Tonight, President Biden will give his first State of the Union Address. While it is hard to focus on anything other than the crisis in the Ukraine, the Administration has a lot to be proud of on the homefront. We are beginning to see progress on our economic recovery. Nearly 6 million jobs have been created and unemployment claims dropped to their lowest since 1969. Retail sales are also up by $90 billion and the US is experiencing its fastest economic growth in 40 years. This past year, we saw two landmark bills that supported business and Main Street in the American Rescue Plan and the Bipartisan Infrastructure Deal. Perhaps most exciting, we are seeing a surge in new business start ups with Americans starting business at a rate 30% greater than before the pandemic.
2022 brings an opportunity to build on that momentum and the White House has said that President Biden will lay out his plan to lower costs for American families, while continuing a historically strong economic recovery. The President should take time to discuss preserving our democracy and returning to passing legislation that will help small businesses. Here are three things we expect President Biden to highlight and three things he should discuss that will accelerate our recovery from Covid-19 and boost our economy.
Three Things We Expect the President will Highlight
1. Leveling the Playing Field to Create a More Fair Tax Structure
President Biden may call for legislation that levels the playing field by creating a tax code that recognizes small businesses for the valuable job creators they are and empowers them to grow and prosper. Three quarters of small business owners have said the tax code favors large corporations over small businesses and that small businesses are harmed when large businesses or corporations use loopholes to avoid paying taxes. Indeed, 60% of small business owners support partially rolling-back the 40% tax cut that large corporations were bequeathed under 2017’s Tax Cuts and Jobs Act – in no small part because doing so will ensure corporations pay their fair share and will not impact the vast majority of small businesses, which are not C corporations. Real change can and should be done, while honoring his promise to not raise taxes on any American making more than $400,000, which represents the vast majority of small business owners. Finally, the Internal Revenue Service needs adequate funding to ensure it can process small business taxes in a timely and accurate fashion, while also ensuring large corporations are paying what they owe.
2. Policies that Support Working Families to Enable More Entrepreneurship
The President may also urge Congress to pass comprehensive paid family and medical leave legislation. Supporting working families in this area will have very positive downstream effects for Main Street. A report from The Boston Consulting Group found that even before the pandemic, companies saw tremendous value in paid leave’s ability to attract and retain quality employees, and hundreds of businesses have publicly called for federal policy intervention since the federal brought paid family leave to the forefront of many of our lives. President Biden should promote creating a national standard for paid leave. In addition, making the Earned Income Tax Credit and Child Tax Credit (CTC) permanent can help improve the economic livelihood of low- and moderate-income families. A recent survey of small business owners found that 64% say the expanded CTC payments put money into the pockets of families, which them to spend more money in their communities and at small businesses.
3. The Bipartisan Infrastructure Deal Will Give Americans Increased Broadband Access
President Biden is expected to announce specific goals for implementing the Bipartisan Infrastructure Deal (BID). This package gives a much-needed upgrade to our infrastructure and supports small businesses in a number of ways, especially in increasing access to high-speed and affordable internet services – a boon to entrepreneurship across the country but especially in low income and rural areas. It is likely that the President will lay out plans for distributing more than $40 billion for broadband deployment and expanding on the more than 10 million lower-income households already receiving subsidized internet service through the Affordable Connectivity Program.
Three Things President Biden Should Discuss (He Just Might)
1. Advancing Legislation to Protect our Democracy and Economy
Given everything happening in Ukraine, issues surrounding our own democracy couldn’t be more front and center. Some states have responded to former President Trump’s falsehoods about the 2020 election being stolen with legislation that would greatly restrict and suppress an individual’s right to vote. Not only is the suppression bad for democracy, this type of thinking and the ill will it sews has the potential to destabilize our economy. A recent survey of 400 leaders and executives of America’s largest businesses found that 77% are worried about the state of US democracy and 85% believe our form of capitalism is dependent on a well-functioning democracy. President Biden should discuss this emerging challenge and continue his push for voting rights legislation.
2. Continue Reducing Healthcare Costs and Expanding Coverage
In 2020, Congress passed legislation establishing new billing protections when getting emergency care and non-emergency care from out-of-network providers at in-network facilities starting this year. The Biden Administration has begun to implement this law and it is an important step forward. However, lowering the cost of healthcare is often the most cited policy priority for small business owners. According to the Kaiser Family Foundation, family premiums for employer-sponsored health insurance have risen 47% over the last decade while inflation has risen only 19%. The Centers for Medicare & Medicaid estimates that health spending accounted for roughly a fifth of GDP in 2020. High healthcare costs directly impact economic growth in the form of diverted investment. The Build Back Better (BBB) framework laid out a plan for reducing premiums for more than 9 million Americans who buy insurance through the Affordable Care Act Marketplace by an average of $600 per person per year. The package also would close the Medicaid coverage gap, which could help 4 million uninsured people obtain coverage. It also took steps towards allowing the government to negotiate with drug companies to lower costs. President Biden should discuss taking these additional steps to provide greater stability for many small business owners and their employees.
3. Increasing Access to Capital and Giving Government More Tools to Support Small Business Owners
Giving small business owners and aspiring access to capital is critical in entrepreneurs rebuilding Main Street. The BBB framework allocates a $5 billion investment in US Small Business Administration (SBA) programs that support recovery and provide long-term solutions. Additionally, the BID codified the Minority Business Development Agency, elevating it to permanent status. The agency is set to receive $110 million through 2025, which will enable it to better serve small business owners. Funding these agencies is a worthwhile investment.
A thriving Main Street is the foundation of a strong economy. If and when President Biden speaks out on these areas, it could help persuade Congress to invest more deeply in them, and the benefits to small businesses across the nation will be seen for decades to come.