Bush Downsizes Small Business

By James Devitt, Gadflyer. Posted June 21, 2004.

"I love to be in the presence of entrepreneurs and small business owners and dreamers and doers," President Bush recently told a crowd in Appleton, Wisconsin. Indeed, small business is a staple of Bush's rhetoric – whether the subject is taxes, regulation, or health care, you can count on him to cite helping small businesses as a justification for whatever policy he's touting.

The President frequently uses a small business as a backdrop for his political events, and he talks a good game about their importance to our economy and society. After all, more than half of all private sector workers are employed by small businesses. The small businessperson is supposed to embody the qualities that drive the American economy: hard work, risk-taking, and a perfect combination of independence and community-centeredness. And these are the qualities Bush wants Americans to believe he honors.

But what has stayed under the radar, for the most part, is the fact that the Bush Administration has been no friend of America's small businesses.

One of President Bush's early actions was to demote from his cabinet the head of the Small Business Administration (SBA), a position that was elevated to cabinet-level status under President Clinton. Meanwhile, much of the Bush cabinet has been made up of leaders from many of America's largest corporations.

Given how Bush has treated the SBA and its loan programs, it isn't surprising that he demoted its chief. In May of 2001, the Washington Post reported that the administration was seeking to slash the SBA budget by 40 percent. More significantly, it planned to eliminate a $144.5 million appropriation for a small business loan guaranty program and impose higher fees for certain borrowers. It took a bi-partisan effort in Congress to save funding for this program, which is the single-largest source of small business capital in the nation.

This pattern would be repeated in subsequent budgets, and this year is no different. The President has proposed slashing the overall SBA budget next year by 10 percent, including eliminating the Microloan program. This loan program is geared toward very small businesses and the self-employed – frequently women and minorities. Overall, Bush has cut the agency's budget by 25 percent since taking office.

So Bush says one thing and does another. What's new?

Nothing, of course. But a more relevant question is this: Why hasn't John Kerry made an issue of out of Bush's treatment of small businesses? Small businesses, which the SBA defines as those with fewer than 500 employees, make up 99.7 percent of the United States' 22.9 million businesses. They also generate 60 percent to 80 percent of new jobs each year, Newsday reported in March.

Kerry would seem to have the credentials to speak on the subject. He is the ranking Democrat on the Senate's Small Business and Entrepreneurship Committee. Yet, Kerry's most recent floor statement on small business posted on his Senate web site is two years old. And the last time he posted a press release on the subject was in February 2003. In addition, small businesses are not among the "Kerry Communities" listed on his campaign's web site (although he does have a page on the site devoted to small business).

More significantly, it's becoming increasingly clear that Kerry will have to have to adopt a more aggressive economic message to combat Bush's claims of a warming economy (the Labor Department reported on June 4 that the economy added 216,000 new jobs in May).

For progressive advocates, Kerry's relative silence toward the 23 million Americans who own small businesses is perplexing.

"It seems natural that Kerry would try to appeal to small business, and try to speak to and for them," said Joel Marks, executive director of the American Small Business Alliance. "America loves small business because it is the heart and soul of our communities and our economy. Also, for women and minorities, it's the most accessible path to the American Dream. Bush has dumped on them from nearly day one of his administration. Kerry has a solid background and voting record, and he easily could step in and make himself their champion."

But we haven't heard anything yet.

James Devitt is a Contributing Editor at The American Prospect

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