The U.S. economy has shown tepid signs of improvement in recent months. Inflation has moderated, though we are not yet out of the woods, and recently the unemployment rate dropped to its lowest level in decades. But small businesses are still very much in the doldrums, according to two new surveys.
In January, the National Federation of Independent Business released its most recent Small Business Optimism Index, which showed that small-business confidence has sunk steadily since June 2022.
Meanwhile, a Goldman Sachs survey published on February 6 also revealed a gloomy outlook. Of 1,838 small business owners from across the country, 70% gave the federal government a "C" grade or below for its effectiveness in delivering small-business support. Inflation remained among entrepreneurs' top concerns.
Sound pro-growth, pro-entrepreneur policies matter to the success and survival of small businesses. That's why it's encouraging to see Republicans using their new House majority to lend these firms a helping hand.
From lessening costly government interference in small business operations to encouraging fair competition, policy action thus far has been focused on alleviating uncertainties and encouraging innovation and investment. For example, the House majority has advanced legislation to protect small businesses from IRS overreach and intrusive audits.
The Republican's policy agenda, called the "Commitment to America," includes an array of reforms and accountability measures that aim to further restore economic stability and growth. The plan works to address the current pain points of small business owners -- including overregulation, regulatory threats, and uncertainty with regard to important tax relief and incentives -- while curbing the rampant government spending that's been fueling inflation.
The Family and Small Business Taxpayer Protection Act noted above would, among other things, cut tens of billions of dollars from the IRS budget over the next decade. Lawmakers are rightfully concerned that overfunding the agency would result in expanded targeting of the self-employed and small businesses, where burdensome audits impose greater hardships and stress on business owners -- rather than the handful of billionaires the new funding is supposed to target.
The Commitment to America also pledges greater investments in protecting American companies' data security. Cybersecurity is a major priority -- in a survey conducted by my organization, the Small Business and Entrepreneurship Council, roughly two-thirds of respondents said they want Congress to focus on this issue. And for good reason. The typical worker at a small business receives 350% more phishing and other social engineering attacks than a worker at a larger corporation.
House Republicans are also working to support the U.S. life-science industry, where small-to-medium-sized entities employ over 70% of the more than 1.8 million workers. As part of the Inflation Reduction Act, Democrats pushed through drug price controls for Medicare. If allowed to stand, these market distortions will undermine critical research and development at biotech firms, and put some of them out of business.
While it will be difficult for House Republicans to completely reverse these price controls given Democrats control the Senate and the presidency, they can lay the groundwork to repeal this misguided law.
House Republicans are off to a good start in 2023, and entrepreneurs are counting on their success to see these commitments through to pave the way for a more stable economic environment in the months and years ahead.
Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.