August 12, 1992 PRESIDENT BUSH: HELPING SMALL BUSINESSES TO GROW AND CREATE JOBS +quot;Thr
August 12, 1992
PRESIDENT BUSH: HELPING SMALL BUSINESSES
TO GROW AND CREATE JOBS
"Through their willingness to take risks and to do the hard
work that is necessary to improve existing products and
services, or to design, develop, and market new ones, small
business people are leading America's economic productivity
and innovation. Indeed, small business is the lifeblood of
our Nation's free enterprise system."
President Bush
May 12, 1992
Summary
o As a former businessman and entrepreneur, George Bush
understands the difficulties faced by small business owners,
especially the need to raise capital and invest in growth.
President Bush appreciates small business' unique role in
creating jobs. Accordingly, the President has tailored his
economic policies to cut burdensome federal regulations and
to help small businesses get better access to capital.
o As the economy begins to recover, the President's efforts to
keep inflation and interest rates low and to eliminate
burdensome regulations are helping small businesses to cut
costs, raise capital, and create jobs.
o To spur growth, and encourage new investment, the President
is pushing a far-reaching economic growth plan, including
new incentives for small businesses to invest in
productivity -- a capital gains tax cut and a new investment
tax allowance. The President's $5,000 tax credit for first-
time homebuyers' will also spur new demand for housing,
generating 272,500 new jobs, 125,000 new home starts, and
$12.5 billion worth of residential construction.
o The President has authorized a record 6 billion dollar loan
authority for the SBA for new business start ups and job
expansion.
o The President will not impose costly new taxes on small
businesses, especially new payroll or income taxes. In
contrast, Bill Clinton has already promised to impose $150
billion in new taxes on the American people, including
significant new payroll tax mandates and income tax rate
hikes.
o Clinton's new tax increases and mandates on business would
cost jobs.
-- Over 800,000 small businesses would be hit by Clinton's
tax hikes. Per worker health care costs would soar by
at least two-thirds, while mandated family leave would
cost them $1.2 billion each year. A small business
owner would have to think twice about hiring each new
worker.
-- The National Federation of Independent Business
estimates that between one and two million small
business jobs would evaporate if "play or pay" health
insurance becomes law.
o In addition to vetoing the Democrats' $100 billion tax hike
earlier this year, the President has vetoed bills that would
have imposed significant new mandates on businesses,
including new requirements for parental and family leave.
The President has fought successfully for flexible policies
-- in child care, for instance -- that serve both small
business owners and employees.
o The President's commitment to open new markets and conclude
free-trade agreements that break down foreign barriers are
creating new growth opportunities for American businesses.
Small Business: Backbone of a Growing Economy
o The Bush Administration's economic policies have reduced
inflation and interest rates to their lowest levels in
decades, laying the groundwork for a strong recovery, new
growth, and more jobs.
o President Bush's economic growth plan, which Democrats in
Congress continue to block, would have created 500,000
additional new jobs this year. Small businesses, in
particular, will benefit from the President's plan.
-- Small businesses accounted for more than two-thirds of
the 850,000 jobs created in 1991 and 350,000 jobs
during the first five months of 1992.
-- Small businesses currently employ more than half of the
American work force, generate 44% of all sales, and 39%
of the U.S. GNP. From 1990-91 small business profits
increased by more than 32%.
o Many of the President's actions have followed
recommendations called for at the 1986 White House
Conference on Small Business. Those recommendations
included: capital gains tax reduction, liability reforms,
and opposition to government mandated benefits.
Reducing Taxes on Business
o Capital Gains Tax Cut: President Bush has proposed a
reduction in the capital gains tax to create jobs, spur new
investment, and boost productivity. Congress has refused to
pass the capital gains tax cut proposed in both the 1990 and
1992 Presidential economic growth packages. As a result,
small businesses and venture entrepreneurs have suffered.
-- 47% of most small businesses obtain start-up funds from
personal capital which is taxable under current laws.
o Investment Tax Allowance: The President supports a 15%
investment tax allowance to encourage businesses to buy
equipment, upgrade their plants, and start hiring again.
