Give Us Your Questions For The White House: Small Business Edition

Yesterday, President Obama spoke at the Brookings Institute about his administration’s plan for spurring job growth in our not-quite-a-recession-anymore-but-still-pretty-much-a-recession. Now they’ve invited Consumerist to bring our readers’ questions about the program to Austan Goolsbee, the staff director and chief economist on the President’s Economic Recovery Advisory Board.

We know that there are lot of small business owners who read Consumerist and we wanted to open the floor to them because the job creation plan focuses on their needs.

Here’s the relevant part of the address:

First, we’re proposing a series of steps to help small businesses grow and hire new staff. Over the past 15 years, small businesses have created roughly 65 percent of all new jobs in America. These are companies formed around kitchen tables in family meetings, formed when an entrepreneur takes a chance on a dream, formed when a worker decides it’s time she became her own boss. These are also companies that drive innovation, producing 13 times more patents per employee than large companies. And it’s worth remembering, every once in a while a small business becomes a big business — and changes the world.

That’s why it’s so important that we help small business struggling to stay open, or struggling to open in the first place, during these difficult times. Building on the tax cuts in the Recovery Act, we’re proposing a complete elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year. And I believe it’s worthwhile to create a tax incentive to encourage small businesses to add and keep employees, and I’m going to work with Congress to pass one.

Now, these steps will help, but we also have to address the continuing struggle of small businesses to get loans that they need to start up and grow. To that end, we’re proposing to waive fees and increase the guarantees for SBA-backed loans. And I’m asking my Treasury Secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.

The President also mentioned a program to help consumers retrofit their homes to be more energy efficient. Here’s a blog post from the White House that summarizes the plan.

Consumerist will be heading down there next Tuesday, so leave your questions in the comments or email them to tips@consumerist.com with the subject “Job Creation Questions.”

The Big Picture and Some Next Steps on Jobs [White House]
Obama Pushes New Job Stimulus [WSJ]
Obama, Republicans and the battle over TARP [USAToday]
PREVIOUSLY: Ben & Meg Interview Obama Administration On Credit Card Reform

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  1. Segador says:

    Mr. President,

    Why do all of your plans to save our country money seem to hinge on spending even more money? We want to be behind you, but Econ 101 seems to demand otherwise.

    Sincerely,

    U.S. Taxpayers.

    • darklighter says:

      Do you live in a world where you have point masses, vacuums, and frictionless surfaces? Because Physics 101 is about as complete a view of the world as Econ 101.

    • Daemon Xar says:

      Because private industry is being cautious (for basically the first time ever), and something needs to be done to stimulate the economy?

      Worked to bring us out of the Great Depression.

    • ARP says:

      Why do all Republican presidents since Reagan pay for tax cuts through deficit spending? I thought tax cuts are supposed to increase economic activity and pay for themselves.

      Also, right now, he’s not trying to save money, he’s trying to save the economy. Related, but slightly different things.

    • Coelacanth says:

      It’s called Keynesean economics, and it’s worked quite well in the past.

  2. a3219806 says:

    Sir,
    With the economy the way it is now, there is NO way I am hiring any more people. Moreover, if taxes go up in any way, I will lay-off 20% of my staff.
    Good day.

    • mac-phisto says:

      that’s the point. if you’re a small business owner, take this opportunity to get some “facetime” in the oval office. what the consumerist eds. bring to washington very well may end up in legislation designed to make your life a little easier. so why don’t you set the snark down for a few seconds & think about what you would need to retain & hire new employees, forward that information to the staff & pat yourself on the back for being a good citizen.

  3. Jacob says:

    I run a very small business (as a second job) and it took me over 10 pages of tax forms just to report a few thousand dollars of self-employment income. Is having simpler tax laws ever going to happen?

    • Coelacanth says:

      Depending on the complexity of your business, I was able to fill out my self-employment taxes (again as a second job) fairly easily with TurboTax. It wasn’t complicated at all.

      What made your situation difficult?

  4. ktetch says:

    I started the video a little late, and caught right at the end of the first paragraph.

