Congress should repeal the Small Business Jobs Act

President Barack Obama signs the Small Business Jobs Act during a ceremony in the East Room of the White House in Washington, D.C., Monday, Sept. 27. Courtesy of MCT

Arguing for the government: Gabe Cwern

Recently President Obama signed a $42 billion small business-lending bill into law. Although the intent of the bill was to put money into banks and local governments to help small businesses, all it will do is act as a cover for the government to say “look we are helping,” where in reality this bill will just cause more problems.

This initiative combines a small tax cut for businesses and the rest of the money is being given to small banks to distribute as loans.

However, as Rep. John Boehner said, “Unfortunately, this bill does nothing to help end the uncertainty that is crippling job creation and hurting small business. Instead it puts taxpayers on the hook for even more bailouts.”

We are setting the precedent of taxpayer bailouts to pay for the businesses that aren’t successful.

Yes, we need to help our small businesses grow but there are no guarantees the money will be going to companies who know how to use it.

Another reason why this bailout may not be as successful as hoped is the simple question of which small businesses are actually in a position to grow. In an economy like the one we find ourselves in right now, and with all the money being moved around by congress, people are still seemingly not confident in the economy and they are being remarkably frugal.

Rob Basso of “Basso on Business,” the founder of a small business community bank (like the ones receiving the money) said, “small business owners need a reason for a loan,” and in this economy where money is tight, it is fiscally irresponsible for small businesses to take up loans they can’t pay for.

In other words, what happens to a business when they take advantage of an easy to receive loan and do all the right moves, but still can’t pay it off because of the stiffness Americans have with their money right now.

This bill will not really do much of anything because small businesses themselves are not in a position to do much of anything. You must change the psyche of the American spender, and you must start evaluating the situation from the position of a small business owner. Politicians are politicking at the expense of the business, this looks like a good move but really it is likely just a motivating tool for the upcoming midterm elections.

Arguing for the opposition: Aprile Sumague

President Obama did the right thing by signing the new small business bill on Sept. 27. President Obama signed a $30 billion bill that would provide loans to small banks that will help capitalize small businesses and an additional $12 billion in tax cuts.

This bill will help provide loans and cut taxes for millions of small business owners who create most of the new jobs in this country.

Small business hiring falls off big time from January 2008 to May 2010, as reported by CNN. This new bill is aiming to create 500,000 new jobs.

It will also help new entrepreneurs as they can deduct start-up expenses up to $10,000 for 2010. Before this bill, they could only deduct up to $5,000. Business owners who buy new equipment will be able to write off the first $500,000 of their investment.

Another great thing about this law is it’s fully paid for and it won’t add to the country’s deficit.

Camden R. Fine, president and chief executive officer of the Independent Community Bankers of America, said this law will give the nation’s nearly 8,000 community banks the opportunity to further serve their local small business customers.

Small business owners had a hard time in acquiring loans when the country was first hit with the economic recession. Business owners were forced to close down their businesses.

I personally saw, and am continuously seeing, the fall of small businesses because I work for a company that sells security systems for small businesses. Many of the small businesses we cater to have been, and are still, behind on their bills.

Many of them have closed down their businesses and filed for bankruptcy. And these are businesses we need in our every day lives, such as convenient stores.

This bill will greatly help restore stability to our economy with targeted tax cuts and loan opportunities for the largest job creators in our country–small business.

Although the Senate has approved the extension of unemployment benefits, it will be better if these millions of unemployed citizens get jobs to be able to provide for themselves and their families. Unemployment barely helps with bills and necessities–people need jobs.

This new law is a way to help people in need–the small business owners and most especially, the unemployed.

Who won the debate?

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  • Nothing could demonstrate more clearly how out of touch politicians are with “small business” than the Small Business Jobs Act of 2010. And nothing could demonstrate their ongoing desire to scratch the backs of the their big business cronies than this charade.

    This incentive is about as helpful to small business as a mouse trap is for a mouse. It does nothing to stimulate investment in small business and continues to give perks to big businesses that hurt small businesses.

    When the government (the SBA) says “small business”, it defines that as any business with fewer than 500 employees. That includes 99.7% of all businesses in America and is no different than saying anyone under 7′ tall is “short”.

    Is a business with 499 employees “small”? In 2009, Australia passed the Fair Trade Act that legally defines a small business as having fewer than 15 employees. No one would argue that 100% of the businesses involved in Australia’s definition are truly small. But let’s even go as high as 20 employees – Here’s how much this bill helps those businesses:

    1) This bill only allows for investment in C Corporations. C Corp status is actually a very bad entity structure for 99.9% of businesses under 20 employees. Virtually no businesses of this size should be a C Corp and couldn’t afford to be one. So this definition of “small” knocks out almost 100% of small businesses right out of the gate.

    2) It must be a “qualified trade or business”, which this bill defines as non-service sector jobs. A large portion of true small businesses are service sector companies. Why are they excluded? Simple – they are almost exclusively non-union companies. The politicians want this money going to their big business/big union cronies who fund their re-election.

    3) The investment must be held for five years to qualify! Investors are looking for small businesses that will grow quickly and give them a return within 2-3 years, sometimes up to five. Private investment money is not built around making 5+ year investments – if their money is stuck that long, they aren’t going to make the investment.

    So there is NOTHING here for small businesses.

    When will American small businesses realize that there is no one watching the shop for them in Washington on either side of the aisle, including the supposed SBA which is focused on 7′ tall companies, not “small” ones?

    And almost no one is watching the shop for them amongst the thousands of consultants and journalists that pretend to serve the small business community as well. Everybody is in love with “big”, whether it is big business or big government, they’re all working together to help each other get bigger.

    We need to stop the flow of favors, bailouts, laws, regulations and incentives coming out of Washington and the SBA that continue to make life easier for big businesses at the direct expense of the 28 million small business owners in the U.S. This legislation is simply another favor for big business at the expense of small business, but because the government and the SBA includes 7′ tall people in their definition of “short”, we all sit back and congratulate them as they get another photo op with “small” business owners.

    Wake up, small business owners! They aren’t on your side, and are proactively working against you at every step of the way to fund their big business re-election friends.

    We need a cabinet-level small business advocate whose sole purpose is NOT to get perks for small business but to stop the unbalanced ongoing bailouts, favors and incentives that flow relentlessly out of big government on both sides of the aisle into big businesses standing around the beltway with their hands out.

    The “Small Business Jobs Act of 2010” is just another one of these big business incentives. Enough is enough. Vote for anyone you know that is truly for supporting the 28 small businesses in America. And good luck finding that rare politician who is actually doing it.