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GRAVES: Anti-growth policies put optimism on hold

Small businesses look in vain for signs of real recovery

Aholding pattern occurs when an airplane is delayed from its destination, still moving but no longer really getting anywhere. That's also an apt description of the small-business mood under this president's anti-growth policies.

At the Small Business Committee, we hear all year long from small businesses, and they are focused on containing losses or holding on to slim gains. Many would like to expand or invest, but few are planning to. They're working as hard as ever for less reward.

Small businesses are often overlooked -- or given mere lip service -- as an impetus for a recovering economy and job market. Yet small-business growth and a strong recovery are inseparable from one another. You won't see a surging economy while small businesses are hurting, and you won't see many booming small businesses in a struggling economy. Small businesses employ 49 percent of private-sector employees, account for 42 percent of the private-sector payroll, and since 1993, small businesses have created 64 percent of net new jobs. Without a thriving small-business sector, the economy sputters. These facts should cause Washington to focus energetically on changing the small-business outlook. Somehow, that loud and clear message never quite reaches the Oval Office.

Instead, this administration's policies have resulted in higher taxes for many small firms, a constantly growing regulatory burden, and new health care compliance costs and mandates. The entrepreneurial spirit that builds a small business must embrace risk at some level. The perils posed by this administration's policies, however, have instilled hesitation and caution into small-business owners.

The recovery from the 2009 recession, such as it is, has been weak and inconsistent. In fact, it is the weakest since World War II. The economy grew by a modest 2.2 percent in 2012, but contracted by 0.1 percent in the last quarter of the year. That disappointment is another blow to small-business confidence.

In January 2013, the jobless rate increased to 7.9 percent from 7.8 percent, with 12.3 million Americans still needing work, and another 8 million who haven't found full-time jobs. A recent economic outlook report from J.P. Morgan Chase Bank projects the economy can add 175,000 jobs per month in the year ahead. Yet many economists think 300,000 jobs monthly is the mark necessary for the recovery that's been lacking. Changes in the labor force participation rate show that 8.5 million workers dropped out of the labor force entirely in President Obama's first term, according to the Bureau of Labor Statistics (BLS). Small businesses lost 423,000 jobs during that four-year span. Our economy is capable of a stronger recovery, one that puts people back to work.

Not surprisingly in this economy, consumer confidence has fluctuated but never really risen, and that limits consumer spending. Consumer spending accounts for 70 percent of economic activity, but it only grew at 0.2 percent in December. The National Retail Federation projects retail sales for 2013 will grow by 3.4 percent, less than the 4.2 percent of 2012. That leaves small businesses struggling against a strong headwind in their search for profitability.

In another sign of the small-business mood, demand for loans remains weak, meaning fewer small businesses are expanding. In the National Federation of Independent Business' annual survey, 52 percent of business owners said they do not want a loan. The latest survey by the federation measured small-business optimism at the fourth-lowest it's been in the poll's history of nearly 40 years.

Small-business owner Sean Falk testified before the committee on Feb. 13 that uncertainty and regulations are taking their toll on job creators. "There are also the impacts of the new health care law, commodity prices, fuel prices, unemployment insurance rates, U.S. dollar exchange rate and others. All of those factors cut into shrinking profit margins and create disincentives to business growth," he said.

We hear a lot from politicians who think more taxes and more spending to fund more government are somehow the answer, as though that hasn't been tried. Small businesses should not be asked to take more from their bottom line and foot the bill for a Washington agenda that only adds to their woes. Let's get the federal government's anti-growth policies out of the way. Then the entrepreneurial spirit of this great country will bring back economic growth and jobs.

I'm an optimist about the United States of America and the possibilities of this powerful economy. I know we will see a robust economic recovery again. When it shows up, small-business growth will be taking flight and leading the way.

Rep. Sam Graves, Missouri Republican, is chairman of the House Small Business Committee.

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