Noted Economist Holtz-Eakin: New Taxes Will Hurt Small Businesses

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Economist Douglas Holtz-Eakin, a former director of the Congressional Budget Office and the president of The American Action Forum, a Washington policy institute dedicated to keeping America strong, warned technology solution providers two years ago at Everything Channel's XChange conference that the government stimulus response to the economic crises missed the mark.

In an interview with CRN Monday regarding the debt ceiling gridlock in Washington, Holtz-Eakin said if elected officials try to tax their way out of the deficit crises, small businesses will be in "big trouble." Below are excerpts from the interview with Holtz-Eakin.

Two years ago you predicted the government response to the economic crises was inadequate. What impact is the debt ceiling gridlock in Washington having on technology solution providers and small businesses?

Getting through the debt limit increase (without market disruption) is dealing with the symptom of the problem. If you get market disruption, small businesses lose. We saw that in 2008.

The question is: how do you address the real problem which is the fact that we have projected so much debt in our future. If the solution is that we are going to tax our way out of it, small businesses are in big trouble.

They (small businesses) just really have to keep their eye on the degree to which (Washington) is willing to address the spending problem. The greater the willingness to address it the better it will be for small businesses.

What is your business advice for technology solution providers trying to maintain their own businesses in the midst of the debt ceiling talks.

I think we saw a fairly important moment today when both the House and Senate came out with alternative plans that had no new revenue. That is a start. The question is: will that stick going forward? That is what they have to keep their eye on.

Next: What Needs To Be Done To End The Economic Crisis 

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