Taxes

Obama Tries to Assuage Small Businesses' Fiscal Fears


Obama Tries to Assuage Small Businesses' Fiscal Fears

Photograph by Andrew Harrer/Bloomberg

When President Barack Obama met with small business owners at the White House on Tuesday, he tried to reassure them that he’ll reach a deal with Republicans in Congress to keep tax cuts for the middle class from expiring Jan. 1. The 15 business owners who spent more than an hour with Obama, Vice President Joe Biden, and top economic aides walked out of the Roosevelt Room convinced, according to interviews with four of them. The White House has 34 days to convince everyone else.

“As a small business owner, we need to see more certainty in where we’re going so we can plan,” says David Ickert, chief financial officer of Air Tractor, a 280-employee manufacturer of crop-duster and forest fire-fighting planes in Olney, Tex., who was in the meeting. “We really won’t get that feeling until we see some concrete results, bills that are passed by Congress and signed by the president.”

Ickert, a member of the National Small Business Association, says Obama and his aides indicated that they would try a “two-stage effort,” extending the current tax rates on income under $250,000 before yearend and then tackling thornier problems like simplifying the tax code in 2013.

That, of course, means allowing tax rates to rise for top earners’ income over $250,000 starting on New Year’s Day, a move Republicans have opposed, often portraying it as a tax hike on business owners. “I am in the higher tax bracket and the 3.5 percent is not going to change my world, and it’s certainly not going to drive my business decisions in terms of hiring or firing,” says Lisa Goodbee, president of Colorado engineering firm Goodbee & Associates, who was also in the room. “I can’t say for certain that that was everyone’s opinion in the room,” says Goodbee, who supported Obama’s campaign.

The sense in the room, according to attendees, was that allowing the “fiscal cliff” cuts to go unchecked would hurt business most by raising taxes on middle-class incomes. “How does the president create that confidence for the middle class? For all the small businesses, that’s who are customers are,” says Nikhil Arora, co-founder of Back to the Roots, a 31-employee Oakland (Calif.) company that sells kits to grow gourmet mushrooms in discarded coffee grounds. “That’s his No. 1 priority, restoring confidence.”

Both parties in Washington are escalating their PR campaigns as the days left to reach a deal dwindle. Representative Sam Graves, the Republican who chairs the House Small Business Committee, chided Obama two weeks ago for meeting with corporate executives and not small businesses. This week, the president is also scheduled to visit a toy factory in Pennsylvania on Friday. The National Federation of Independent Business, the small business lobby that led the challenge to Obama’s health reform law, was not invited to Tuesday’s summit, according to Jean Card, a spokeswoman for the group.

While the business owners meeting with Obama may have been broadly sympathetic, they said the president and his staff seemed genuinely interested in what they had to say. “My surprise was this wasn’t a selling meeting, this was a listening meeting,” says Lew Prince, co-owner of the 24-employee Vintage Vinyl record store in St. Louis. Prince, who made a small donation to Obama’s campaign, says he’s generally cynical about Washington, but the president won him over. “I got a leather hide,” he says. “I don’t believe any of these people most of the time. This was a genuine outreach to people who are going to build the future economy.”

John_tozzi
Tozzi is a reporter for Bloomberg Businessweek in New York.

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