What small business owners should watch for in the State of the Union


How hard will the president fight for immigration reform? How high does raising the minimum wage rank on his priority list. We will get some sense on Tuesday during the State of the Union. (Carolyn Kaster/AP)

During his annual address to Congress on Tuesday, President Obama will outline his plans to accelerate job creation and revive the economic recovery, which came to a near halt toward the end of last year.

What remains to be seen is whether small businesses — which the president just two weeks ago referred to as “the lifeblood of our economy” — indeed play an important role in his broader recovery plans.

“I deeply believe that small businesses can help drive and continue the growth that we have already seen,” Obama said earlier this month while introducing his nominee for Small Business Administrator, Maria Contreras-Sweet, later adding that he has “made small businesses a priority from day one.”

However, he made only two references to small businesses during last year’s State of the Union, and his administration failed to deliver on several of the economic goals he set forth, including immigration reform, wage hikes and a smooth rollout of the health care law, all of which are expected to come up again this year.

Aside from how many times the president specifically mentions small businesses, there are several important questions entrepreneurs should be looking for answers to in his speech. Here are the five big ones.

President Obama will have the spotlight at the State of the Union address, but lawmakers also get to share their legislative agendas through the guests they invite along. (Julie Percha/The Washington Post)

How malleable is the health care law?

Heading into the State of the Union, the health care law rollout is looking better, with the administration announcing that 3 million people have signed up for coverage, nearly on pace with its original goals, and negative perceptions of the law have subsided slightly.

Still, there is plenty of concern among small business leaders, many of whom have called on the administration in recent months to consider changing or throwing out some key provisions, such as a tax on insurers that is expected to be passed along to employers and new mandatory benefits that will force insurers to start cancelling many small-business plans later this year.

White House officials point to the latest enrollment numbers as evidence that the law is working and will have its intended effects over time, and they aren’t likely to open the door to major changes at this point. That said, they have already delayed the launch of the online employer exchange and penalties for not providing coverage to workers, showing the administration is willing to consider changes and delays when necessary.

Considering the next wave of cancellations is slated to crash right before the mid-term elections this fall, many will be listening for whether the president is open to additional changes to the rules or whether his administration plans to leave well enough alone and stick to the law as it now stands.

Where does immigration rank on the priority list?

“Send me a comprehensive immigration reform bill in the next few months, and I will sign it right away.” That was the president’s message during last year’s address, but it may very well come up again on Tuesday.

The Post's Ed O'Keefe details the pomp and circumstance of the most-watched political event of the year, the annual State of the Union address. (Theresa Poulson/The Washington Post)

A broad immigration reform proposal made its way through the Senate last spring but quickly fizzled out in the House, where Republican leaders have insisted on moving forward with several smaller bills, rather than one large package. Headed by Speaker John Boehner (R-Ohio), they are expected to release an outline of their immigration plans later this week.

Supporters of an overhaul — which tend to include technology start-ups and entrepreneurs, which often cite a need for more highly trained workers from overseas — will be watching to see if the president would be willing to consider a piecemeal approach to reform. In addition, the potential for an agreement may hinge on the administration’s flexibility over a pathway to citizenship for undocumented workers, which has not sat well with Republicans and is not expected to be a part of their plans in the House.

How will lawmakers respond to his minimum-wage plans?

By all accounts, income inequality is expected to be a primary theme of the speech, and part of the president’s plan to close the nation’s ballooning wealth gap centers around lifting the federal minimum wage. The White House has already announced that the president will use his executive powers to require the minimum wage for workers on all new federal contracts to increase to $10.10 per hour.

Meanwhile, he will call on Congress to pass legislation that lifts the minimum to that same level for all workers by 2015.

“Let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty,” Obama said during his address last year.

Since then, the plan has picked up little traction at a federal level, though some states have taken it upon themselves to raise their own minimum wages. Some small business advocates support the move, arguing that higher pay leads to more consumer spending and better sales at small firms.

Others warn that it forces small companies, particularly those in sectors like retail and restaurants, to drop workers. They will certainly be watching to see whether the president renews his push to increase the federal minimum, and if so, how much time he devotes to that portion of his agenda.

How committed is the administration to trade agreements?

Right now, the administration is in the midst of hammering out one free trade agreement with Asian and Latin American nations (the Trans-Pacific Partnership) and a second with members of the European Union. Officials say the economy would benefit greatly if U.S. firms had easier, more affordable access to consumers overseas.

However, the president faces pushback from some in his own party who say existing free trade agreements have actually had an adverse effect on the economy, moving jobs overseas and contributing to an even greater sense of income inequality in the United States.

Still, small business groups view free trade agreements as a pathway to additional sales, higher revenues and more job openings at small companies, many of which already sell abroad or would like to in the future. Of those that have not sold goods overseas (about one third of the total), 63 percent say they would consider exporting, up from 43 percent just three years ago, according to a poll by the National Small Business Association.

Does tax reform still stand a chance?

During last year’s speech, Obama said that the country needed “a tax code that helps small businesses spend less time filling out complicated forms and more time expanding and hiring.” He later added that “now is our best chance for bipartisan, comprehensive tax reform.”

It didn’t pan out. Despite bipartisan cooperation between the top tax writers in both the House and Senate — Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) — the two sides were unable to come to an agreement over the best way to overhaul the nation’s unruly tax system.

