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WASHINGTON, D.C. - President Barack Obama discussed the economy and the condition of small businesses in his first State of the Union address given to a joint session of Congress Wednesday night. “We cut taxes for small businesses,” he declared early on in his speech.
The President then told Congress that economic growth should be further stimulated by eliminating all capital gains taxes on small business investments, and by providing a tax incentive for all small businesses that invest in new plants and equipment.
Matthew Shay, CEO of the International Franchise Association, thinks tax relief is a good thing for America’s franchises. “We support the President’s call for targeted tax relief for new investment in small businesses,” he declared Thursday morning.
Dawn Sweeney, the CEO of the National Restaurant Association, representing the restaurant and food industries, agrees. He thought the president’s tax proposals as a positive move to help the nation’s restaurants. “We support the President’s call for tax incentives to help spur the economy and generate additional jobs, including the extension of expired provisions that allow businesses an enhanced deduction for expensing and ‘bonus’ depreciation for capital expenditures,” said Sweeney. “This will encourage restaurants to invest and create jobs. A tax credit for new hires will further encourage restaurateurs to hire additional workers.”
President Obama declared that one of the largest problems for small businesses has been accessing loans and capital. “Even though banks on Wall Street are lending again, they're mostly lending to bigger companies,” the President told Congress. “Financing remains difficult for small business owners across the country, even those that are making a profit.”
The President proposed taking $30 billion of the TARP bailout money that Wall Street banks have now paid back to the government and use it to help community banks give small businesses the credit they need to stay afloat. “I'm also proposing a new small business tax credit -– one that will go to over one million small businesses who hire new workers or raise wages,” he said.
The NRA responded that the proposal by the president was an excellent idea. “During these challenging economic times, restaurants – many of which are small businesses – continue to have difficulty securing access to credit,” he replied. “We are encouraged by the President's proposal to allow a portion of unspent TARP money to be used to directly support small business lending. His call for a continued elimination of fees and continued increase in guarantees for SBA loans through 2010 would help restaurant businesses secure access to credit.”
The IFA agrees that such measures will help franchise chains as well. Shay says that franchise businesses have been severely impacted by the lack of access to credit, which was down 40 percent in 2009. He recommends Congress immediately to put the direction that the president wants to go by raising the SBA 7(a) loan program limit from $2 million to $5 million will help to create between 450,000 and 650,000 new jobs.
“Now is the time to put that support into action,” Shay declared.
The President went on to say that there is a great need for health insurance reform to relieve heavy costs to middle-class families. Health care reform “would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market,” he said. “It would require every insurance plan to cover preventive care.”
President Obama observed, “By the time I'm finished speaking tonight, more Americans will have lost their health insurance. Millions will lose it this year. Our deficit will grow. Premiums will go up. Patients will be denied the care they need. Small business owners will continue to drop coverage altogether." He then declared, "I will not walk away from these Americans, and neither should the people in this chamber.”
In a divided Congress, Democrats rose to their feet with applause, while Republicans observed quietly in their seats.
The IFA is less supportive of what it feels are rushed Senate and House bills. “If we are going to seriously consider meaningful healthcare reform and create jobs, cost containment is the place to begin,” said Shay. “It’s time to slow down the process and develop a bill that benefits everyone and avoids catastrophic consequences to our economy.”
Regarding the health care bill, the CEO of the National Restaurant Association stated, “it is essential to the restaurant industry that the protections added to the Senate version of this legislation be included if the Congress enacts any reform.”
The President concluded his State of the Union remarks, “Our administration has had some political setbacks this year, and some of them were deserved. But I wake up every day knowing that they are nothing compared to the setbacks that families all across this country have faced this year. And what keeps me going -– what keeps me fighting -– is that despite all these setbacks, that spirit of determination and optimism, that fundamental decency that has always been at the core of the American people, that lives on. It lives on in the struggling small business owner who wrote to me of his company, "None of us," he said, "…are willing to consider, even slightly, that we might fail."
In regard to health care and economic initiatives, the President ended his speech, “We don't quit. I don't quit.”