    My question is this – in the interests of driving innovation, should we not cut patent term lengths (you have to keep innovating if you want to keep making money from something) and bring in a comprehensive overhaul of the requirements for getting a patent, contesting a patent, keeping a patent. Even such simple things as ‘a 2-year use-it or lose-it’ requirement will cut down on patent trolls, spurring innovation. Or having a publicly accessible and interactive prior-art search, to cut down substantially on the turnaround time for patent applications, and to avoid junk patents being used to hold others to task (There is a patent for a wooden stick ‘toy’ for dogs, filed in the last 10 years – I kid you not!)
    These are simple fixes that will vastly increase the impact of the patent system and drive innovation. The other alternative is cut out a lot of the legal crap – I filed a patent about 10 years ago, and it cost me more in legal fees than to develop the product, and that was in the UK, to do in the US would have been more that that.

    • ARP says:

      I agree that the patent and copyright system needs reform. However, a huge part of our economy is based on protection of IP as it currently exists. A drastic changes (i.e. removal of business process patents from that which can patented under State Street, Chakrabarty, et. al.), would cause a significant impact at a time when we’re trying to nurse the economy back to health. And such a change wouldn’t create the short term impact that we’re looking for. Long Term, yes, I think it needs to be reformed. Question: How would use it or lose it work? If I invent a new processor front end bus, and license it to Intel (but never do anything with it myself), am I using it. How would we differentiate that from the Katz’s of the world?

      • Daemon Xar says:

        I actually wrote my law school thesis on this topic. There are a number of ways to address unilateral, bilateral, and multilateral patenet suppression without imposing a draconian use it or lose it model. The definition of “use” must also be broad–licensing it to someone that uses it must qualify or we risk losing disclosure of important developments. There are also legitimate reasons to not use a patent, and those ought to be protected as well.

        Patent reform is necessary, and there is some recognition of that in Washington. The Lieberman/McCain climate bill from a couple of years ago would have required the PTO to take a look at reform to free up climate-related technologies.

      • ktetch says:

        It’s not a ‘are YOU using it it, if not then you lose it” it’s “Is the object under patent being used”. In your example, by licensing it, then yes it’s being used. My patented item I don’t use myself, I’ve licensed it to another company.

        What it attempts to do, is avoid all these patents for things that have no real-world application at present, and exist to just ‘hog the seat’, in case someone comes along, and has a real-world application for it. They then can’t do this new thing, because some company came up with an abstract idea, and just attempted to just cash in on someone else’s innovation. That’s not what patents are about.

        Similarly, you mention business processes. Under the constitutional justification for patents (“for the PROGRESS of science and the useful arts”) these patents are neither progressional, nor a useful art (or science), and thus shouldn’t be patentable. Now, if we lose say 1200 jobs because these companies can’t exist solely off business method patents, oh well. Especially if it means 12,000 or more jobs can be created by a greater economic growth by the release of these ‘business methods’.

        The point of the reform is’t to create jobs while ensuring none are lost, that’s farcical. The point is a net increase in jobs, and to stimulate creativity. Patent trolls, and method-patents kill innovation, kill economies, and reduce progress. These are not good things.

        How would use-it or lose-it work. An example would be that within 2 years of patent filing, there should be a concrete example of the patent in use commercially, either directly or indirectly. Failing that, the patent is invalidated.

        BTW, don’t call them intellectual property. They’re neither property, nor ‘intellectual’. They’re assignable government granted monopoly distribution rights.

        Ultimately though, it’s about progress, that is the raison d’etre of patents. It’s not profitability, it’s not to avoid job losses, and not to allow control of a market. Scientific and cultural advancement was the reason it was included in the US constitution. It’s rather sad that so many people put dollars ahead of the growth of civilization as a whole.

        (If anyone’s interested, I did discuss all this at length on WNYU back in July. I’m trying to clear copyright with the station now, and when I have, I’ll be posting the whole thing on my site, with links to resources)

        • Daemon Xar says:

          The argument about “intellectual property” is semantics. IP is the accepted term in the industry and in the law that lets people know we’re talking about copyrights, patents, and trademarks. What would you rather have us call them? Inchoate property? It’s a shorthand, and we all know what we’re talking about when we use it.

