You’ve probably heard about President Obama’s recent jobs summit. Following the summit, the President unveiled some more specific proposals for stimulating job creation.
I usually tune out lawmakers talking about creating jobs. Reason? Government can’t create sustained, long-term jobs (except for government workers of course). It’s up to businesses to create jobs.
However, President Obama has said repeatedly that private business will have to be the engine of job creation. Let’s take a look at the specifics of the President’s plan around small businesses. Speaking at the Brookings Institution, reports, the President said he would:
- Help small firms raise capital by eliminating the capital gains tax for investors who buy stock in small businesses in 2010 and keep the stock for at least five years. (Currently, capital gains taxes are 75 percent excluded.)
- Extend through 2010 a provision in the stimulus program that provides tax breaks for small companies on up to $250,000 in capital investments, such as for new plants or equipment.
- Offer small businesses a short-term tax incentive for hiring new employees
- Eliminate fees for small businesses that borrow through major Small Business Administration loan programs in 2010.
He calls these steps a framework for innovating, noting: “Government can help lay the groundwork on which the private sector can better generate jobs, growth, and innovation. After all, small business tax relief is not a substitute for ingenuity and industriousness by our entrepreneurs -- but it can help those with good ideas to grow and expand. Incentives to promote energy efficiency and clean energy manufacturing don't automatically create jobs or lower carbon emissions -- but these steps provide a framework in which companies can compete and innovate to create those jobs and reduce energy consumption.” See the full text of the President’s speech here.
Other elements of President Obama’s plan include investing in infrastructure projects and a plan to reward homeowners who make their homes more energy-efficient (similar to the “cash for clunkers” automotive program). While not directly aimed at small business, these programs could potentially lead to temporary business for contractors and other construction-industry companies that have been hurting since the housing market collapsed.
During his jobs summit last week, President Obama admitted that where to find financing for any job creation program was a major concern. However, on Monday the Treasury announced that the cost of the federal bank bailout was some $200 billion less than originally expected. In his speech before the Brookings Institution, President Obama suggested that some of this unused TARP money could be used to help small business and stimulate job creation.
The use of TARP funds for any job creation program has been criticized, and may be problematic, reports, because some in Congress are arguing that any unused funds should go to pay down the deficit, rather than being spent. While Democrats are contending that using TARP money for job creation ultimately helps reduce the deficit, Republicans have contended this would be a misuse of TARP funds, and have criticized the Obama administration for treating the program like a "slush fund" it can spend without congressional approval.
While several of President Obama’s proposals simply call for extending existing programs, others, such as the tax credit for new hires, would require working with Congress to develop specifics.
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Anita Campbell is the Editor in Chief of
Anita Campbell is the Editor in Chief ofSmall Business Trends, an online publication serving small businesses.