Obama to Business: I’m from the Government and I’m Here to Help

If the president wants to help America’s small businesses, he should consider what he is doing to hurt them.

President Barack Obama delivers his State of the Union address to Congress, January 25, 2011
President Barack Obama delivers his State of the Union address to Congress, January 25, 2011 (White House/Pete Souza)

President Barack Obama urged Congress on Tuesday night to “do more to help the entrepreneurs and small businessowners” of America yet it are his own policies that have stopped companies from adding more jobs.

The president has hailed small business throughout his State of Union speeches and this year’s was no exception. But as in the past, he was more concerned about what government can do to help some businesses than what it is doing to harm all of them.

From subsidized manufacturing hubs to increased funding for scientific research that benefits enterprise, the president lay out a vision of an activist government that is so deeply involved in the economy that it ends up picking winners and losers. He spoke proudly of more solar panels being installed across the country but didn’t mention that they are generously subsidized, creating an unlevel playing field. He also reported that natural gas production is up — and pollution therefore down — but didn’t mention that the revolution in shale gas has come about not because but in spite of a government that won’t allow more drilling for oil and gas on federal lands.

Echoing his “new economic patriotism” speech from September 2012, he again suggested that companies that bring jobs back to the United States should be rewarded with a tax credit whereas companies that outsource jobs would face higher taxes. He also urged, once again, an end to tax “subsidies” for oil and gas companies which are actually tax breaks that all companies can use. Why should oil and gas be exempted? Especially when he earlier hailed the increase in natural gas output?

Obama called on parties in Congress to simplify the tax code which he admitted is “riddled with wasteful, complicated loopholes that punish businesses investing here” while it is the uncertainty about the tax regime that has stopped businesses, big and small, from investing more.

The president’s own administration and his Democratic Party have contributed in no small part to that uncertainty by raising income taxes for the wealthy, introducing, and then phasing out, a payroll tax credit as well as an enhanced credit on equipment purchases. The Tax Policy Center estimated last year that up to 77 percent of Americans would be paying higher taxes as a result of these tax changes in 2013. Because many entrepreneurs file their taxes as individuals, that has in all likelihood imposed a heavier burden on businesses as well.

The president touted government loans for small businesses but what he did not mention is that financial reforms enacted by his administration have made it harder for those same businesses to get credit from the private sector. Banks have had to raise their interest rates and fees to cover the costs of complying with new regulations, so some new companies have little choice but to turn to the government for help.

Finally, the president spoke about his health-care reforms that now prohibit insurers from dropping coverage when their customers get ill. What he also did not mention, however, is that it will mandate businessowners with fifty or more employees to provide health benefits to all their staff or risk a $2,000 fine per worker. That has stopped many small businesses from expanding or even convinced them to lay off workers before the law could take effect.

And then the president asked businesses to raise their wages in the absence of a minimum wage hike because it will “boost productivity and reduce turnover.” That may be true but many are simply unable to — because of everything Barack Obama’s government has done to make life harder for them.