          Are you really arguing that all method patents are bad?

          The problem with pure “use-it or lose-it” is that there are good reasons not to use a patent, and those people shouldn’t lose their invested time and resources because they haven’t brought the product to market yet. I tend to think that patents suppression (i.e. trolling) should trigger a copyright royalty-board type proceeding to determine a fair license (though this raises another host of issues).

          Mostly, we need to get patent trials out of the Western District of Texas . . .

          • ktetch says:

            It’s a shorthand? no, a shorthand means ‘shorter’, Intellectual property (actually not called that in most relevant laws, the first time I believe it’s mentioned in a law is the Bayh-Dole Act of 1980) is a lobbyist term, just like “pro-life”, that seeks to define a position in the naming. You want shorthand to cover patents, copyrights, and trademarks (which are actually VERY different and mostly unrelated laws) then call them “c/p/t”. Again, though, the name is deceptive, since they are not property, and do not require intellect (If I each 5 bags of cheesy-poofs, and then pass out, drooling on a piece of paper, a photograph would be eligible for copyright, as indeed would the paper)

            2 years is plenty of time to bring a product to market one way or the other, if you’re serious about it. Again though, you fall into the trap of patents being about making money. They’re NOT, and never have been. They are about the progress of science and the useful arts – read your Constitution. If companies have been abusing the law to make profit, then, like Bluehippo, they should be gone. I’ve never understood where the idea that patents, or copyrights, exist to make a profit for someone comes from. It’s certainly not from the law.

            I’m not saying method patents are all bad, I’m saying they should never have BEEN patents. They were traditionally deemed not to be patentable, until the last 20-30 years, when the USPTO, understaffed as it is, found it impossible to determine if some patents were methods, or technologies. We’ll see how the SCOTUS goes, with In re Bilski (argued a month ago)

            And if there are ‘good reasons’ not to use a patent, what are they? I’m sure I can come up with a bunch of reasons why someone else should have free and open access to the patent. Don’t bother arguing about profitability though, either don’t file the patent and thus prevent others from using it, or file it and make a loss. THERE IS NO RIGHT TO PROFIT FROM PATENTS.

            • Daemon Xar says:

              You’re right–there is no “right” to profit from patents. But it is what we exchange with inventors in order to get information about the patent. Without some incentive to disclose, companies would have no reason to tell anyone about things they patent. The purpose of the patent/copyright clause is to advance science and the useful arts by getting information out into the world. The fundamental purpose of patent is to make the information PUBLIC. That’s why we grant a monopoly.

              FYI, by “in the law” I was speaking about the practice of law, not a specific statute. If nothing else, I can tell you an entire generation of lawyers is growing up learning the IP is the term of art that encompasses patent, copyright, and trademark. So if you want to spend a lot of time arguing semantics, you’re entitled. But the rest of us will continue to use it, as “IP” is actually shorter than “patent, copyright, and trademark.” Two letters compared to twenty-eight, if I’m counting right. I’m not sure why you’re so bothered by the phrase, but I guess you can be if it makes you feel better. And, for the record, they are property, and for the most part have some intellectual component. There are more obviously poorly termed things in the world to complain about, if you really must.

              Two years is a reasonable period to bring things to market? Maybe, if the invention is simple, made of a single part, and has no potential dangerous applications. You seem to be missing the point that a lot of patents are filed when technology is first created, and before final applications have even been considered. Then there’s the testing phase, marketing devleopment phase, and eventual roll-out phase. Add into that the fact that there is a huge issue in the United States of lack of bridging funds to move from initial testing into final development (called the “valley of death”), and it can take a hell of a lot longer than 2 years.

              I’m okay with requiring inventors to demonstrate some progress within two years, but I think you’d be hard pressed to find a lot of successful inventions that were rolled out within two years of recieving the patent, let alone filing.