Now, Baucus has been nominated as the next ambassador to China, and his departure from the Hill has left small business leaders feeling awfully pessimistic about the prospects of a major tax code rewrite anytime soon. It remains to be seen whether the president will take another stab at the subject in his address this year, but he if doesn’t, supporters say the chances start to look even more dim.

Follow J.D. Harrison and On Small Business on Twitter.

by J.D. Harrison

During his annual address to Congress on Tuesday, President Obama will outline his plans to accelerate job creation and revive the economic recovery, which came to a near halt toward the end of last year.

What remains to be seen is whether small businesses — which the president just two weeks ago referred to as “the lifeblood of our economy” — indeed play an important role in his broader recovery plans.

“I deeply believe that small businesses can help drive and continue the growth that we have already seen,” Obama said earlier this month while introducing his nominee for Small Business Administrator, Maria Contreras-Sweet, later adding that he has “made small businesses a priority from day one.”

However, he made only two references to small businesses during last year’s State of the Union, and his administration failed to deliver on several of the economic goals he set forth, including immigration reform, wage hikes and a smooth rollout of the health care law, all of which are expected to come up again this year.

Aside from how many times the president specifically mentions small businesses, there are several important questions entrepreneurs should be looking for answers to in his speech. Here are the five big ones.

How malleable is the health care law?

Heading into the State of the Union, the health care law rollout is looking better, with the administration announcing that 3 million people have signed up for coverage, nearly on pace with its original goals, and negative perceptions of the law have subsided slightly.

Still, there is plenty of concern among small business leaders, many of whom have called on the administration in recent months to consider changing or throwing out some key provisions, such as a tax on insurers that is expected to be passed along to employers and new mandatory benefits that will force insurers to start cancelling many small-business plans later this year.

White House officials point to the latest enrollment numbers as evidence that the law is working and will have its intended effects over time, and they aren’t likely to open the door to major changes at this point. That said, they have already delayed the launch of the online employer exchange and penalties for not providing coverage to workers, showing the administration is willing to consider changes and delays when necessary.

Considering the next wave of cancellations is slated to crash right before the mid-term elections this fall, many will be listening for whether the president is open to additional changes to the rules or whether his administration plans to leave well enough alone and stick to the law as it now stands.

Where does immigration rank on the priority list?

“Send me a comprehensive immigration reform bill in the next few months, and I will sign it right away.” That was the president’s message during last year’s address, but it may very well come up again on Tuesday.

A broad immigration reform proposal made its way through the Senate last spring but quickly fizzled out in the House, where Republican leaders have insisted on moving forward with several smaller bills, rather than one large package. Headed by Speaker John Boehner (R-Ohio), they are expected to release an outline of their immigration plans later this week.

Supporters of an overhaul — which tend to include technology start-ups and entrepreneurs, which often cite a need for more highly trained workers from overseas — will be watching to see if the president would be willing to consider a piecemeal approach to reform. In addition, the potential for an agreement may hinge on the administration’s flexibility over a pathway to citizenship for undocumented workers, which has not sat well with Republicans and is not expected to be a part of their plans in the House.

How will lawmakers respond to his minimum-wage plans?

By all accounts, income inequality is expected to be a primary theme of the speech, and part of the president’s plan to close the nation’s ballooning wealth gap centers around lifting the federal minimum wage. The White House has already announced that the president will use his executive powers to require the minimum wage for workers on all new federal contracts to increase to $10.10 per hour.

Meanwhile, he will call on Congress to pass legislation that lifts the minimum to that same level for all workers by 2015.

“Let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty,” Obama said during his address last year.

Since then, the plan has picked up little traction at a federal level, though some states have taken it upon themselves to raise their own minimum wages. Some small business advocates support the move, arguing that higher pay leads to more consumer spending and better sales at small firms.

Others warn that it forces small companies, particularly those in sectors like retail and restaurants, to drop workers. They will certainly be watching to see whether the president renews his push to increase the federal minimum, and if so, how much time he devotes to that portion of his agenda.

How committed is the administration to trade agreements?

Right now, the administration is in the midst of hammering out one free trade agreement with Asian and Latin American nations (the Trans-Pacific Partnership) and a second with members of the European Union. Officials say the economy would benefit greatly if U.S. firms had easier, more affordable access to consumers overseas.

However, the president faces pushback from some in his own party who say existing free trade agreements have actually had an adverse effect on the economy, moving jobs overseas and contributing to an even greater sense of income inequality in the United States.

Still, small business groups view free trade agreements as a pathway to additional sales, higher revenues and more job openings at small companies, many of which already sell abroad or would like to in the future. Of those that have not sold goods overseas (about one third of the total), 63 percent say they would consider exporting, up from 43 percent just three years ago, according to a poll by the National Small Business Association.

Does tax reform still stand a chance?

During last year’s speech, Obama said that the country needed “a tax code that helps small businesses spend less time filling out complicated forms and more time expanding and hiring.” He later added that “now is our best chance for bipartisan, comprehensive tax reform.”

It didn’t pan out. Despite bipartisan cooperation between the top tax writers in both the House and Senate — Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) — the two sides were unable to come to an agreement over the best way to overhaul the nation’s unruly tax system.

Now, Baucus has been nominated as the next ambassador to China, and his departure from the Hill has left small business leaders feeling awfully pessimistic about the prospects of a major tax code rewrite anytime soon. It remains to be seen whether the president will take another stab at the subject in his address this year, but he if doesn’t, supporters say the chances start to look even more dim.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.
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