Moving America's Small Business And Entrepreneurs Forward

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MOVING AMERICA’S SMALL BUSINESSES & ENTREPRENEURS FORWARD

Creating an Economy Built to Last

National Economic Council

May 2012

Introduction From Main Street shops to high-tech startups, America’s small businesses and entrepreneurs are the engine of our economy and one of our country’s greatest assets. Over the last two decades, small and new businesses have been responsible for creating 2 out of every 3 net new jobs, and today the country’s 28 million small firms employ 60 million Americans, half of the private sector workforce. When America's small businesses are strong and growing, our communities are strong and growing. President Obama understands that to create an economy built to last—one that ensures millions of hard working Americans have the opportunity to achieve the American Dream—we must make sure that every entrepreneur and small business in America has the tools they need to grow. When President Obama took office in January 2009, the economy was in free-fall, losing over 800,000 jobs a month. In the fourth quarter of 2008 and the first quarter of 2009, the economy shrank at an average annual rate of 7.8%. Small businesses in particular were struggling under the weight of the worst economic crisis of our lifetime, weak consumer demand, and a credit crunch created by the Wall Street meltdown. From the moment he took office, President Obama has fought tirelessly to move our economy forward and invest in entrepreneurs and small businesses so they can do what they do best—take risks, develop new ideas, grow businesses, and create new jobs. To help them expand and hire, the President has signed a total of 18 tax cuts for small businesses, from greater expensing to the President’s signature call to eliminate capital gains taxes on investments in small businesses. The President has also established two new small business lending funds and expanded Small Business Administration lending programs, which have hit an all-time record. The President also recognizes the vital role that innovative, fast-moving firms play in creating jobs and expanding the economy, which is why he signed into law the bipartisan JOBS Act to make it easier for growing firms to go public and raise capital. It’s also why he signed into law the most significant reform of our patent system in 50 years with the bipartisan America Invests Act. Finally the President knows that in the 21st century, entrepreneurs face a new set of global challenges. That’s why he has helped small businesses expand and compete in foreign markets with a more than 6% increase in the number of small businesses exporting from 2009 to 2010 – making progress toward the five-year goal of doubling exports through the National Export Initiative. As a result of these efforts, small businesses are at the forefront of America’s economic recovery. In the last 26 months we have created 4.25 million private sector jobs – many of them at small and new businesses – and triple the number of jobs added during the last economic recovery in 2002-2004. We know there is still a great deal of work to be done, but the actions we’ve taken – and the partnerships we’ve built – are creating a more inclusive economy, a more resilient economy, and an economy that is driven by a strong and growing middle class. To move forward we must continue to make smart investments in small business. As part of the President’s “Congress To-Do List”, at this make-or-break moment for the middle class, we can act right now to help hard working small business owners create jobs by giving them a tax credit for new hires and a tax deduction for new investments. His business tax reform plan would make tax filing simpler for small businesses and entrepreneurs so that they can focus on growing their businesses rather than filling out tax returns. There is simply no excuse for inaction. This report, the second by this Administration, provides a sampling of the many investments of the Obama Administration to support small businesses and is a reflection of the depth and bread