Small businesses getting 'hurt the most' from Biden's economy: Joe Germanotta
Joanne Trattoria owner and Lady Gaga's father Joe Germanotta talks the economy and inflation, NYC crime and the state of small business in a wide-ranging interview on 'Mornings with Maria.'
The nation recently marked "Small Business Week," which has historically been a time to honor our nation’s entrepreneurs. Yet the regulatory assault from the Biden administration has hardly been a cause for celebration.
Having survived COVID-19, inflation, rising costs of energy, and widespread labor shortages, employers are facing increasing headwinds from their own federal government. In an economy where regulatory certainty is key to growth, the Biden administration has brought anything but. Consider three events from the last few weeks alone:
First, the administration continued deflecting responsibility for lingering inflation onto private companies with their obsession over so-called "junk fees," which are service charges imposed by private companies that the Biden administration deems to be unfair.
President Biden departs the White House on April 30, 2024, for a campaign event in Delaware. (Kevin Dietsch/Getty Images)
Sure, no one likes paying unexpected costs, but consumers also are free to shop around on different platforms or apps. Furthermore, the administration is applying an overly broad, one-size-fits-all mentality rather than specifically targeting certain industries. They’re deploying a sledgehammer for a situation that calls for a scalpel.
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The administration is barely bothering to hide the political motivation. Bharat Ramamurti, former deputy National Economic Council director, admitted that, "junk fees, out of 180 things they polled, was in the top three most popular actions."
Second, the Federal Trade Commission (FTC) issued a blanket rule banning non-compete agreements. Framed by FTC Chair Lina Khan and her followers as evil contracts that prevent workers from switching jobs in search of better employment opportunities, the reality is more complex.
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Non-competes are an essential tool to prevent corporate espionage and ensure that competition is fair, which is ironically a tent pole of the FTC mission statement too often ignored by Khan in pursuit of her ideological crusade. Non-competes also allow businesses to protect their intellectual property and invest in the training of their employees.
It’s no wonder the FTC’s unilateral ban already faces legal challenges and an uncertain future.
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Finally, Biden has promised to let the Trump-era tax cuts, due to sunset at the end of next year, expire. In other words, he will raise taxes on almost everyone, not just the "wealthy and biggest corporations." According to the Tax Foundation, the 2017 Tax Cuts and Jobs Act (TCJA) cut taxes across the board, including those at the bottom half of the tax bracket.
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The law not only lowered the marginal tax rates and widened tax brackets, but also expanded credits aimed at families, including the standard deduction and child tax credit -- both of which nearly doubled.
Also, the TCJA included the small business deduction in Section 199A, which allows these taxpayers to deduct up to 20% of their qualified business income.
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By lowering their tax burden, the tax law has given small businesses the relief and flexibility to expand, pay higher wages or financially prepare for the unknown.
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Meanwhile, the economic warning signs are blinking red. Gross domestic product missed the mark by a wide margin in the first quarter. Instead of the 2.4% increase anticipated by economists, GDP growth came in at only 1.6%.
A Commerce Department report showed that inflation in the first quarter, as measured by the personal consumption expenditures index, rose by 3.7%. The dreaded "stagflation" discussion has begun.
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The political numbers aren’t much better for Biden. A poll from CNN found 70% of Americans believe economic conditions are poor. The president’s approval ratings for the economy (34%) and inflation (29%) are underwater. Biden trails Trump by the largest margin of the race at the national level.
Good policy leads to good politics. It’s a lesson the Biden administration would be wise to heed. Unfortunately, from junk fees to non-competes to tax hikes, their recent actions do not offer much in the way of hope on either front, especially for small businesses.
