Dashboard: What Does the Trump Chaos Mean for Small Businesses?

[Music] welcome to another 21 hats dashboard I'm Lauren Feldman and I'm here today with John arensmeier who is founder and CEO of small business majority and advocacy group for businesses and entrepreneurs welcome back John good to be here Lauren great to have you as always uh so John I as you know I talk to business owners all the time some of them are quite concerned about what's happening in Washington what the Trump Administration is doing uh and they feel like it's creating chaos and uncertainty that's having an impact on their businesses I also talk to business owners who feel as though Trump is kicking ass and cleaning things up and they're cheering them on and quite confident about where things are going you're right there in Washington where everything is happening what do you think about what's going on well Lauren first of all everything's happening out there and the business owners we talk to are you know living through this look I don't want to get overly political here but this is in short a disaster and um not only um is the administration going after valuable programs that either benefit directly or indirectly small businesses but they are creating chaos as you said chaos and uncertainty out there and that is not good for business that is not a good business environment we just saw the Atlanta fed published numbers showing that their their projection of the uh GDP and for the first quarter dropped from 2.3% positive to negative 1.5% so this is not a good environment for small businesses a disaster are you referring primarily to the cuts in the programs or just the uncertainty that all of this chaos is creating what's your bigger concern there both it is it is programs the SBA laid off 20% of their laid off they fired 20% of their Workforce um the uh the the the other programs have been cut that indirectly and directly benefit small business uh we've seen Farmers um you know because of the um uh the usaid cuts um you know hurting and uh so that's because the USA Aid was buying um crops from Farmers to supply around the world and those crops are no longer being bought correct and the econom is interconnected so um and the tariffs uh the tariffs are um we're hearing we're hearing from uh small business owners that the tariffs are a disaster even before he actually took action on the tff um polling we did show that um 53% of businesses felt that the tariffs increased tariffs are going to hurt their business and 77% said it was going to hurt the economy we're back in the field with some more polling now I'm sure those numbers are going to be higher so it's all the piece U Tom Freedman had had a piece that said that the economy is interconnected uh we have a a business owner who manufactures in domestically manufactures um keyboards and and computer mouses uh waterprof and he hey has to import a lot of his materials but then he exports so he's going to get hit both ways he's got to pay increased tariffs on the stuff that's coming in but then when he exports he is going to have to um there's no doubt going to be a trade war and he's going to have to pay that uh and he's actually thinking believe can you believe this moving his um production offshore simply because of that the whole point of the Tariff supposedly is to increase domestic production you're saying he would actually go somewhere else to to build he is on a business trip as we speak uh exploring options in other countries wow you've had an interesting experience of late you had the opportunity to take business owners to Capitol Hill and talk to both Democrats and Republicans and get their sense of what's Happening H how did that go uh it was earlier this week and uh it was a really good experience we had um we had over 30 business owners um we had meetings 62 meetings with staff and members and it was really very uh enlightening uh to hear directly from the business owners who are out there uh Across America U dealing with this and hearing them tell their stories first of all they are Echo what I said they are very concerned about the chaos they are very concerned about the uncertainty and some of them are uh directly impacted we have one business owner who's a government contractor who who lost 70% of her business overnight this is somebody who spent 20 years building this incredible business and just gone now that's an extreme case but all the business owners say they're being impacted by this and so having them be able to tell their stories about what's going on and we also talked about um we all we also talked about other issues and they talked about how they're being impacted by the tariffs being impacted by fears of mass deportations actual mass deportations and fierce of mass deportations and of course we talked about um the um upcoming tax debate and uh and I can get into a little more detail on that so we we covered the gamut of of issues uh and um it was just really interesting to hear their voices and uh the reaction was you know across both Democrats and Republicans really listened really um really understood um you know said they understood what they were saying um I think right now certainly the Republicans are not prepared to sort of break ranks with with the White House um but I could tell that they were listening and taking it all in by reading their faces uh or actual comments what both I mean the questions they asked and they you know they gen had followup questions and tell me more and I'm interested to hear uh and um you know I hear you I mean you know I some were they gaslighting us I don't know um I I think that they um you know they they were interested to hear what what small businesses are feeling out there they're they're hearing from a lot of constituents and um the opportunity to have small businesses uh collectively speak to them I and tell their stories I think was was important the Democrats too the Democrats wanted to hear the stories as well they need to kind of understand um and be able to articulate uh in anything they're doing uh be able to articulate what's what's being felt by small business owners as well the House Republicans did move forward with a um the start of a budget Bill process uh which makes the discussion of what's going to happen to the Trump taxes from 2017 uh suddenly uh quite relevant you you just referred to to the taxes tell me what your