-- An investment tax allowance would spur 30% of all small
businesses to expand facilities and operations.
o R & D Tax Credit: The President has proposed to make
permanent the 20% research and experimentation tax credit,
which will encourage investment in industries and
technologies to lead long-term growth into the next century.
o AMT Reform: The President opposes the "adjusted current
earnings" depreciation adjustment under the Alternative
Minimum Tax (AMT). This penalizes capital-intensive
industries such as airlines, chemicals, paper, motor
vehicles, and steel when they buy equipment to modernize or
expand capacity. As part of his economic growth package,
the President has proposed AMT Reform.
o The President's proposed enterprise zones will encourage
small businesses to return to inner cities and rural areas.
The incentives include a limited refundable tax credit for
qualified employee wages and an elimination of taxation on
capital gains attributable to eligible zone property.
o The President strongly supports a first-time homebuyer's tax
credit as a long-term stimulant to the economy. This credit
would create about 272,000 jobs, generate 125,000 housing
starts, and produce $12.5 billion in additional residential
construction.
The Dangers of Tax-Hiking Clintonomics
o Clinton's economic "strategy," which proposes the largest
single tax increase in history and includes oppressive
government mandates, would cost at least 2.6 million
American jobs.
o Clinton hides behind the veil of class warfare, claiming
that his tax increases will only "soak the rich." In
reality, he plans to drown small business.
-- The real burden of Clinton's tax hikes will be felt
largely by job-creating small businesses -- the sole
proprietorships, partnerships, Subchapter S
corporations and family farms that form the backbone of
the small business community.
-- More than 75% of those whose taxes will be raised fall
into this category, and more than $40 billion of the
Clinton tax hikes will be paid for directly from the
profits of small business.
-- Simply stated, more than 800,000 small businesses will
have their taxes increased each year under a Clinton
presidency.
o All told, Clinton's new taxes and mandates on business will
cost American businesses $101 billion next year -- fully 54%
of their 1991 profits. At a time when the economy is
starting to grow again, any plan that takes away over half
of American business' profits -- profits that are being
invested in new workers and better products -- will cost
jobs, eliminate opportunity, and stifle economic growth.
Health Care Reform for Small Businesses
o Over the past two years, 83% of small businesses have seen
their health care costs increase. President Bush realizes
that small businesses have been at a competitive
disadvantage in the insurance marketplace and has pledged to
reform the current health care system.
o The President's plan can reduce the cost of health coverage
for small business without costly government mandates or
higher taxes.
-- Health Insurance Networks: Until now, small businesses
have been at a competitive disadvantage in the
insurance marketplace. The President's Comprehensive
Health Reform Program encourages small businesses to
form Health Insurance Networks (HINs). These HINs will
allow small businesses to pool their purchasing power,
enabling them to purchase low cost, high quality health
insurance. The President's proposal also exempts
insurance sold through HINs (as well as that sold
outside of HINs) from costly state-imposed mandates and
excessive state premium taxes.
-- 100% Deduction: Self-employed persons would be
permitted to deduct 100% of their insurance costs (as a
regular business expense) from their taxable income.
-- Insurance Credit Certificates: Small business employees
and their families with low to moderate incomes and not
receiving employer provided health insurance would
receive insurance credit certificates or tax deductions
of up to $1,250 for individuals, $2,500 for 2-person
families, and $3,750 for larger families, making
insurance affordable.
o The President's plan ensures that states will develop
packages of basic benefits, and will guarantee that similar
businesses buying similar insurance policies pay comparable
premiums, regardless of how sick their employees are. No
longer will small employers find that one sick employee or
one employee with a sick child will make insurance
unaffordable or unavailable.
o The President strongly opposes play-or-pay and Canadian-
style health plans that would penalize small businesses and
bring with them the rationing of services, new intrusive
government bureaucracies.
-- A survey conducted by the National Federation of
Independent Business showed that 93 percent of small-
business owners oppose government mandating that
employers purchase health insurance for their
employees. In fact, if these employers were forced to
pay as much as $150 a month per employee for health
coverage, more than one-fourth would opt to close their
doors. Another one-fourth would remain open but lay
off some employees.
o Bill Clinton's play-or-pay health plan would require $80
billion in new taxes.
-- In addition, the minimum of a 7 percent payroll tax
that a play-or-pay health plan requires could result in
a pay cut of $1,680 a year for the average 30-year old
male high school graduate, currently earning $24,000 a
year in wages, and a pay cut of $1,260 a year for the
average 30 year old male high school dropout, currently
earning $18,000 a year in wages.
