What Happened to Obama's Big Plans for Small Business?By
Small business always gets lots of lip service during the State of the Union address. In the past four years, the president has used the speech to announce big plans around regulations, taxes, health care, immigration, energy, and other issues that matter to business owners. Here is a look at some of those pledges and what has happened to them.
What Obama said: “Most new jobs are created in startups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.” (2012)
What happened: The Jumpstart Our Business Startups Act, passed in April, lifted some restrictions on how small businesses can raise money and it legalized crowdfunding. Regulators are still working out the details.
What Obama said: “I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.” (2012)
“To reduce barriers to growth and investment, I’ve ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them.” (2011)
What happened: While fewer in number, Obama’s regulations have cost more than his predecessors’, though the administration says the benefits to health and safety have outweighed the cost. The review of regulations has won limited praise from business owners.
What Obama said: “My administration will develop a proposal to merge, consolidate, and reorganize the federal government in a way that best serves the goal of a more competitive America.” (2011)
What happened: Plans to merge bureaucracies such as the Commerce Department and various trade agencies made headlines but went nowhere in Congress.
What Obama said: “We can start [improving the health reform law] right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses.”
What happened: This tax provision in the Affordable Care Act, which would have required companies to report payments to vendors to the IRS, was killed with bipartisan support.
What Obama said: “[Health reform] would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market. … It would reduce costs and premiums for millions of families and businesses.” (2010)
What happened: The Affordable Care Act’s health insurance exchanges will begin operating at the end of 2013 for small businesses and individuals. The jury’s still out on how affordable premiums will be for employers, and the law’s mandate that companies with 50 employees buy health insurance or pay a penalty means new costs for businesses that haven’t offered coverage in the past.
What Obama said: “Let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, defend this country. Send me a law that gives them the chance to earn their citizenship. I will sign it right away.” (2012)
“And let’s stop expelling talented, responsible young people who could be staffing our research labs or starting a new business, who could be further enriching this nation.” (2011)
What happened: The Obama administration allowed undocumented immigrants who were brought to the U.S. as children to apply for reprieves from deportation. Broader immigration reform, including plans to ease visa rules for entrepreneurs, has been stalled in Congress, though the GOP’s growing need to court Hispanic voters may make legislation more feasible this session.
Energy and Climate
What Obama said: “You can see the results of last year’s investments in clean energy—in the North Carolina company that will create 1,200 jobs nationwide helping to make advanced batteries, or in the California business that will put a thousand people to work making solar panels.” (2010)
What happened: Obama’s high-risk bets on clean energy manufacturing haven’t paid off. Companies such as Solyndra and A123 Systems that received hundreds of millions of dollars in government grants and loans ended up in bankruptcy.
What Obama said: “[Creating clean energy jobs] means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.” (2010)
What happened: A climate bill to limit global warming emissions with a cap-and-trade system, critical to clean energy entrepreneurs, narrowly passed the House in 2009 but died in the Senate. The prospects for federal climate change legislation remain dim.
What Obama said: “We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports and reform export controls consistent with national security.” (2010)
What happened: U.S. exports reached a record $2.2 trillion in 2012, 39 percent above the 2009 level.
What Obama said: “I’m also proposing a new small business tax credit—one that will go to over one million small businesses who hire new workers or raise wages.” (2010)
What happened: Passed in March 2010, the HIRE Act gave employers a $1,000 credit and a break on Social Security taxes if they hired unemployed workers in 2010. The Treasury estimated (PDF) that employers made more than 10 million hires that would be eligible for the break.
What Obama said: “While we’re at it, let’s also eliminate all capital gains taxes on small business investment and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment.” (2010)
What happened: The Small Business Jobs Act gives a capital gains tax break to people who invested in small businesses in 2010 and 2011 and held on to their stakes for at least five years. The law also doubled the amount that small businesses could immediately deduct for investing in new equipment, to $500,000, in 2010 and 2011. The level shrank to $139,000 for the 2012 tax year.
What Obama said: “I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat.” (2010)
What happened: The Small Business Lending Fund didn’t start moving money into banks for another year-and-a-half. Ultimately, weak demand from banks meant the Treasury disbursed only $4 billion and many banks used the money to repay earlier government bailouts. Treasury says banks that received money from the fund boosted small business loan by $7.4 billion, or 20 percent, over 2009-10 levels.
What Obama said: “We are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.” (2009)
What happened: This program, conceived before Obama took office, didn’t lend directly to businesses. Instead, the Federal Reserve made loans to investors who bought up securities backed by business and consumer loans in order to thaw markets frozen during the financial crisis. The Term Asset-Backed Loan Facility loaned $71 billion to investors that helped support 900,000 loans to small businesses, as well as millions of car, credit-card, and student loans, according to the Fed.