Joe Biden Earns F Grade from Small Businesses

If the election were held today, Donald Trump would win the presidency. Most polls show the former president leading Joe Biden in nearly all of the swing states that decided the last election.

Undecided voters may swing Biden’s way come November. But one group is decidedly against pulling the lever for Biden — small business owners (SBOs).

The Job Creators Network (JCN) polled more than 400 small business employers on a range of topics, including how they grade the president’s performance. Talk about tough graders: A whopping 37% gave Biden an F. Just 9% of SBOs gave the commander-in-chief an A. The rest of the group: B (16%), C (18%) and D (16%).

SBOs are decidedly worried about the overall economy — 46% say the economy is getting worse compared to 27% who think it’s improving. And about a third of respondents pinpoint crime in their local areas as hurting profitability and making it harder to keep costs down.

“The need for increased spending on security, lost product due to shoplifting and a drop in customer foot traffic are reasons why,” says the JCN. “A majority of respondents blame homelessness and drug addiction for the uptick.” Fewer blame the rise in crime on the surge in illegal aliens coming across the border since Biden took office, estimated at anywhere from 6 to 9 million people.

Biden Tax Move Would Hurt Small Businesses

Some Republican lawmakers now admit they should’ve made lower tax rates permanent under the 2017 Tax Cuts and Jobs Act (TCJA). Generous tax cuts to multi-national corporations in the TCJA ticked off most Democrat and some Republican voters. Failing to cut government spending in any area to pay for the tax cuts helped Democrats turn out their base and recapture the House in 2018.

One significant plank in the TCJA did prove popular — lowering the tax burden for middle- and working-class Americans. For some reason, Biden and his team think it’s a good idea to let tax rates go up again once the Act expires at the end of 2025.

Individual taxpayers will pay a higher percentage of between 1% to 4% starting in 2026 if Biden wins reelection and follows through on his promise. “[S]mall businesses would face a 20% tax hike, the end of bonus depreciation, and higher tax brackets on their earnings,” warns Alfredo Ortiz, CEO of the JCN.

Biden also plans to tax corporations at a higher rate to reduce the budget deficit. Biden’s plan, announced in April, calls for:

• raising the corporate tax rate from 21% to 28%
• instituting a corporate minimum tax of 21% which would impact multi-national and pharmaceutical companies
• quadrupling the stock buyback tax from 1% to 4%, and
• eliminating corporate tax deductions for $1 million or higher salaries.

The Fed Won’t Throw a Lifeline Anytime Soon

Capital-strapped businesses, including small ones, were counting on multiple reductions in the federal funds target rate in 2024. Now a majority of CEOs (38%) expect the Federal Reserve to cut interest rates just once this year, according to the Conference Board CEO Confidence survey for April.

Fed chairman Jerome Powell says he can’t see the “stag” or the “flation” in the economy. Nor can he clearly see a rate reduction or increase in the near future. “I don’t think [a rate hike is] likely, based on the data that we have,” Powell told a bankers conference in mid-May. “It’s more likely that we’ll be at a place where we hold the [monetary] policy rate where it is.”

Powell and other Fed members hoped to drive inflation down to 2% when they first started raising rates in early 2022. None are (publicly) expressing 2% as a realistic goalpost anymore. Stubborn inflation is making multiple quarter-point rate reductions unlikely in the near future.

SBOs may secure more favorable rates — and more capital — through a Small Business Administration (SBA) loan or grant. The government is taking on greater risk than before, to the benefit of start-up businesses and those with OK credit scores. Among the changes benefitting loan applicants put in place last fall:

• SBA is now the sole decision-maker on loan eligibility
• a 10% equity injection is no longer required for startups seeking a $500K or higher loan, and
• a $500K loan may be secured with a credit score of 155 or higher (300 is perfect).