Small businesses continue to struggle, operating in a world of uncertainty and hindered by risk aversion that discourages growth and increases competition for loans. All the while, small business owners fight a complex tax system and an unfair payroll tax, which if unchanged, will increase along the same trajectory as our nation’s unsustainable debt.
This is what I heard last week as I traveled to Washington, D.C., to celebrate National Small Business Week as a representative for the Washington chapter of the Campaign to Fix the Debt. The trip reminded me that now is a good time to reflect on the impact small businesses play in our economy and their prevailing view of the condition of American fiscal policy.
Small businesses around the country remain discouraged and threatened by the ballooning national debt and our elected leaders’ insufficient response. According to a recent survey by the National Small Business Association, the growing national debt is the No. 1 issue small businesses believe Congress and the administration should address.
In fact, eight out of 10 small businesses believe the economy is on the wrong track, according to a different survey conducted by the United States Chamber of Commerce. About 54 percent of those businesses believe the small business climate will worsen over the next two years, while 62 percent believe the debt and deficit to be a threat to their success.
This is due in large part to the fact that high levels of debt frequently correspond with higher interest rates, which make it more difficult for small businesses to attain affordable credit. As a result, businesses are affected on both the supply and demand sides of the economy. Firms tend to reduce investment until they have more knowledge of the future of the economy because investments are generally too costly to reverse. On the supply side, businesses tend to do less hiring during times of uncertainty, as it is costly to pay more employees.
My cross-country trek validated my belief that as the national debt continues to expand, it could eventually cripple America’s small business, crowd out private-sector investment, and create greater economic instability — wreaking havoc on the confidence of small businesses ready to make hiring or investment decisions.
Therefore, I believe we need a big deal — one that’s big enough for Congress not to have another fiscal showdown any time soon. The time is now to implement a program that addresses our entitlement programs, the true drivers of our debt, and figure out how to tweak them so as to cut costs over the long term.
Similarly, Congress and the president need to figure out how to reform the tax code in order to raise the money needed to pay for the vital services we all want our government to provide.
As a small business advocate, I hope Sens. Cantwell and Murray will make an effort to ensure that our representatives on Capitol Hill address long-term solutions that tackle our growing debt in order to ensure a sound fiscal future for our nation.
Enacting a plan to reduce the deficit and put the debt on a downward trajectory as a share of the economy would provide greater certainty, and, as a result, provide the confidence necessary for businesses to make the proper investments that will ensure their success. It would also increase opportunities for small businesses to hire more workers and contribute to a stronger economy.
Small business owners like the ones I work with in Central Washington are the perfect subject for politicians’ speeches: We typify the American dream by placing our faith — and our money — at the mercy of our own abilities and drive to succeed.
The time is now for America’s leaders to get our fiscal house in order and create a predictable and stable environment conducive to business growth for these keepers of the American dream. The backbone of our economy depends on it.
Mario Reyes is the former president of the North Central Washington Hispanic Chamber of Commerce and a member of the Campaign to Fix the Debt’s Small Business Council, which features more than 2,500 members hailing from every state in the nation. Reyes is a resident of Wenatchee.