Policymakers’ Logic: Cut Small Business Funding in order to Boost Small Business and Job Creation

By Marshall Kirby, Public Policy Analyst

Almost everyone knows America is facing a fiscal and budget crisis.  Years of spending more than was brought in have now caught up with us, with some help from a recession.  You’d be hard pressed to find an economist or policy analyst who would argue that this is not a major concern for the economy and nation as a whole.  However, you do find debates in the policy solutions legislators propose.  Should we make serious cuts in budgets to reduce the deficit, or do we make gradual cuts given that we still are in the midst of high unemployment and economic uncertainty?  There are serious and sound arguments that each side can make.  But when it comes down to it, there needs to be a sound strategy of what we can realistically cut without producing negative short, mid, and long term implications for the economy at large.

This is where many people get frustrated (including myself).  There are a lot of things that the government spends on that are wasteful, just as there are many valuable programs that promote growth and important social causes.  However, this does not help in quantifying these areas – in fact we live in a highly partisan time and each party’s anathema is the other’s idea of a successful program.  However, it seems in the past few weeks that Democrats and Republicans have found some bipartisan common ground – albeit with a frightening proposal.

Senators Mary Landrieu and Olympia Snowe both on the Senate Small Business Committee, have formed a cross party alliance and have drafted a letter already sent to Small Business Administration head Karen Mills.  The leaders request that Ms. Mills come up with programs which can be “cut” or “eliminated” without hampering the ability of the SBA to operate and serve the Small Business Community.  Both Senators in the past have been avid supporters of the SBA and of promoting small business interests.  It seems even stranger in that the previous decade was marked with reductions in the budget.  In 2006, the budget was $440 million, down from 2001 when it was $674 million.  To President Obama’s credit, he restored some of the SBA’s funding in 2010 bringing it $687 million (this is a nominal increase, but when accounting for inflation, it represents still a lower proportion of funding than in 2001).  The stimulus bill did provide additional money for small business loans, but with that funding drying up, the future is uncertain for the types of programs and loans it will be able to deliver to business owners and entrepreneurs.

Entrepreneurs Week in America

By: Marshall Kirby, Public Policy Analyst

11/18/2010

President Obama announced that November 14-20 is Entrepreneurs Week in America.  This announcement coincides with The Ewing Marion Kauffman Foundation’s Global Entrepreneurs Week.  Highlighting the success of small businesses at shaping and empowering the nation’s economy and providing job growth and innovation, President Obama has also highlighted aspects of the American Recovery and Reinvestment Act, and the Small Business Jobs Act aimed at providing funding, tax credits, and resources to the Small Business Administration (SBA) and enterprises all across the nation.

In a time of recession, small businesses can provide a catalyst to the economy and alter local and regional economies.  Despite the credit crisis and a downturned economy, entrepreneurship is still a viable option for many, and educating the public about resources available to current and would be entrepreneurs should be a priority.  In past years, the SBA has had remarkable success at helping the economically underprivileged, women, and minorities the help and resources they need to begin and produce the American Dream for millions of people.  Let’s hope that President Obama’s announcement sparks a new wave of entrepreneurial spirit which can boost the economy and prosperity of our nation’s communities.