Why the presidential candidates are trumpeting small business

Getty Images Sen. Ted Cruz (R-Texas) speaks to a crowd gathered at Liberty University in Lynchburg, Virginia, on March 23, 2015, to announce his presidential candidacy.

Getty Images
Sen. Ted Cruz (R-Texas) speaks to a crowd gathered at Liberty University in Lynchburg, Virginia, on March 23, 2015, to announce his presidential candidacy.

In modern American politics, Democrats and Republicans disagree on virtually everything—except the virtues of small business, that is.

This sector is “the backbone of the U.S. economy,” said the Republican Party platform, which hails small business 11 times.

It is “the engine of job growth,” said the Democratic platform, which touts small business 19 times. Days after Republican presidential candidate Ted Cruz invoked small business in his 2016 announcement speech, Democratic candidate Hillary Clinton featured founders of a new small business in her announcement video.

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Small business is one sliver of the economy where traditional left vs. right, and labor vs. management divides get muddled. The reason is the “small” part, which conjures images of the plucky men and women of average neighborhoods rather than posh Wall Street offices or corporate headquarters.

Pollsters have documented this fact of public opinion for years. In early 2014, Gallup and NBC News/Wall Street Journal surveys asked Americans about their confidence in institutions.

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Just 13 percent reported having a substantial level of confidence in large corporations. Some 62 percent—nearly five times as many—expressed substantial confidence in small businesses.

Most Americans say large corporations don’t pay their fair share in taxes and exhibit less concern for average families than in previous generations. Fully 3 in 4 Americans told Gallup last year they want large corporations to have less influence in American life.

Those sentiments are not difficult to understand. The era of globalization has seen U.S. manufacturing decline, jobs move abroad, imports rise and middle-class wages stagnate.

Small business remains mostly exempt from those concerns. Some 64 percent of Americans told the Allstate/National Journal/Heartland Monitor poll last year that small businesses are helping to solve the nation’s problems.

Policies proposed by politicians naturally reflect such attitudes. Democrats and Republicans compete to offer tax cuts and credits for small businesses that may not be available to larger competitors. Though lawmakers in both parties advocate a corporate-tax rate cut, many vow to resist until small businesses that file their taxes through the individual tax code are also included in the benefits.

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The new health-care law’s mandate that employers offer health coverage doesn’t apply to businesses with fewer than 50 employees. Small business that want to offer it anyway have a special marketplace “exchange” offering lower group-purchasing rates.

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One underlying cause of the embrace of small business is the routine assertion that small businesses are responsible for two-thirds of job creation. Some economists argue that statistic exaggerates the importance of small business in the economy, since that’s a “net” figure that obscures the constant churn that destroys as well as creates jobs in small business. They also note the superior pay and benefits that large companies offer workers.

But don’t expect the American public or the politicians who represent them to note that fact very loudly or espouse the merits of corporate executives anytime soon.

In the Public Religion Research Institute’s American Values Survey last year, 41 percent agreed that “business corporations generally strike a fair balance between making profits and serving the public interest.” A 53 percent majority disagreed.

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