCA, as it will set the tone for forthcoming negotiations with the EU, Japan and Great Britain.
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Of course, other issues must be addressed — from modernizing infrastructure to our workforce shortage. These issues require bipartisan collaboration and, most importantly, action. For the health and growth of U.S. entrepreneurship and the millions of small businesses that represent the heart of our economy, let’s hope President Trump’s State of the Union address will boost the confidence of our entrepreneurs and the bipartisan spirit needed to keep opportunity and our economy growing strong.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.