Ya know, Joe Plumber, I think the Big Government can actually help ya.
Gleaning from the three presidential debates and listening to John McCain's Joe-Plumber-speak, I sensed that he's driven a wedge deeper and deeper through the assumption that the polarity between a centralized government (the stereotypical "Democrat" Big Government philosophy) and the running of small businesses (which represent the foundation of a decentralized economy with less blanket government programs) is irreconcilable. From what I have noticed, it has resulted in the ignoring of one sector that I believe do tie the two groups together very well-the economic development sector. Particularly, the part of economic development that deals with small business technical assistance, growth, and incentive programs such as tax credits and energy savings.
First, some definitions. Economic development. I am using it as part of the larger umbrella of community development and, where necessary, of economic revitalization in areas hard-hit by recent economic distress. Or to copy and paste from Wikipedia: "From a policy perspective, economic development can be defined as efforts that seek to improve the economic well-being and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the tax base."
By technical assistance, I am referring to various services that are provided to small business owners (current or potential) and entrepreneurs such as credit counseling, budgeting, writing a business plan for their businesses, learning financial management tools such as QuickBooks, offering courses that cover some or all of the above, etc.
And to set the scope of what I'm writing about, this is limited to my experience working with economic development in the New York City region-and through various economic development programs, in the broader New York State area from which a lot of my NYC-based experiences stem.
Okay. Now going back to the dichotomy between the Big Government vs. Joe Plumber Businesses. To a certain degree, McCain may be right that increasing government programs might be detrimental to the small business. And fair enough, since stereotypes are often based on some grains of truth, no matter how big or microscopic those grains might be. But like all sweeping generalizations, this assumption ignores the nuances; in this case, it ignores the on-the-ground efforts that help and benefit the small business owner, funding from which comes from the Big Centralized Government.
On a federal level, the one business-focused agency that comes to mind is the Small Business Administration ("SBA"). One of the ways that the SBA trickles down its resources onto the local level is through designating various organizations based in the community as SBA micro-loan lenders to provide capital to small and/or emerging businesses in need of startup capital or funds to bridge their need for temporary liquid finance. There are SBA mirco-lenders throughout the US.
On a State and City level, New York State has various Empire State Development Corporation programs ("ESDC" - cheesy home page, I know :p) that encourage economic growth through technical assistance, the Entrepreneurial Assistance Program, small business loans, etc. New York City has the New York City Economic Development Corporation ("EDC") and the Department of Small Business Services ("SBS"), which, among the many hats its wears, is also the city's administrator of the Empire Zone program, New York State's economic growth/stimulation program that works through giving tax credits to businesses as incentives to encourage job growth and investment within New York State's 80+ Empire Zones.
So, there are plenty of government resources out there, government money that does reach the local level and makes an impact on a specific region's economic growth (or sustenance in the midst of the current economic climate).
(And yes, there is a plethora of red tape. But this is government we're talking about. Can we expect anything less?)
I'm going to focus on the Empire Zone program ("EZ"), because that's the area in which I have the most hands-on experience. EZ works in such a way that, for a company located within a specific Empire Zone that is committed to increase jobs and put in investments into their businesses and their communities (be they renovating for a new storefront or to commit to local hiring from graduates of nearby job training agencies), that company can apply to become EZ-certified, resulting in said company's tax liability to be potentially reduced to 0 for a given tax year.
So for those Joe Plumber businesses out there? If they happen to be a New York business located within an Empire Zone, committed to growing their overall number of (non-executive level) employees, dedicated to long-term investment within the area in which they are located-then a high tax burden would not be the Big Evilness of Evil that McCain has made Obama's economic plan out to be, because, well, any supposed tax increase could potentially be offset by tax credits that would substantially lower tax liability.
This isn't just a New York thing. There are economic development programs in other states, as well.
Now, one of the biggest obstacles for economic development programs such as the Empire Zone program? Is that business owners need to 1) know they exist, 2) know how to access them, 3) be able to run a viable business of profitable expansion before they can become Zone-certified.