              Good reasons not to use a patent: there’s a better/cheaper/easier technology available for the primary purpose of a patent, but there are potentially other uses, they’re not technically feasible yet, its usefulness depends on something happening in the future, regulatory costs are too high at the moment, it’s being integrated into something that’s still under development, etc. We don’t need to penalize people for being creative and inventive merely because there’s not an immediately available application.

              One last thing: “either don’t file the patent and thus prevent others from using it, or file it and make a loss.” This would retard the progress of science and the useful arts, and undercuts EVERYTHING else you said.

  5. Duke_Newcombe-Making children and adults as fat as pigs says:

    Mr. Alleged “President”

    Why are you trying to steal my FREEEEEDUMZ, you socialistic, nazi, secret Muzlimmm!!!111

    There. Got that out of the way. Can we ask relevant questions like grownups, now?

  6. sleze69 says:

    Mr. President – Large banks were loaned money (at 0% interest) by the government so that they would increase loans to small businesses (and home owners, students, etc). Since those same banks are now hoarding that money, would you be open to using the rest of the TARP funding to directly loan money to small businesses. This would force the large banks to start loaning the money.

  7. segfault, registered cat offender says:

    What will be done about the oppressive tax rates on self-employment income? For someone with a small business in the 15% federal income tax bracket, their effective marginal tax rate is nearly 30% (and well over 30% once state income taxes are added in). The self-employment tax needs to be reduced or eliminated.

    • Daemon Xar says:

      Aren’t small businesses taxed the same as personal income?

      • Coelacanth says:

        Not quite. You’re required to pay double what a “regular employee” would for social security and medicare. Your employer pays for 50% of the total tax, gratis to you.

        • Daemon Xar says:

          Right. I should have been more clear. I was talking about income tax. The doubling of social security and medicare is unfortunate. I knew that I only paid half, but didn’t know how that was addressed for the self-employed.

  8. stopshopping says:

    Can anyone provide proof that any government program has reached the small business level or homeowner? All I’ve experienced is a shutdown of credit lines (With a perfect credit history and score), and over 1 year trying to complete a loan modification with Chase. It’s all SPIN. I need a banking job.

    • Daemon Xar says:

      The Small Business Administration, for one.

      There’s still a long way to go. Banks aren’t being terribly helpful with modifications, though in at least some cases it’s due to a consumer not providing the right information despite repeated requests. In others, it’s due to the servicer dragging it’s feet.

      Is your loan being serviced by Chase, or is it just owned by Chase? It’s a significant difference.

    • ARP says:

      I don’t think its spin. It’s bad judgment. Meaning, Bush gave money the banks (and Obama continued it) assuming they would start agressivly lending again. They didn’t. They used the money for bonuses, to buy other banks, everything but lending and jacked up our rates. So, the problem was that Bush (and Obama) a wrong assumption when lending (giving) them the money.

  9. khfurletti says:

    I understand that big banks and the auto industry were “too big to fail” but when is there going to be true reform with the banking industry? It seems apparent from recent news, that executives have gone back to giving big bonuses to themselves with our tax money. How is it that this is still allowed to continue?

    It seems so unbalanced that big companies are getting bailed out but small businesses are still getting the short end of the stick. Companies like American Express are slashing credit limits of small business left and right so that it is hard for them to grow. When are we going to see a stimulous plan that effects real change with small business?

    • ARP says:

      This is the subject of a lot of debate,but in my view the short answer is that we let them get too bid to fail, so that they could call the economic shots, not us. Attempts to reform have been met with resistance from numerous places: 1) Teabaggers being misled by Beck, Hannity, etc. that the US government is going to take over the banks; 2) Lobbyists and their puppet congresspeople/senators; and 3) banking insiders in the Obama administration.

    • ARP says:

      Here’s a reposting of my suggestions on what do to about the banks.