thinking is there well it was a framework as we know uh reconciliation so-called reconciliation framework and so they didn't have to make the tough calls on any individual program uh they didn't actually have to decide what the tax law was going to look like so again given where the Republican majority is now and trying to stay consistent with the White House wasn't entirely surprised that they passed it I think when it comes down to Brass tax even in the house uh which can do this with 50 um well they can do it in the Senate with 50% as well but um I think that there is going to be a lot tougher negotiations when we get uh when we get um down to Brass tax and they have to decide you're going to cut medic uh are we really going to extend tax cuts that are going to be very expensive and quite frankly um benefit the the wealthiest Americans so um we we we'll see uh we'll see but it's uh yeah right now they're kind of in lock step your organization has a slightly unusual position I think on the taxes one of the key points that people are waiting to see what happens with is the 20% pass through deduction that small businesses get a lot of small business uh organizations are really focusing on making sure that that is one of the taxes that is maintained you're suggesting something different well the reality is that the 199a pass through tax provision benefits those who are making you know large sums of money uh as as pass through entities of 73% of the financial benefit goes to 4% of the large just pass through entities so our point is if you want to have and and we agree if you want to have a tax provision that is there to benefit small business you need to write it in such a way that it actually benefits the majority of small businesses and those are the ones with who are smaller and not only will it benefit them with greater dollars they're going to feel that benefit as a percentage of their financials much more than a bigger business so if the goal is to provide supports a small business you want to do it in a way that's going to have the biggest impact on the largest number of businesses and that's not the way the law is now we're proposing and this is just a starting point a $25,000 automatic deduction standard deduction if you will the first $25,000 of of income and obviously if you're have a small net profit you're going that's going to be a huge benefit for you and anyone if you do the math any business with a net profit under $125,000 is going to benefit and that is a vast majority of businesses that figure you gave of 73% of the benefit of the current uh pass through tax deduction going to the top 4% I'm wasn't aware of those numbers and I bet most even business owners are not I think if if that word got out I think it would have an impact on this debate if you look at the at the figures you look at the the statistics is you know you can see that they they publish the tax policy Center publishes numbers shows the percent the dollar percentage benefit by tax category you take the top two tax brackets it's actually to be fair 4.5% of businesses and you add the numbers up it's 73% of the total it's it's just straight math interesting I don't think many people realize that you mentioned healthc care and I think specifically um Medicaid that's not typically thought of as a small business issue um but but it is in reality correct yeah over 7 million small business employees get are on Medicaid 7 million and we looked at numbers of Medicaid coverage after the ad Medicaid was expanded and not only is it employees but 1.5 one excuse me 1.3 3 million more owners and and self-employed people were on Medicaid as a result of that so there is a absolute impact of Medicaid on uh on small businesses both both owners and um employees do you have any sense of what would happen if that went away we just increasing tremendous pressure on the whole small business ecosystem similarly the uh premium tax credits in the ACA uh are have benefited um small businesses and that's going to be disaster if they go away over half of the participants in the ACA marketplaces are small business owners employees and self-employed so all of these Provisions impact small business owners and employees and self-employed tremendously you mentioned early on uh in talking about programs getting cut I think you said 20% of uh employees at the SBA have been fired you know there's there's always fat uh in any government program there are always savings to to be had it's so hard to know the SBA is a is a big agency do you have any sense of what losing 20% of their employees means well first of all there's no data or report out there that somehow they have a bloated Workforce that is you know creating problems for the for the programs that they that they provide so I mean I don't know where they're getting the data from I mean any any business owner will tell you the way to first of all if there is a cost issue and we don't know that the worst thing you can do is just blanket um Hatchet job with with a meat cleaver I mean it it makes no sense just say announce one day oh all provisional employees are going to go I mean that's not a sensible way to look at it if there were a concern of of some kind of uh of bloat or some kind of um inefficiency well spend the time to take a look at it and and analyze it we we certainly never heard that in all the years we've worked with the SBA under both Democratic and Republican administrations um so I don't understand you know no business owner would take that approach to their business and it just seems to be um for show and with no connection to reality do you especially from your talks on the hill did you get a sense of what their ultimate goal is here is there a movement of foot to just get rid of the SBA we certainly heard nothing that specific but if you look at what they're doing across the entire executive branch anything's possible so I I mean I don't I don't know what to say me small business is a constituency that is is it's the most uh respected constituency in the entire country uh even higher than the military uh and it's you know it would seem insane to a Meek cever a further Meek cever to an agency that's benefiting a constituency like that but I have to say looking at what's going on it you we have we have to be prepared for any possibility so we've we've established a rapid response Coalition initially focused on