This is where the (many of them non-profit) economic development sector comes in. I happen to play an integral role in running the EZ program within my area of NYC, and the hardest part is not about getting a qualified business certified, but getting out the information that tax credits are out there for small-and large-businesses within the boundaries of my Zone. Because my organization also has a very healthy small business department, business counselors are able to help with this problem by 1) providing technical assistance such as the 60-hour, 13-week comprehensive Entrepreneurial Assistance Program so that businesses qualified for the EZ program are identified in the process, 2) providing business counseling in many Minority and Women Business Entrepreneurs' ("MWBEs") native language so they can understand both their counseling they receive and other opportunities available to them such as EZ, 3) helping business owners from offering training courses to giving them micro-loans so that their business plans are viable to sustain a long-term business of growth and thus can qualify for programs such as EZ. The funding from these services? The government.
Is the Empire Zone program perfect? Far from it. But it's a prime example of an evolving program that is constantly being fine-tuned toward the ultimate goal of economic development-keep in mind that the program was established by legislators, and problems arising from the ground level take time to go back to the lawmakers to tweak the rules. Many of the former problems of EZ have been addressed: closing of loopholes that allow a company to fake its "new business" status to claim EZ tax credits, for example. New ground-level oversight practices have also been installed, such as establishing Zone-specific development plans that each Zone's Administrative Board must follow. And to ensure that businesses taking tax credits are, for the lack of a better way to put it, "worth" the credits, a higher investment-to-benefits ratio threshold has been set to encourage higher investment into the community in order to qualify for EZ tax credits. More changes are underway, all toward heightening accountability while ensuring the continuity of a viable economic stimulation/job creation program.
Through the Empire Zone, a local fashion wholesaler/manufacturer have become certified to retain its on-site garment production team and to anticipate a growth of as much as 50 new jobs within the next five years; a development company of an 8-story, medical profession-focused building at the heart of Chinatown can use money "saved" from tax credits to invest in specialized water columns (the ones that dentists require for their drills) in each level and hospital-sized elevators throughout the building for the ease of patient transport, among other things; a start-up minority-owned environmental services business can receive credits for the vans and professional equipments they purchased to further their green-friendly services; two local museums have been certified to receive Zone Capital Credits, a way to incentivize fundraising by making donors eligible to receive 25% of their total donations back as tax credits on their personal income tax when they give to a specific funding project.
And this isn't even half of the certified EZ businesses in my Zone.
So when I take a step back and analyze the implication of Big Government's impact on small businesses, I'd have to say that, at least in my experience, I don't see businesses and government as that diametrically opposed. Where do the tax credits come from for EZ-certified businesses? The government. Where does the funding come from to enable organizations like mine to offer technical assistance and 60-hour business training courses to business owners? The government. Where does money come from to enable organizations like mine to offer micro-loans to otherwise unbankable businesses that cannot obtain the necessary capital to start/maintain their businesses, simply because Asian Business Owner X has no credit history since he runs his business and other personal financing shrewdly through cash-only means, because Minority Entrepreneur Y does not have the language capacity to negotiate a loan with a traditional, English-speaking-only bank, or because banks are afraid to extend lines of credit nowadays and just don't want to take a chance on Newbie Businessperson Z even though she's graduated from various Technical Assistance courses? The government.
I'm not saying the government is the be-all-and-end-all answer to the nation's collective financial and economic woes. I just don't think McCain's "hatchet and maaaybe scalpel later" approach sits well with me. Are all earmarks bad? What about the HUD and Housing Preservation and Development "earmark" that enabled my organization to acquire, renovate, and then rent out as affordable units a tenement building that would have gone to the hands of luxury housing developers and caused gentrification and the displacement of current tenants, when now these buildings are required to remain as affordable housing units for the decades to come because a non-profit organization has acquired and is managing it? Yes, go through the budget line-by-line and veto out the pork that doesn't help the people, but don't throw out the baby with the bath water. Or else there will be no more money left for community and economic development, and our counselors who work tirelessly on the frontline to provide a range of services from housing to small business to immigration to entitlement services (Medicaid, Medicare, HealthFirst, etc.) will not be able to help those Joe Plumbers and Joe Six-Packs anymore.
