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As the national political races heat up in preparation for 2004, Washington has become more divided than ever over the state of small business and the best ways for government to help entrepreneurs. Some politicians advocate more tax cuts; others say the tax cuts already enacted should be repealed. Some promote more regulation; others advocate drastic slashing of regulation. And debate rages on many other topics as well.
To explore the debates brewing in Washington, Entrepreneur this month introduces an occasional column, "Point/Counterpoint," which will pose a hot business issue to two panelists. Congresswoman Nydia Velazquez, a Democrat representing New York's 12th District, is the ranking minority member on the House Small Business Committee. Congressman Rick Renzi, a Republican who represents Arizona's 1st District, founded three small businesses before entering Congress and takes a major interest in issues affecting entrepreneurs. The two don't agree on very much politically. But they share one characteristic: They both care about small business and don't back away from concerns relevant to entrepreneurs.
How would you characterize the current
economic condition of small businesses?
Rep. Rick Renzi: I believe the economy in America is beginning to upsurge a bit, and a lot of it has to do with safety. Because the Justice Department and this administration have done such a great job in making sure America hasn't suffered any more catastrophic attacks, it has helped the tourism industry. The Grand Canyon had not seen an upsurge in visitation in the past five years. Then, in June, July and August, visitation rose each month.
Rep. Nydia Velazquez: Sure, if you ask the Bush administration, they'll say recovery is here. But if you talk to small businesses, they'll paint a different picture. There is a perception in small businesses, especially manufacturers, that the economy is not doing well, and, therefore, the climate isn't there for them to invest in new equipment or hire new employees.
What, if anything, do you think the
federal government should do to assist small businesses in this
Velazquez: Last year, when President Bush released his economic agenda, he included targeted tax relief for small businesses: depreciation [of capital spending]. What we need are permanent measures-the measures passed last year [will] sunset in 2005. The president had an opportunity [to make them permanent] in his recent tax cut, but he didn't. Now we have a huge budget deficit. They will have to revisit the tax cut they passed.
Renzi: I agree that small businesses particularly like the idea that in the president's tax-cut package you can write off capital spending. There are many of us in the House who are saying that in 2005 we're going to increase the depreciation amount.
Many experts argue that government regulations are hampering small business and, by extension, the economy. What should government do about this?
Velazquez: The federal government needs to open the door so more small businesses can compete for federal contracting dollars. The president needs to send a more forceful message to the federal government that small businesses can compete for contracts. The Office of Management and Budget should have the authority to make federal agencies unbundle contracts.
And the Small Business Administration needs more manpower. If they don't have the necessary manpower, they can't do the job they are supposed to do.
Renzi: It's not just manpower. There are lessons for the SBA to be learned from the private sector. You can go online as a first-time homebuyer and get a mortgage on the Internet, but it takes six months to get SBA loan paperwork through the system. We need to look at public-private partnerships where SBA loan programs are operated by private firms.
Joshua Kurlantzick is a writer in Washington, D.C.