Stimulate This
Rescue the Economy Through Those Who Created It, and from the Politicians Who Ruined It

BY JUSTIN CASE

Montana's economic recovery, like that of the nation, will be driven by small business, from mom and pops to medium size and larger businesses that employ dozens or even a hundred or so people. The recently updated Montana Small Business Profile (released by the Small Business Administration) makes this abundantly clear. The new figures show that our state has 31,544 small employers who employ 98 percent of the state’s workforce, virtually all of it. Small businesses, more over, created over 53 percent of the state's new jobs from 2004 to 2005 (the latest figures recorded).

On a national scale, small business also drives the economy in a dramatic way. Nationally, about 6 million small employers (99.7 percent of all employer firms, according to the  SBA) provide 50.4 percent of private sector employment. These operations created 80 percent of the nation’s new jobs from 2004 to 2005, and generated more than half of the private non-farm gross domestic product.

The government though has historically  persecuted small business, throwing numerous hurtles in the way of entrepreneurs the moment they decide to open their doors and risk capital (often their life savings), work long hours, and bear the heavy psychological and emotional stress that comes with launching and managing a business. Many employ-ees never stop to consider, or even know, that half of their social security and medicare contributions are paid by their employer, along with workers compensation insurance, state and federal unemployment taxes, and then insidious things like the business equipment tax, which steals hard earned money out of an employers pocket simply because he needs equipment to conduct business. Who could have dreamed up such a counter productive and punitive penalty targeting the hard working people who provide livelihoods for so many? Surely not anyone familiar with life in the real world, or with what it takes to run a small business and create jobs.

These small businesses are born of the courage, hard work and opti-mism that not only drive our economy but define our national character. Their voices and interests, though, are drowned out by power-ful labor unions and their allies in Congress, and outnumbered by those clamoring for government hand outs of every kind,” which often amounts to taxing small businesses to finance somebody’s idea of a utopian society—in which all are subsidized by the government. Yet it is not government that bears the heaviest burden, it is the fellow who has the courage to defy the odds, to go into business for himself, and by so doing create jobs.
Perhaps then it’s about time the small business owner was given his due (or reimbursed for all he’s paid into the system to fund the retire-ment and social programs of others). He or she is the employer of so many, the one who carries the weight of the world on his shoulders while others look to him for a paycheck to support their families.

We hear about a staggering $825 billion economic stimulus lately, supposedly designed to get the economy going, but which will take forever to get through the pipeline, as monies doled out for infrastructure  slowly make their way through the bureaucratic miasma to endeavors that will not create permanent jobs, and with only $25 billion released this year—a massive pork barrel spending program brought to you by the most fiscally irresponsible entity of all, the federal government, the one that encouraged and also failed to criminalize behaviors that caused the financial mess in the first place.

Instead, try these figures on for size: A stimulus of $825 billion divided by 6 million small business owners could direct $137,500 to each small business—the most productive and deserving segment of our economy. With strings attached, and ensuring that the money would be spent rapidly (in ways that would generate employment or expansion, and through the purchase of equipment, services, vehicles or materials, even real estate), the national economy would rebound quickly and dramatically. Targeting the 6 million, instead of rewarding failed mega-institutions like Freddie, Fannie, and GM, or spending on special-interest driven projects, would stimulate the most efficient sector of the economy at an organic level that would cultivate rapid growth and tax revenues that could pay down government debt.

Driving the point home, literally, imagine what such a stimulus would accomplish in Montana. What if 31,544 small employers (employing 98 percent of the state’s workforce) had $137, 500 to spend with the provision that they must do so, or contract to do so, within, say, 6 months, or forfeit the funds. The shot in the arm to the state’s economy, totaling $4.337 billion (and to the country), would be so great that a stimulus half that size ($68,750 per business) would be adequate, a savings of $412.5 billion to the U.S. taxpayer.

 Could there be pitfalls or abuses with such a plan. Yes, but they could be minimized, and keep in mind that such a plan responds to, and improves upon, the foolish and extremely wasteful stimulus package being proposed in Washington, one that even Obama and Biden admit will take too long to kick in. 

Reason tells us that if there’s to be a stimulus (which we do not assume) it should stimulate, not filter through the bureaucracy over a period of years. And it should produce results. So let’s leverage that money in the most effective way possible, by jump starting the economy through small business, our state and nation’s largest employer.

  

 

 

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