      Agreed- there are a myriad of ways to control the banks and their impact/risk to our economy:
      1) Don’t let them get too big to fail. Break them up or regulate the hell out of them if they pose a systemic risk to our economy.
      2) Require a reserve ratio on every investment, account, etc. they have. No exceptions.
      3) Up the reserves ratio so that for every $X in outstanding loans, investments, etc. they have $X in cash to cover it. For risky investments require a higher ratio (e.g. subprime loans 3 to 1, bundled mortgages 2 to 1, etc.)
      4) Up the FDIC contributions so that if a bank does fail, the taxpayer is partially covered by the premiums.
      5) Allow the Fed to quickly take over, shut down, and liquidate the banks.
      6) Limit the power of the Fed to loan money at dirt cheap rates and provide more transparency into their activities.

  10. Coelacanth says:

    Am I the only one who thinks this, or am I beginning to suspect that Consumerist is beginning to fall victim to astroturfing?

  11. a3219806 says:

    Consumerist could start by not axing legitimate questions.

  12. SPENCERG says:

    President Obama said the following:

    “Building on the tax cuts in the Recovery Act, we’re proposing a complete elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year.”

    I’m having trouble understanding the “capital gains taxes” part. Does this mean that the term “small business” will have to be defined? As I understand it, capital gains taxes realistically only apply to big businesses. These tax cuts are supposed to help small business expand faster?

    I’m confused…

  13. Demonpiggies says:

    Why not introduce a law/bill/program that forces companies to prove they need to downsize/layoff?
    Small businesses IMHO are not the issue here, it’s the larger companies driving the econ. into the crapper. If the Fed. could oversee and hold the companies accountable for these layoffs wouldn’t we see a turn around (or at least a stand still) in unemployment? Why can a company layoff hundreds of people just to make their profit margin larger? It’s understandable if and only if a company is on the verge of closing but just because a faceless board wants another 15cent stock rise but doesn’t want to work for it should NOT be acceptable……..

    Just because loaning money to banks and companies seems like a valid way to keep them (and their employees) in business does NOT mean they will use it wisely (as we have seen). Loan and tax rebate monies and their usage/spending of it should be strictly enforced in order to stem the tide of unemployment. How is giving money to small businesses going to encourage them to hire 1, 2 or 5 new employees?

    I should say I almost failed Econ. 110 so I might just be venting here (I do understand basic algebra: PeopleWIthJobs – PeopleNotAbleToAffordLiving = CrapEconomy)…

  14. Verdant Pine Trees says:

    My questions would be:

    Considering what’s happened with other financial sectors that were underregulated, when will the government start regulating companies like PayPal? (Not a “bank” and gets away with freezing accounts, collecting interest on those users’ money in their own FDIC accounts, and poor security.) I’ve never been personally hurt but I know that many have been. More people will be using online payment processors – it’s important to get this right.

    Will the Obama administration make sure that the Consumer Product Improvement Act (CPSIA) is revised ASAP, so as not to hurt handmade toy makers, the makers of children’s goods, and other cottage industries who will be forced to test one of a kind items before selling them? Some of these people turned to making a more modest living after losing their jobs in the recession…

  15. mac-phisto says:

    as i see it, the 2 largest obstacles for small business in america today are as follows:
    1) taxes – if you want small companies to expand their businesses & hire employees, i would suggest tax breaks tied directly to employment; perhaps rebate a portion of payroll taxes for a number of years that would phase out over time.
    2) access to capital/loans – the biggest complaint i hear is that as financing has dried up at banks & other FIs, qualifying for access to capital thru government programs (such as SBA’s 7(a) or microloan programs) is quite difficult. perhaps reviewing the criteria for participation might help. furthermore, i believe credit unions could serve a pivotal role in assisting small businesses in financing, but this would require an expansion of their charter. regulators aren’t too happy about CUs providing small business financing & that won’t change without a change of policy from above.

  16. mannyvel says:

    Tax incentives are great, but they really aren’t very helpful because you need actual cash flow until you can file…unless the tax incentives are payroll tax incentives. Are you suggesting a payroll tax holiday?

    How about making all businesses doing under $75k in revenue tax exempt?

