The term "small business" was uttered a total of 27 times in 90 minutes by President Obama and Governor Romney on stage in Denver Wednesday night, prompting headlines such as "Small business front and center in the presidential debate" in the Washington Post and a Bloomberg editorial that proclaimed small business the biggest winner of the debate.
But for all their references to small business, did the candidates address the real concerns of small business owners, or just play to them with sound bites?
Before the debate, we asked six leaders of small business and entrepreneurship advocacy organizations what questions they'd most like to hear answered. Post-debate, we've reviewed the transcript to determine whether the candidates delivered. For the most part, they did not.
Two small business leaders—Small Business Majority founder John Arensmeyer and Young Entrepreneur Council cofounder Ryan Paugh—hoped the candidates would specifically address how they would improve access to capital for small businesses. The subject did not come up at all during the debate.
Two others—National Association for the Self-Employed CEO Kristie Arslan and Empact cofounder Michael Simmons—wondered how each candidate would "encourage self-employment" (Arslan) and "infuse the entrepreneurial mindset into the fabric of society" (Simmons). They were likely disappointed by what they heard too. The fifth point of a five-point plan Governor Romney summed up was to "champion small business," but he did not say how. The word "entrepreneur" was never mentioned, nor was any reference to innovation, outside of Romney's remarks that, as a consultant, he was "astonished at the creativity and innovation that exists in the American people," and that "we look for discovery and innovation ... to provide the pursuit of happiness for our citizens."
Both candidates said they would support job training as a way to bolster employment, with Romney advocating for moving money spent on 47 existing federal job training programs to the states, but neither suggested training or support for entrepreneurs or the self-employed.
SCORE CEO Kenneth Yancey was looking to each candidate to describe three specific actions to ensure small business sector growth. Both came up short, with two, not three actions. But their explanations for how they'd support small businesses through the tax code provided the only complete answer to another small business advocate's question: Dan Danner, CEO of the National Federation of Independent Businesses, had asked, "How will raising the top income tax rate impact job creation, given that so many employers are organized as pass-through entities and pay taxes at the individual rates?"
"Governor Romney and I do share a deep interest in encouraging small-business growth," the President said. He and Romney both suggested that implementing tax cuts and reducing healthcare costs are the way to do it, although, of course, they proposed different approaches.
President Obama referred to the 18 tax cuts he claims he has already made for small business and said, "I think it's important ... that we change our tax code to make sure that we're helping small businesses and companies that are investing here in the United States ..." Under his plan, Obama said 97 percent of small businesses would not see their income taxes go up. He added, however, that for incomes over $250,000 a year, "we should go back to the rates that we had when Bill Clinton was president, when we created 23 million new jobs, went from deficit to surplus, and created a whole lot of millionaires to boot."
Governor Romney said he would reduce tax rates across the board while also lowering deductions, exemptions, credits "so we keep getting the revenue we need." The reason to cut taxes despite the need to stem the federal deficit, he said, "is because small business pays that individual rate; 54 percent of America's workers work in businesses that are taxed not at the corporate tax rate, but at the individual tax rate." Romney argued that allowing a tax rate hike from 35 percent to 40 percent for incomes over $250,000 would "kill 700,000 jobs"—data he attributed to Danner's organization.
The candidates' positions on health care costs were already well known, but reducing those was the second measure each described for encouraging small business growth.
The President argued that his Affordable Care Act is designed to help small business, and suggested that, when it is fully implemented, "we're going to be in a position to show that costs are going down." He acknowledged that "over the last two years, health care premiums have gone up," but said "they've gone up slower than any time in the last 50 years."
Romney said he would repeal the Affordable Care Act. "The number of small businesses I've gone to that are saying they're dropping insurance because they can't afford it, the cost of health care is just prohibitive," Romney said. Citing a study that says 30 percent of American businesses anticipate dropping people from coverage, Romney argued that Obamacare has already killed jobs, and that three-fourths of small businesses across the country are less likely to hire due to the effect of the legislation.
Last but not least among the questions small business advocates we spoke to had for the candidates, NASE CEO Arslan hoped the candidates would define what they believe a small business is, and what characteristics define a successful business venture. The debate discourse touched on the subject, but hardly offered clarity. President Obama said he and Governor Romney "do have a difference" over small business definitions. Under Governor Romney's definition, the President said, "there are a whole bunch of millionaires and billionaires who are small businesses." But Romney argued that it's not just wealthy people like Donald Trump who would see their taxes increase under the President's plans, but "all those businesses that employ one-quarter of the workers in America ... that are taxed as individuals."