Like it or not, the federal government is and will continue to play a bigger role in business decisions for the foreseeable future. I'm not going to try to debate the pros and cons of what has been done to date or whether or the government should be doing anything at all. But if the government is going to put its nose in the tent, there are some things it should do.
First off, it needs to think small. By that I mean, "think small business." Far too much of what the federal government has done has been centered on bailing out big business. Trouble is, big business has lots of money, is well organized and can buy lots of lobbyists. Small business is, of course, unorganized, naturally fragmented and has no real political clout, given that the little lobbying it does is through associations that have to represent large numbers of smaller organizations with varying interests. So small business gets little attention.
In order to think small, the feds need to think about what they can do to help businesses generate sales, which ultimately leads to jobs, which in turn leads to growth in the economy, which will lead to more tax revenue.
So rather than a government spending spree, the feds should produce the kind of legislation that spurs private spending. It seems to me that if there was some type of tax relief for infrastructure spending by business and perhaps even by individuals then we would see more business activity.
So, for instance, if a business were to receive tax credits or tax deductions on infrastructure spending, be it in the form of technology or otherwise, we would certainly see a greater willingness to spend on improving technology and other infrastructure. I would suggest there should be a larger benefit given to businesses below a certain threshold to help out smaller companies that as a category historically provide the majority of new jobs.
The government should also provide a tax credit or deduction for homeowners who improve their property, and this should not be based on income. Anyone hiring a contractor to improve a home is stimulating the economy and ultimately creating jobs and disposable income by those job holders.
There also should be a lowering of the payroll tax, which in and of itself would make it easier for businesses to justify new hiring.
It's clear that the current stimulus program has done little to generate new jobs. Let's not forget we were told the $750 billion in stimulus funding would keep the unemployment rate in the 8 percent range.
If we are going to stimulate jobs, which is what will lead to real GDP growth, something has to be done to spur small-business investment. Otherwise we are going to have a marginally better year in 2010 than we all did in 2009--and that just isn't going to feel very good.