FROM THE OFFICE OF PUBLIC AFFAIRS

Thank you so much for having me here today.

Thank you, Hector, for your outstanding leadership at the SBA. You are the country’s top small-business advocate – it’s a pleasure to work with you and I’m proud to call you friend.

Thanks also to the SBA’s Office of Advocacy and its head, Tom Sullivan, for putting together today’s meeting. The future of small-business policy is an area that is critical to our country’s economy and our way of life as Americans, and I appreciate that you have gathered the finest minds available to discuss, predict and develop the issues.

I really want to emphasize, today, the Administration-wide commitment small businesses and entrepreneurship. This meeting is a good example of that commitment, and I’m pleased to say that you’ll find that the phrase “small business” comes up a lot more than it used to in the halls of government.

In federal agencies across this city, small business is no longer an abstract concept, a pet cause, or something that only the SBA deals with. Thanks to the President’s passion and commitment, and an insistence that the enormous economic importance of the small-business sector be recognized, government policies of all kinds are today being developed with small business in mind.

There really has been an awakening in this area. The statistics on small business that are provided to the public by the Office of Advocacy have certainly helped. Thanks to your work, more and more people understand, every day, that most employers are small, that it is small business that creates the vast majority – about 70 percent – of net new jobs, that small businesses are the most innovative, and that they even represent the majority of all exporters.

We have a President who sees those statistics as an illustration of the character of this great country that he already knew. One where individual effort, ingenuity and strength of character is everything. One where freedom produces so many wonderful things. A country where, as DeToqueville aptly observed, what is most astonishing “is not so much the marvelous grandeur of some undertakings as the innumerable multitude of small ones.”

So I believe that we have made progress, in government, in terms of recognizing small business and developing policies that enhance and/or protect the environment in which it thrives.

It is important that we strengthen those policies as we go forward, and be mindful of the evolving needs of small business as we go.

There are a few things that will always remain true and I recommend you make them the basis for any recommendations you make to the public sector:

First, lower taxes will always bet better for small business.

It’s a fundamental truth of economics. Lowering the tax burden allows entrepreneurs to invest more money in the growth of their business, in hiring new employees or developing new products. Taxes that are too high and too complex act as a chokehold on this incredibly dynamic sector.

Second, until we achieve significant reform, the cost of health insurance will weigh heavily on small companies. This is a financial issue of enormous proportions. As you well know, small businesses are the most disadvantaged group in the current health insurance marketplace. They are so often priced out of the market altogether… and when they can afford insurance for themselves and their employees, it becomes a financial arrangement that feels like grabbing a tiger by the tail. Escalating prices threaten to swallow company profits whole, yet not offering health insurance means valued employees may look for a better benefits package elsewhere, working for a larger company.

I know that this issue may seem old, and this conference is about looking toward the future… but we must face the reality that we have talked about small business and health care for many years now, and the situation has not improved. Association Health Plans are a critical first step, but even they have not met approval from both sides of Capitol Hill yet.

The third issue that I have to mention is that of government regulation – both state and federal. Like taxes, this is an area that can quickly choke small-business growth and innovation. You know the statistics… regulatory compliance is far more expensive for small companies than it is for large ones. They’re spending 60 percent more, per employee, to comply with federal regulations alone. No matter what issues emerge in the future, if government is involved we must be extremely cautious, always comply with SBREFA (Small Business Regulatory Enforcement Fairness Act), and never forget the consequences of all potential actions on America’s job creators and innovators.

A final fundamental issue that I want to touch on is one that is not discussed as often as it should be in terms of burdens on small business, and that’s the need to tackle lawsuit abuse.
 
Small-business owners are incredibly vulnerable when it comes to frivolous lawsuits. Lawsuits are filed against employers by employees who drink too much at the company holiday party and injure themselves or others as a result. Customers at a restaurant or store file suits for slipping or bumping into tables – things that used to be called bad luck or clumsiness are today treated like a winning lottery ticket.

Added to the already-great costs of doing business is liability insurance, whose cost grows with every frivolous suit that is filed.

The invention of new products is fraught with peril. Will a new product be used incorrectly and called dangerous? If the system is not changed, what entrepreneurs of the future will be brave enough to bring new products and ideas to market?

The national attitude that made America great is one of “can do.” And today entrepreneurs of all kinds are threatened by a new national attitude of “can sue.”

This problem is a drag on our economy overall, but we’ve got to remind lawmakers of how hard it is on the smallest firms. As you well know, small-business owners can’t afford the legal fees involved with defending themselves against suits that are baseless. As a result, they have become victims of small settlements… knowing that it is cheaper to pay an accuser four or five thousand dollars than it is to pay an attorney what it would take to go to court and have the case thrown out.

This atmosphere is an outrage against the small business community. Like with health care and all these other issues, any future policy proposals for small business must include civil justice reform.

These fundamental issues, along with having access to capital, will always be relevant to the small-business community.

While none of us can predict what the small businesses of the future will look like, what goods and services they will offer, I am confident that international trade is an issue that will be of growing importance, and that if we can maintain a good environment for entrepreneurs and risk-takers that self-employment will become an increasingly popular option for American workers.

In both cases, these future trends come from the fact that we living in a new world, thanks to technology. It’s a smaller world. Your home can be your office, and your computer your passport to a world of information and new markets.

Many people don’t realize that trade is something that small business already engages in, and that there is a desire to increase their import/export activity. In fact, ninety-seven percent of all U.S. exporters are small or medium-sized businesses. Companies with fewer than 20 employees make up nearly 70 percent of all exporting firms.

When you consider that only 5% of the global population lives in the U.S., you realize that 95% of our potential market is outside the U.S.  As a country, we need to stay engaged with the rest of the world, to keep those markets opened to our small businesses.  We have the best workforce in the world, the most innovative businesses, and the most competitive companies. Our small businesses can compete with anybody, given the chance.

That chance comes from open trade policies, more free-trade agreements. And that’s something President Bush believes very strongly in.

Free trade is just like everything else that makes America, and small business, tick. The basis being: freedom itself.

While it seems that government and policy grows increasingly complicated, I think that small business will always want it to be as simple as possible: leave us alone to do what we do best.

If government goes along with that simple request, the rewards will always be great.

Thank you so much for having me here today. Have a wonderful meeting.