the um on the potential cuts and making sure we're ready with stories of small business owners and all the organizations um business support organizations um Mission driven lenders like cdfis that can speak to um the benefits on the ground for um small businesses and we're putting together a coalition to be ready to deal with anything like that that might happen similarly there's $5 billion in state small business credit initiative funding that's managed by the treasury that's been fully obligated to the states and that is sitting in an account because you can't transfer that money until pre 80% of the previous money has been spent who knows it's sitting in an account in Washington anything's possible so we need to be prepared to push back with the voices of small business the voices of the organizations on the ground that support those small businesses organization including local Chambers organizations that actually have ties to members of Congress that are friendly with members of Congress Republican and Democrat so um that's what we're doing because we just don't know at this point we feel it's our job to be ready because we see what's happening and uh we don't know what's going to happen you're s obviously right when you talk about the esteem in which small business owners are held um everybody knows they're the backbone of the economy and politicians will tell you that ad nauseum at least before an election um but it's interesting with the SBA because you know again talking to business owners I I talked to a lot of business owners who really don't have any idea what the SBA does and aren't sure whether it should really exist or not do you hear that I don't know why they aren't aware of it it's probably because they haven't needed it the SBA was set up in 1953 to provide guarantees on loans that perhaps would be more difficult to finance in the open market if you're a business owner who has no problem getting Credit in the open market uh then you probably don't need the SBA but the SBA has had how many years is that over 70 years of providing that back stop for loans where that might not get approved without that guarantee and that is a very important part of the market and you so it's it's hard enough to get capital and the SBA plays a vital role in expanding that the FBA also funds business support organizations out there the um small business um uh SVD uh development councils the women's business centers um that provide support to small businesses and advice so yeah there may be some small business owners feel they need it but there are plenty of business owners who do so to kind of summarize and wrap up here you see a disaster unfolding and you said that you're preparing to um to have business owners ready and your organization ready to mount opposition and provide voice to the concerns it what triggers that at what point and what chance do you think that has of actually having an impact well we always are building support from small business owners listening to them bringing them to Washington and state capitals by we were active in in um many states uh so we're already doing that so it wasn't like we're starting from scratch to find out what's business own thinking and and how they might um join with us to to advocate for themselves sure but yeah I I pretty pretty soon into the administration it became pretty clear that um this was at a a tsunami level that we had an anticip I at and um so we decided we really needed to step step that effort up and turn it into a u Raper response Coalition if somebody listening to this wants to get involved and add their voice to what you're doing where should they go um smallbusiness majority.org it's our website and if they're looking for business resources we have a business resource site called ventu eyes.org but if they're looking to um to join us in any work we're doing um advocacy work we're doing they should they should go to small business majority.org what form might that take uh if they if they want to join in the advocacy well it it all depends I mean we first love to hear from them I mean that's a large part of our Outreach efforts with businesses are are something to listen to them address their needs um if they need resources uh we we you know we help provide that to them but if they're interested in if they're interested in sharing their the their input fine if they're interested in in helping joining us to take action that's fine too um that involves um you know letters uh talking to the media uh petitions maybe um it involves uh you know speaking getting in touch with their with their state and and federal legislators so we we can help them uh and get them involved in any way they want to be involved um and so you know there's no set way uh we have a sort of a range of ways that bus business owners uh work with us we got have National and state business councils uh we've got um Regular groups that get together uh and so we're U you know and now we've got this sort of consolidating this into this U into this uh um R response Coalition which by the way we're going to use that model to get ready to respond to other issues as well but did I miss anything John anything you'd like to call to our attention no I think we've covered everything I don't think we talked about uh or maybe we did about the immigration the deportations but not this time we didn't they really quickly I mean that is a tremendous concern to businesses uh because there you know there are a lot of first of all uh the reality is that it's a mix of of of immigrants some documented some not but a lot of the documented a lot of the immigrants who working legally are being impacted by this whole programs are being shut down and the whole um uh many businesses is a huge part of of their economy and their supply chains economy and it's again just creating incredible chaos disaster and uncertainty and as we all know the worst thing for business is that level of of uncertainty and and Chaos it's very difficult it's hard enough to run a business under normal circumstances so this is just making it much worse and disrupting uh a a very valuable Workforce uh is not making it any better John aens me is founder and CEO of small business majority thanks for taking the time John I appreciate appreciate it thank you Lauren I'm sure we'll be talking a lot more in uh the months ahead have a great week everybody [Music]