Obama, Small Business and Job Creation – Strike 3, You’re Out

President Obama is poised to strike out with small businesses in the very near future. He already has two strikes and is digging in at the plate for the pitch that will be strike three.

Strike One

During a press conference on June 8, 2012 the President was asked for comment on Republican assertions that his economic policies had failed, and he replied (my emphasis):

The truth of the matter is that, as I said, we’ve created 4.3 million jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government — oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.

And so, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is, how do we help state and local governments and how do we help the construction industry. Because the recipes that they’re promoting are basically the kinds of policies that would add weakness to the economy, would result in further layoffs, would not provide relief in the housing market, and would result, I think most economists estimate, in lower growth and fewer jobs, not more.

Obviously the private sector is not “doing fine” and Obama ran backward from that remark later the same day. But that’s only part of the strike since 70% of the jobs he mentions were created by small businesses, and a large percentage of construction jobs are provided by small business construction companies.

NOTE: See Majority Leader Eric Cantor’s statements, that were fact-checked by PolitiFact in two articles (available here and here), that small businesses create 70% of all jobs in the US.

Even more troubling is that despite an increase of more than $5 trillion in the national debt the Federal government has still had to cut funding to the states and municipalities. Combine this failure with his out-of-touch private sector statement and lack of understanding that it is small businesses that created the jobs cited, and the President has an 0 and 1 count.

Strike Two

This past Friday at a campaign stop in Roanoke, VA the President stated (my emphasis):

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

This may the single most compelling statement Obama has ever made that demonstrates just how little understanding he has of free-markets and their interaction with government. Personally I have started and grown several successful small businesses over the last 22 years and I can assure you it was my desire and passion that grew those businesses, not the government.

Sure I had some great teachers growing up but they haven’t worked 100 plus hour work weeks alongside me for the last two decades. I have never taken a dime of government money to build my businesses although I’ve certainly paid plenty in the form of income taxes, payroll taxes, unemployment taxes and other assorted costs of employees. Did my employees earn their paychecks? Of course because that’s the way it’s supposed to work. They give me an honest week’s worth of effort and I give them a fair paycheck.

As to the President’s comments about infrastructure and the American system, he infers that somehow the government providing roads, bridges and economic opportunity is something special. In a capitalist society that is what the government is supposed to provide and then get out of the way and let business owners do what they do best – grow their companies and create jobs. If Obama had done his job better over the last 41 months, small business owners could have created even more jobs but alas the Administration has not come close to providing any kind of economic certainty or stability.

For his utter contempt of small business owners and ignorance about the true responsibilities of the government in a free-market economy, the count goes to 0 and 2.

Strike Three

In his most recent political pandering Obama has endorsed extending the so-called “Bush Tax Cuts” for only those taxpayers earning less than $250,000 and championed himself as the savior of the middle-class in doing so. The problem with his plan is that a great many small businesses are Sub-S corporations that pass their profits through to the owner or partners who then pay taxes based on those earnings.

At a time when Obama is supposed to be working to create an economic environment where jobs can be created, he’s advocating a tax increase on the very people who are working the hardest to put people back to work. What part of this simple equation has eluded the President?

From an AP article that appeared in the Boston Herald:

Extending the tax cuts only for households making below $250,000 costs the government about $800 billion less over 10 years than extending them for everyone. The full cuts cost the government about $4.5 trillion over a decade.

Simple math says that not extending the tax cuts for people earning more than $250,000 only saves the government $80 billion per year. But when small business owners are forced to pay a substantial part of that $80 billion they effectively lose monies that could be used for payroll to create jobs.

Let’s just assume that half, though I believe the number is much higher, of that amount or $40 billion will fall to successful small business owners. At an average annual salary of $47,000 that same amount of money could pay the salaries and benefits for approximately 800,000 employees and, after all is said and done, it’s more jobs that the President says he want to create. Though his actions belie that goal and speak more directly to political pandering and grandstanding, and that is something Obama does get.

For turning his back on the nucleus of taxpayers who are working hard every day to create more jobs and his incredibly transparent political pandering, it’s a swing and miss. Strike three!

As a small business owner who has navigated good and bad markets, robust and flat economies, and increasing government regulation and taxation for 22 years, all I can say is Mr. President you’ve had your three strikes and come November I can only hope “You’re Out”.