Presidential Vetoes: Stopping the Democrats' Costly New Mandates
o President Bush has consistently opposed measures that would
hurt small business. Among his 31 vetoes, the President
vetoed three measures that would have imposed costly new
mandates and regulations on small business:
-- Labor Standards Amendments of 1989
Had President Bush not vetoed this bill, which increased
the minimum wage to $4.55 per hour, many small firms
would have had to lay off employees to meet
unnecessarily inflated labor costs. The bill would have
forced employers to cut services to their customers or
cut jobs, particularly damaging the employment prospects
of young people and less advantaged citizens. It also
would have accelerated inflation, causing some
businesses to close completely.
-- Family and Medical Leave Act (1990)
President Bush believes that family leave is an
important benefit for employers to offer employees, but
he objects to rigid, federally-imposed requirements.
This bill would have stifled productivity and job growth
which the U.S. desperately needs if it intends to
compete in the global marketplace. Small businesses
would have been hit hard by mandated family leave,
costing them $1.2 billion each year.
-- Tax Fairness and Economic Growth Acceleration Act (1992)
This bill, forced through by the Democratic leadership,
included a $100 billion tax increase. More than two-
thirds of this tax increase would have fallen on small
business owners and entrepreneurs. The plan also failed
to create long-term investment and growth and would have
jeopardized the economic recovery.
Relieving the Credit Crunch
o The Bush Administration has worked with bank regulators and
has conducted extensive meetings with bankers, examiners,
and borrowers all over the nation to ease the credit crunch
and increase the availability of funds.
o The Administration has worked with regulators to issue over
35 regulatory changes in order to increase the availability
of credit.
-- The Bush Administration has directed that valuation of
real estate be based on ability to generate income, not
on liquidation value.
-- The President has taken action to end over-zealous bank
examinations and to promote incentives that help banks
maintain capital levels.
-- The President has proposed legislation to increase the
availability of credit by reducing unnecessary
regulatory burdens on the banking industry. Industry
observers estimate that if just 25% of the resources
banks now devote to regulatory compliance could be
redirected into bank capital, the banking industry
could support $20-30 billion in additional lending.
o The Bush Administration has called on banks with improving
capital and earnings aggressively to seek out sound loans --
and not just investing their capital in government
securities.
Improving Access to Capital Through the SBA
o Working with the programs of the U.S. Small Business
Administration (SBA), the President has expanded
opportunities for small businessmen and women to obtain
capital. The President has authorized a record $6 billion
loan authority for the SBA for new business start ups and
job expansion.
o The SBA has established a micro-loan program to make direct
10-year loans of up to $750,000 to non-profit intermediaries
which provide small loans -- ranging from a few hundred
dollars to $25,000 -- to entrepreneurs to establish or
strengthen their small businesses.
o The Bush Administration has worked with Congress to seek
long-term improvements in the venture capital-providing
Small Business Investment Corporations (SBICs).
Regulatory Reform
o President Bush has made the reduction of burdensome
regulation a priority in his efforts to spur economic
growth, and has taken significant steps to ease the
strangle-hold of unnecessary regulations. Regulations, no
matter how well-intentioned, often times stifle economic
growth and inhibit job creation.
-- In his January 28, 1992 State of the Union address,
President Bush ordered a temporary halt to new federal
regulations. President Bush's moratorium will help
small businesses grow without sacrificing health and
safety.
-- According to a recent survey by National Small Business
United, regulatory burdens are the second-highest
concern of small business owners.
-- Under the President's direction, federal agencies have
taken more than 200 separate regulatory reform actions
which collectively will save Americans between $11 and
$24 billion annually.
o The Administration has developed proposals designed to ease,
or provide more flexibility in the regulation of small
business.
-- The Bush Administration has proposed allowing small
businesses to file payroll taxes only once a month
instead of as often as twice a week as now required.
-- The IRS is currently working on a new federal tax form
(941EZ), one specifically tailored for small business,
which eliminates many questions applicable only to
larger firms. In 1990, the IRS developed a new
unemployment tax reporting form that is now used by
approximately 700,000 small businesses, and is
estimated to save 10 million hours in paperwork.
