GOP Exploits Small Business for Political Gain

Politicians kill policies they don't support by calling them anti-small business.

By + More
Money HP -- Carousel. Small business open sign

David Brodwin is a cofounder and board member of American Sustainable Business Council. Follow him on Twitter at @davidbrodwin.

America loves small business. We honor the toughness and dedication it takes to keep a business going. We appreciate the jobs and incomes they provide and generate. We enjoy the distinctive flavor that small, locally-owned businesses bring to a neighborhood.

Sadly, our admiration for small business has been exploited. It's exploited by politicians who claim to support small business, while pushing policies that actually harm them. Whenever a politician wants to kill something, a favorite strategy is to say that it "hurts small business."

The misrepresentation of small business now com from conservative Republicans who cater to large multinational corporations and seek to discredit policies of the Obama administration. Here are some recent examples in healthcare, tax reform, regulations, and the farm bill:

[See a collection of political cartoons on the economy.]

Healthcare. Critics of the Affordable Care Act, also called Obamacare, claim that the legislation would somehow hurt small business. Nothing in the act supports this claim. All businesses with less than 50 employees are exempt from the requirement to offer insurance or pay a penalty. Ninety-seven percent of small businesses meet this exemption. Businesses with 50-199 employees pay only $2,000 per uninsured employee, less than half the cost of the average policy. According to John Sheils, senior vice president of a healthcare consulting subsidiary of UnitedHealth, small business "actually could come out ahead…. They don't face the mandate and they could get a tax credit…"

Tax Reform. Both Democrats and Republicans want to extend tax cuts for all Americans earning less than $250,000 per year. But Republicans want to go further, and increase the cuts for those in top brackets. They justify this extra generosity by saying that raising the rates at the top would penalize small business. In reality, only 2.5 percent of small businesses owners earn enough income to see their taxes rise under the Democrats' current proposal. Even fewer can take advantage of special tax preferences engineered for the ultra-wealthy who live on passive income.

The Farm Bill. Every four years or so, the Farm Bill must be updated and renewed. This bill is always pitched to the public as the protector of America's small family farms. A family farm is, after all, a small business. But in truth, the bill does little for family farms or other small businesses. It is mostly a subsidy and free insurance program for the largest industrial producers of corn, wheat, and soybeans. Its primary supporters are agri- and chemical giants like Monsanto, DuPont, ConAgra, Tyson, Archer Daniels Midland, and Cargill. This year's "mediocre" bill takes subsidies even further. Sen. John McCain reportedly said he was "hard-pressed to think of any other industry that operates with less risk at the expense of the American taxpayer."

[See a collection of political cartoons on healthcare.]

Regulations. This legislative season, many bills have been proposed that would jam up the federal regulatory process. These bills are sold on the proposition that regulations are the primary impediment to hiring and growth among small business. But a closer look shows otherwise. Small businesses, according to a recent poll, suffer far more from the lack of demand than regulation. In fact, 78 percent of small business owners say regulations help protect them from unfair competition, and 86 percent believe some regulation is essential in a modern economy. Sixty-one percent of them support standards that move America toward energy efficiency. In short, for every business that may be harmed by a regulation, another business (usually a newer, faster growing business) benefits from the same regulations. America's small businesses have learned how to make money from fair and sensible regulations.

Small Businesses Fight Back

America's small businesses are fighting back. They are standing up for what they really need and believe. They are joining organizations like American Sustainable Business Council, Main Street Alliance, Chambers for Innovation and Clean Energy, and Small Business Majority. They are rejecting organizations like National Federation of Independent Business which claim the mantle of small business while serving other masters.

[See a collection of political cartoons on Congress.]

The National Federation of Independent Business claims to represent small business. It brought the suit over healthcare to the Supreme Court. But much of the National Federation of Independent Business's money does not come from small business, and many of their policy positions do not help small business. The National Federation of Independent Business, and its "Legal Center" receives large contributions from a handful of Republican political operatives and special interests with little if any connection to small business. More than $10 million of recent donations came from only 10 contributors. (Can a real small business give $1 million per year to a trade organization?) Karl Rove's political fundraising arm, "Crossroads GPS" gave the National Federation of Independent Business $3.7 million in 2010 to campaign against the Affordable Care Act. "It is clear that the NFIB is acting on behalf of its partisan big contributors and not their members," said Frank Knapp, head of the South Carolina Small Business Chamber of Commerce.

It's important that we pay attention to what small businesses need. These businesses, most importantly the younger small businesses (less than five years old), provide more than their share of new jobs. But we must listen to the real small businesses and ignore those who make false claims for partisan purposes.

The opinions reflected in this blog do not necessarily reflect official positions of the nonpartisan American Sustainable Business Council or its Action Fund.

  • Read Antony Davies: How Bad State Laws Are Still Good for U.S. Economic Freedom
  • Check out Intelligence on Twitter at @EconomicIntel.
  • Check out U.S. News Weekly: an insider's guide to politics and policy.