Entrepreneurs Don't Love the Great Recession

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What the Government Has Done

The optimistic chirping about how well small business owners have been doing has a cost. It takes attention off of what needs to be done to help those running their own businesses. We need to keep Washington's attention on the recession's harm. Instead of helping small business owners, many of the federal government's recent actions have heaped new burdens on them.

• The health-care reform bill has increased costs at the largest small businesses. Beginning in 2014, small businesses with more than 50 employees that do not offer employee health insurance will be penalized $2,000 per worker for all employees beyond the initial 30. And all businesses, from the tiniest small businesses to the largest, will have to spend more time and money to adhere to the law, because, as one observer put it, "small businesses will need help filing the correct forms for tax credits, fines, and opting out of insurance."

• A host of new regulations has increased the burden of compliance. According to the Heritage Foundation, the cost of new regulations increased last year by the largest amount since 1992, coming in at $13 billion. The Code of Federal Regulations, which lists all regulations currently on the books, increased by almost 5,400 pages, to 163,333 pages, the highest level ever.

• Taxes on successful small business owners are going up. In 2013, individuals who make more than $200,000 per year face a 0.9 percent tax increase on salaries and 3.8 percent on unearned income to pay for the cost of the heath-care legislation. If the Bush tax cuts are allowed to expire, small business owners who earn a lot will face an additional 4.6 percent increase in income taxes and a 5 percent increase in capital gains taxes.

• Efforts to get more capital to small businesses have done little. Lending programs at the Small Business Administration have been beefed up, but less than 1 percent of small businesses make use of these loans.And the infamous Troubled Asset Relief Program did little to get credit to small businesses.Paul Atkins, a member of Congress's TARP oversight panel, wrote in a statement to a House committee: "After a thorough review, we found little evidence that these programs have had a noticeable effect on business credit availability."

Instead of blaming Wall Street for the problems of Main Street, those on Pennsylvania Avenue might consider working to counteract the adverse effects of the Great Recession on Main Street's entrepreneurs. And those writing about those entrepreneurs might consider toning down the all-is-fine rhetoric. It takes the pressure to help struggling business owners off policymakers.

Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.

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