-- The Administration has proposed deductible tax
preparation fees, joint federal and state filing, and
the electronic deposit of payroll taxes.
o Under the Vice President's leadership, the President's
Council on Competitiveness is assisting federal agencies in
reducing the regulatory barriers that hamper the growth of
American industries.
-- The Council challenged overly-restrictive definitions
of wetlands that would have barred development on lands
not truly wet.
o The President has proposed legislation that will reform the
product liability system by encouraging settlements instead
of costly litigation, reducing excessive court awards, and
providing for prompt payment of legitimate claims.
o To assist small businesses in raising essential capital, the
SEC is simplifying needlessly complex registration
requirements. It is also increasing the maximum size for
SEC Regulation A public stock offerings from $1.5 million to
$5 million under streamlined procedures.
Opening Markets for American Goods
o U.S. goods and services face many barriers around the world,
from prohibitive licensing requirements and collusive
corporate business practices to inadequate protection for
intellectual property rights. President Bush is committed
to redressing these barriers and increasing exports to
create jobs and foster competitiveness.
-- U.S. merchandise exports surged to an all time high of
$422 billion in 1991, up 31% since 1988. Today,
America is again the world's leading exporting nation,
and small businesses have been a beneficiary of this
export growth.
o The President wants a strong North American Free Trade
Agreement (NAFTA) with Canada and Mexico, which would create
a market of 360 million consumers with an output of $6
trillion. Since Mexico began to liberalize trade in 1986,
U.S. merchandise exports to Mexico have surged by more than
169 percent; a NAFTA will ensure that our exports to Mexico
increase even more.
-- NAFTA means more opportunities for U.S. small
businesses to grow through international export. U.S.
merchandise exports to Mexico and Canada have more than
doubled since 1980, rising from $51 to $118 billion.
o The President is working for a strong GATT agreement to open
markets worldwide to a variety of U.S. businesses. A
successful agreement could increase U.S. output by $1
trillion over the next ten years.
-- The President stood firm in his protection of U.S.
intellectual property rights and opposed arbitrary
emissions targets and timetables in Rio de Janiero at
the United Nations Conference on the Environment and
Development.
o Had the President not successfully objected to these Rio
initiatives, the U.S. biotech industry would have been
decimated, the U.S. opposed provisions that would have
jeopardized U.S. biotech industry activities overseas, and
new job-costing carbon taxes.
Development of a Skilled and Literate Workforce
o President Bush believes that improving the American
educational system and job training programs are critical to
America's competitive position in the world. The President
has begun programs that will lead to a better educated
workforce that can quickly adapt to the changing business
needs of the future.
-- The President's America 2000 grass-roots education
strategy advocates school choice (both private and
public), tougher standards, and would create break-the-
mold New American Schools.
o The President has doubled funding for literacy and
established the National Institute for Literacy which
coordinates all federal literacy programs. Literacy is a
top priority of both the President and Mrs. Bush.
o The President's Job Training 2000 initiatives will replace
several different Federal job-training programs with a new,
coordinated, market-driven system. Services now provided
under the Job Training Partnership Act will be provided
through Skills Centers that will provide "one stop shopping"
for those in need of job training.
-- On April 14, 1992, President Bush sent to Congress his
Youth Apprenticeship Act. This bill facilitates the
development of voluntary youth apprenticeships that
integrate high academic standards, workplace skills,
and real working experience leading to meaningful
employment.
o The President's Lifelong Learning Act ensures that higher
education will be available to many people who are now
denied access, particularly part-time students. This Act
makes it easier for employees of small businesses to get
training by providing a lifetime line of credit for all
Americans.
Supporting Women Entrepreneurs
o Through the Office of Women's Business Ownership at the
Department of Labor and the Small Business Administration,
the Bush Administration assists nearly 5 million women
entrepreneurs in the U.S. Census Bureau statistics indicate
that women own 32% of all small businesses in the United
States, projected to grow to 40% by the year 2000.
o President Bush has established initiatives designed to help
women to establish and maintain their own businesses. His
initiatives provide technical assistance, improve access to
credit, and foster export growth.
White House Conference on Small Business
o The President, in recognition of the important role small
business plays in the American economy, fully supports the
1994 Conference on Small Business.
E-Mail Fredric L. Rice / The Skeptic Tank