Business lobbyists...who needs 'em?

The politifact.com number #4 Lie of 2010, from my previous post, got me thinking about the anti-business sentiment talking points that are still in play.

At the end of September, Forbes magazine ran an article entitled “Obama’s Problem With Business”. The problem with the problem is that it’s not a real problem. Dinesh D’Souza’s ridiculous assertion that Obama is exercising something he calls anti-colonialism is baseless. I read the article which prompted my to read Obama’s book “Dreams From My Father” which D’Souza cites as the root cause of Obama’s socialist world view. To say that it’s absolute nonsense would be a compliment.

The same day that idiotic hit piece ran in Forbes, the president signed the Small Business Jobs Act. The bill included a series of proposals that small businesses started benefiting from on day one. Among the many provisions in the bill, twelve of the top benefits to small businesses are:

• Extension of Successful SBA Recovery Loan Provisions —Immediately Supporting Loans to Over 1,400 Small Businesses

• A More Than Doubling of the Maximum Loan Size for The Largest SBA Programs

• A New $30 Billion Small Business Lending Fund

• An Initiative to Strengthen Innovative State Small Business Programs – Supporting Over $15 Billion in Lending

• Eight New Small Business Tax Cuts

• Zero Taxes on Capital Gains from Key Small Business Investments

• Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments

• Extension of 50% Bonus Depreciation

• A New Deduction of Health Insurance Costs for Self-Employed

• Tax Relief and Simplification for Cell Phone Deductions

• An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses

• A Five-Year Carryback Of General Business Credits

• Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business

It’s difficult to see anti-business written across those bullet points. In addition to the legislative improvements for small business, large businesses are not suffering at all. Quite the contrary.

According to a Commerce Department report released in mid-November, American businesses earned profits at an annual rate of almost $1.7 trillion in the third quarter of 2010. In noninflation-adjusted terms, that’s the highest figure recorded since the government began keeping track over 60 years ago.

The Dow, below 8,000 on the day President Obama was inaugurated, is now hovering around the 11,500 mark. In a rational universe, American business would be very happy with Mr. Obama. However, fear-messaging has shown to be a powerful opponent to rational thought.

The irrational buzz is that Obama is “anti business”. There are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery. There is no truth to these claims.

Anti business fear-mongers will tell you that business spending on plants and equipment is at its lowest level, as a share of G.D.P., in 40 years, but what they don’t mention is that business investment ALWAYS falls sharply when the economy is depressed.

Think about it – rationally. Why would any business expand production capacity when they’re not selling enough to use the capacity they already have?

It’s surprising how well business investments are doing, given the low rate of investment. Capacity utilization in industry is up over the past year, but still far below historical norms. Vacancy rates at industrial and retail properties are at historic highs. Businesses have plenty of idle structures and machines, why should they be building or buying even more?

Where’s the evidence that an anti business climate is depressing spending? The answer, supposedly, is that this is what you hear when you talk to entrepreneurs. But don’t believe it. When business people talk to the press they complain about taxes, regulations and the deficit; they always do.

But the cries that Obama is wrecking the economy aren’t coming from businesses; they’re coming from business lobbyists. Check out the Washington Monthly report on the U.S. Chamber of Commerce in the latest Washington Monthly. The Chamber is peddling scare stories about what Democrats are up to.

Reading through the latest survey of small business trends by groups like the National Federation for Independent Business, you find commentary that is largely a diatribe against government — “Washington is applying leeches and performing blood-letting as a cure”. One might imagine this diatribe reflects what the surveyed businesses said. But while a few businesses declared that the political climate was deterring expansion, they were vastly outnumbered by those citing a poor economy.

It turns out that business is less concerned about taxes and regulation than during the 1990s, an era of booming investment. Concerns about poor sales, on the other hand, have surged. The weak economy, not fear about government actions, is what’s holding investment down.

So why are we hearing so much about the alleged harm being inflicted by an anti business climate? For the most part it’s the same old, same old: lobbyists trying to bully Washington into cutting taxes and dismantling regulations, while extracting bigger fees from their clients along the way.