  17. stevemis says:

    Small business are simply *afraid* to expand or make any commitments for staffing. How do I know this? I am a small business owner who should probably be expanding the business, but have decided to “wait and see”. What am I waiting for? I’m waiting to find out what the future is going to cost me. Here are my concerns:

    1. Health “Care” reform will undoubtedly increase our costs.

    2. Cap and Trade: The Trade/Tax aspect will cause (quoting President Obama) our “energy costs to necessarily skyrocket” which will undoubtedly have a profound effect on our (and everyone else’s) costs.

    3. Our government is completely out of control with regards to spending, which has caused the Dollar to dramatically drop in value, which will make US businesses have an even harder time securing sales outside of the United States.

    4. Every tax I’ve personally paid, along with every tax my company pays, has increased in the last year.

    5. Our government can’t seem to stop meddling with the affairs of private business. Our government threw aside long-standing bankruptcy procedures in order to “steal” Chrysler from it’s rightful owners and creditors and redistribute same to foreign countries and unions.

    6. Unions. As a business owner, unions scare the life out of me. Unions are a parasite which systematically feed upon it’s host (the business) to the point where the business teeters on collapse. Business owners see the obvious relationship with the President and SEIU, which does not inspire confidence.

    While the government is asking businesses to expand, it has systematically stacked the cards against us. I am mildly offended that this same government is asking why businesses are hesitant.

    Back to work. I’ve got mouths to feed and taxes to pay.

    • mac-phisto says:

      could you expand on how you think health care reform will increase your costs? the bills in congress exclude small businesses from having to provide health care to employees & provides a public option that their employees could take advantage of (which is a huge leg up considering that small business insurance pools are usually way more expensive per employee than large business pools). doesn’t that decrease your costs (by allowing you to transfer the cost burden of health care to taxpayers) while at the same time allowing you to be more competitive when seeking employees (by providing benefits that you may not have provided before)?

    • ARP says:

      I call BS. This is a rant. You seem to have the same writer as Hannity.

  18. Tankueray says:

    The SBA recently changed their procedures on loans. If you’re getting a loan for a property, an environmental assessment (of varying degrees) has to be done. If the property was used in the past as a facility that the EPA regulates, instant Phase I site assessment. This can get expensive.

    Also, all the new environmental rules that are coming out are a mere slap on the wrist to Exxon and a major expense to small business.

    It is nearly impossible to make a profit while trying to comply with all the regulations out there. And they’re all scary: EPA, OSHA, IRS, etc. They can each bankrupt you and there are very few programs to assist anyone with understanding the rules. I called TxDOT the other day about my license plate and I got a call center!

  19. badgeman46 says:

    This isn’t so much a question but more a suggestion. Why won’t you cut the corporate tax rate so companies want to do business here and we are competitive with the rest of the world? More businesses= more jobs=more tax revenue.

  20. curmudgeonly troll says:

    If more debt and printing money was sound economic policy, wouldn’t Argentina, or Zimbabwe be the most prosperous economies in the world? What exactly is the difference between the USA and those countries?

    If more sustainable trade means Asia should export less, save less, and consume more, while the USA needs to export more, save more, and consume less, how do we get to a sustainable balance of trade without an extended period of a weak US economy and decline in the standard of living? (and without a period of crises and loss of confidence in the US and the dollar?)

  21. savdavid says:

    President Obama, when are you coming to work?

  22. bizgirl says:

    The government sure moved quickly to save all the banks, but they haven’t done a thing for small business except talk about it. My bank credit lines were closed when the economy tanked and the SBA wouldn’t take a second position to allow for purchase order financing. I was also told I qualified for a forbearance which is when the SBA allows you to go without making payments for a specified amount of time. Unfortunately, no one at the bank was authorized to grant it and no one at the SBA office was authorized to grant it. The end result is my business is closing. I’ve laid off 10 people and turned down over $1.5M in orders because I have no way to buy inventory. I’ve held on as long as possible, but I’m ready to give up. No wonder we need a government health plan no one will have a job with benefits.

  23. kralx says:

    Even such simple things as ‘a 2-year use-it or lose-it’ requirement will cut down on patent trolls, spurring innovation. Or having a publicly accessible and interactive prior-art search, to cut down substantially on the turnaround time for patent applications, and to avoid junk patents being used to hold others to task sincerely

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