Divided government doesn’t have to mean endless bickering and political gridlock.
It can also be an opportunity to enact common-sense, bipartisan solutions benefiting America’s small businesses — and therefore our economy overall.
It’s almost a cliché to say that small business is the engine that drives America’s economy. But that doesn’t make it any less true.
Small businesses account for almost half of total employment, and a similar share of U.S. GDP. For the past quarter century, they’ve also accounted for around two-thirds of job creation --- at least, that was the case prior to the COVID-19 pandemic, when government-imposed lockdowns devastated small businesses nationally.
The small business community is still reeling from the effects of the pandemic.
Countless cherished local establishments, many of which had been around for decades, did not survive. Others just barely managed to hang on by the skin of their teeth.
Instead of extending them a helping hand, the government has held down struggling entrepreneurs while they’re straining to regain their footing.
Inflation, high energy prices, and labor shortages are like an albatross around the neck of small business owners.
The end of one-party rule in Washington means that anything lawmakers accomplish will have to come with bipartisan support. With that in mind, here are five things Washington can do to help small businesses get back on their feet in the next two years:
1. Fight Inflation
The single most important thing the federal government can do to help small business owners is get inflation under control. Fortunately, all Congress really has to do is . . . nothing. The Federal Reserve is aggressively raising interest rates to bring down inflation.
That strategy will eventually work — as long as Congress doesn’t continue to juice demand with trillions of dollars in new deficit spending.
Obviously, doing nothing goes against every instinct most politicians have. But in an era of divided government, both parties have a way of keeping each other in check.
2. Reduce Taxes on Business Owners
Forget about the left-right divide over corporate tax rates. The overwhelming majority (95%) of companies in the U.S., and virtually all small businesses, are considered "pass-through entities," meaning their owners pay taxes on business profits through the personal income tax.
While there is still a healthy appetite on the left for "taxing the rich," it is possible for lawmakers to single out pass-through entities for reduced income tax liabilities.
That would amount to a targeted tax break specifically for small businesses, which everybody should be able to get behind.
3. Revitalize American Energy
Too often, it seems as though politicians let ideology dictate which forms of energy they support. What voters want, and what the economy needs, is a genuine “all of the above” approach that treats all forms of energy equally.
We need to stop subsidizing snake oil salesmen just because they claim to be embarking on a "green" energy project. Remember Solyndra?
That’s $535 million taxpayers will never get back. At the same time, we need to remove artificial obstacles to fossil fuel production. It’s all well and good for us to transition away from coal, oil, and gas in favor of renewable energy sources long term, but we can’t afford to put the costs of that transition on the backs of consumers and small business owners.
The first goal should be energy independence from the rest of the world.
4. Rein in Regulations
Congress has ceded enormous power to the Executive Branch, enabling presidents and their Cabinet secretaries to promulgate new regulations at a pace that overwhelms the public’s ability to keep track, and buries small business owners in mountains of paperwork that prevent them from focusing on building their businesses.
In just two years, the Biden administration has issued 443 final rules that require an estimated 193 million hours of compliance paperwork nationwide.
That’s the equivalent of 96,500 full-time employees working year-round just to keep up with the paperwork required by new regulations — and that doesn’t include the time that bureaucrats must spend evaluating that paperwork and enforcing compliance.
Congress should think seriously about whether it’s in the nation’s best interests for the Executive Branch to have such far-reaching regulatory power. Even small steps toward reining in this power would pay huge dividends for struggling business owners.
5. Renounce Lockdowns
It’s too late to save the estimated 200,000 businesses that shut their doors forever because of heavy-handed anti-coronavirus policies in 2020.
But — it’s not too late to plan for the next pandemic.
Under the Interstate Commerce Clause of the U.S. Constitution — which has been interpreted so broadly that it allows the federal government to prevent a farmer from raising crops for personal use — Congress absolutely has the power to make sure that future emergencies are not met with the sort of over-reaction characterizing our response to to COVID-19.
Congress should claw back some of the sweeping emergency powers it has granted to the Executive Branch over the years, which are now routinely used to justify obvious abuses of power under the guise of emergencies — there are currently 31 active federal emergencies on the books! — that have enraged partisans on both sides of the aisle.
We're going to spend the next two years under divided government.
Neither side is going to be able to get everything it wants. The logical course of action is for both sides to seek common ground making life easier for America’s entrepreneurs and small business owners — and by extension, for the tens of millions of Americans they employ.
Papa John Schnatter is the founder and former Chairman and CEO of Papa John’s International.
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