First, some definitions. Economic development. I am using it as part of the larger umbrella of community development and, where necessary, of economic revitalization in areas hard-hit by recent economic distress. Or to copy and paste from Wikipedia: "From a policy perspective, economic development can be defined as efforts that seek to improve the economic well-being and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the tax base."
By technical assistance, I am referring to various services that are provided to small business owners (current or potential) and entrepreneurs such as credit counseling, budgeting, writing a business plan for their businesses, learning financial management tools such as QuickBooks, offering courses that cover some or all of the above, etc.
And to set the scope of what I'm writing about, this is limited to my experience working with economic development in the New York City region-and through various economic development programs, in the broader New York State area from which a lot of my NYC-based experiences stem.
Okay. Now going back to the dichotomy between the Big Government vs. Joe Plumber Businesses. To a certain degree, McCain may be right that increasing government programs might be detrimental to the small business. And fair enough, since stereotypes are often based on some grains of truth, no matter how big or microscopic those grains might be. But like all sweeping generalizations, this assumption ignores the nuances; in this case, it ignores the on-the-ground efforts that help and benefit the small business owner, funding from which comes from the Big Centralized Government.
On a federal level, the one business-focused agency that comes to mind is the Small Business Administration ("SBA"). One of the ways that the SBA trickles down its resources onto the local level is through designating various organizations based in the community as SBA micro-loan lenders to provide capital to small and/or emerging businesses in need of startup capital or funds to bridge their need for temporary liquid finance. There are SBA mirco-lenders throughout the US.
On a State and City level, New York State has various Empire State Development Corporation programs ("ESDC" - cheesy home page, I know :p) that encourage economic growth through technical assistance, the Entrepreneurial Assistance Program, small business loans, etc. New York City has the New York City Economic Development Corporation ("EDC") and the Department of Small Business Services ("SBS"), which, among the many hats its wears, is also the city's administrator of the Empire Zone program, New York State's economic growth/stimulation program that works through giving tax credits to businesses as incentives to encourage job growth and investment within New York State's 80+ Empire Zones.
So, there are plenty of government resources out there, government money that does reach the local level and makes an impact on a specific region's economic growth (or sustenance in the midst of the current economic climate).
(And yes, there is a plethora of red tape. But this is government we're talking about. Can we expect anything less?)
I'm going to focus on the Empire Zone program ("EZ"), because that's the area in which I have the most hands-on experience. EZ works in such a way that, for a company located within a specific Empire Zone that is committed to increase jobs and put in investments into their businesses and their communities (be they renovating for a new storefront or to commit to local hiring from graduates of nearby job training agencies), that company can apply to become EZ-certified, resulting in said company's tax liability to be potentially reduced to 0 for a given tax year.
So for those Joe Plumber businesses out there? If they happen to be a New York business located within an Empire Zone, committed to growing their overall number of (non-executive level) employees, dedicated to long-term investment within the area in which they are located-then a high tax burden would not be the Big Evilness of Evil that McCain has made Obama's economic plan out to be, because, well, any supposed tax increase could potentially be offset by tax credits that would substantially lower tax liability.
This isn't just a New York thing. There are economic development programs in other states, as well.
Now, one of the biggest obstacles for economic development programs such as the Empire Zone program? Is that business owners need to 1) know they exist, 2) know how to access them, 3) be able to run a viable business of profitable expansion before they can become Zone-certified.
