Once again, the hour is growing late for elected officials to strike a deal to avoid a potentially catastrophic blow to the economy, as the $1.2 trillion round of automatic spending cuts known as “sequestration” is scheduled to commence at the end of the month. President Obama has urged lawmakers to pass legislation to delay the cuts until at least the end of the year, but House Republicans aren’t warming to the idea, denouncing the plan as a ploy to quietly extend temporary tax hikes without addressing the nation’s excessive spending.
Any deal to completely dismiss — rather than postpone — the automatic cuts will likely include some concessions by Republicans on tax increases in exchange for willingness from Democrats to curb spending. Eliminating government subsidies for farmers and oil producers, scaling back the defense budget and reducing education funding have all been floated as plausible spending cuts; but overhauling the nation’s revenue-bleeding entitlement system comes up more often that any other solution.
So if that doesn’t work for small business owners, where do they think Congress should turn?
Rather than picking apart Medicare and Social Security, most respondents said they hope Congress closes tax loopholes that favor large corporations and eliminates breaks for firms that move manufacturing or production jobs overseas. More than six in 10 small business owners also favored proposals to cease those government subsidies for oil and gas companies.
Nevertheless, if changes to social programs prove necessary, the majority favored raising the income cap for payroll taxes so that high-level incomes are taxed for Social Security.
Ultimately, the only thing that would spell total disaster for small businesses, Roach said, is if lawmakers stand idly by and allow the automatic cuts to set in as scheduled.
“Economists agree that sequestration would send us back into recession,” Roach said. “Do you know how hard we worked to get out of that last recession? At the small business level, we are finally getting out of it, and the fact that we could have to start over and try to climb back out again — it leaves a lot of us completely flummoxed that it’s even a possibility.”
Which issues are you watching most closely in the budget negotiations?
Follow On Small Business and J.D. Harrison