This is where the (many of them non-profit) economic development sector comes in. I happen to play an integral role in running the EZ program within my area of NYC, and the hardest part is not about getting a qualified business certified, but getting out the information that tax credits are out there for small-and large-businesses within the boundaries of my Zone. Because my organization also has a very healthy small business department, business counselors are able to help with this problem by 1) providing technical assistance such as the 60-hour, 13-week comprehensive Entrepreneurial Assistance Program so that businesses qualified for the EZ program are identified in the process, 2) providing business counseling in many Minority and Women Business Entrepreneurs' ("MWBEs") native language so they can understand both their counseling they receive and other opportunities available to them such as EZ, 3) helping business owners from offering training courses to giving them micro-loans so that their business plans are viable to sustain a long-term business of growth and thus can qualify for programs such as EZ. The funding from these services? The government.
Is the Empire Zone program perfect? Far from it. But it's a prime example of an evolving program that is constantly being fine-tuned toward the ultimate goal of economic development-keep in mind that the program was established by legislators, and problems arising from the ground level take time to go back to the lawmakers to tweak the rules. Many of the former problems of EZ have been addressed: closing of loopholes that allow a company to fake its "new business" status to claim EZ tax credits, for example. New ground-level oversight practices have also been installed, such as establishing Zone-specific development plans that each Zone's Administrative Board must follow. And to ensure that businesses taking tax credits are, for the lack of a better way to put it, "worth" the credits, a higher investment-to-benefits ratio threshold has been set to encourage higher investment into the community in order to qualify for EZ tax credits. More changes are underway, all toward heightening accountability while ensuring the continuity of a viable economic stimulation/job creation program.
Through the Empire Zone, a local fashion wholesaler/manufacturer have become certified to retain its on-site garment production team and to anticipate a growth of as much as 50 new jobs within the next five years; a development company of an 8-story, medical profession-focused building at the heart of Chinatown can use money "saved" from tax credits to invest in specialized water columns (the ones that dentists require for their drills) in each level and hospital-sized elevators throughout the building for the ease of patient transport, among other things; a start-up minority-owned environmental services business can receive credits for the vans and professional equipments they purchased to further their green-friendly services; two local museums have been certified to receive Zone Capital Credits, a way to incentivize fundraising by making donors eligible to receive 25% of their total donations back as tax credits on their personal income tax when they give to a specific funding project.
And this isn't even half of the certified EZ businesses in my Zone.
So when I take a step back and analyze the implication of Big Government's impact on small businesses, I'd have to say that, at least in my experience, I don't see businesses and government as that diametrically opposed. Where do the tax credits come from for EZ-certified businesses? The government. Where does the funding come from to enable organizations like mine to offer technical assistance and 60-hour business training courses to business owners? The government. Where does money come from to enable organizations like mine to offer micro-loans to otherwise unbankable businesses that cannot obtain the necessary capital to start/maintain their businesses, simply because Asian Business Owner X has no credit history since he runs his business and other personal financing shrewdly through cash-only means, because Minority Entrepreneur Y does not have the language capacity to negotiate a loan with a traditional, English-speaking-only bank, or because banks are afraid to extend lines of credit nowadays and just don't want to take a chance on Newbie Businessperson Z even though she's graduated from various Technical Assistance courses? The government.
I'm not saying the government is the be-all-and-end-all answer to the nation's collective financial and economic woes. I just don't think McCain's "hatchet and maaaybe scalpel later" approach sits well with me. Are all earmarks bad? What about the HUD and Housing Preservation and Development "earmark" that enabled my organization to acquire, renovate, and then rent out as affordable units a tenement building that would have gone to the hands of luxury housing developers and caused gentrification and the displacement of current tenants, when now these buildings are required to remain as affordable housing units for the decades to come because a non-profit organization has acquired and is managing it? Yes, go through the budget line-by-line and veto out the pork that doesn't help the people, but don't throw out the baby with the bath water. Or else there will be no more money left for community and economic development, and our counselors who work tirelessly on the frontline to provide a range of services from housing to small business to immigration to entitlement services (Medicaid, Medicare, HealthFirst, etc.) will not be able to help those Joe Plumbers and Joe Six-Packs anymore.