With economy slowing, investing in entrepreneurs is most important

As I travel throughout Maine and listen to constituents, it is clear that with a housing market in crisis, a job market in decline and energy prices surging, the economy is the primary domestic issue facing our nation.

While these challenging times are compelling us to explore new approaches to reinvigorate the economy, my experience as ranking member and former chair of the Senate Committee on Small Business Entrepreneurship has led me to conclude that we must not lose sight of the critical role small businesses will undoubtedly play in a recovery.

Moreover, National Small Business Week, which we are currently celebrating, provides us with a tremendous opportunity to consider additional ways we can assist small businesses to hasten our return to prosperity.

When many Americans hear the word ‘business,’ they conjure images of corporate towers housing thousands of workers. Yet it is small enterprises, which represent 99.7 percent of all employer firms nationwide, that truly drives our economy and creates new opportunities.

Consider that in December 2007, the Small Business Administration’s Office of Advocacy reported that small enterprises accounted for all of our nation’s net new jobs in 2004, the most recent year for which firm data was available. In fact, while small firms gained a 1.86 million net new jobs in 2004, large firms with 500 or more employees actually experienced a net loss of 181,000 jobs. At a time when jobs are leaving and businesses are closing, can we really afford not to invest in our nation’s small businesses?

Regrettably, the answer, while obvious to any of the 232,000 people who lost their job in the past three months, isn’t always evident to folks on Capitol Hill. That is why I have recently championed a number of measures that will help small businesses do what they do best – innovate and create jobs. Investing in our nation’s small businesses is a direct and responsible step we can take to reverse the current economic downturn that’s creating numerous hardships for employers and workers throughout the country.

In February, President Bush signed the Economic Stimulus Act of 2008 with a provision I helped draft to nearly double the amount of new investment small businesses can “expense” on their tax forms, instead of depreciate, over numerous years to $250,000. I personally reached out to Treasury Secretary Henry Paulson to gain the administration’s support for this incentive, which will help drive new purchases of equipment and machinery and, thereby, generate thousands of jobs.

Meanwhile, earlier this month, the Senate approved the Foreclosure Prevention Act of 2008, which included a proposal I have long championed to increase the net operating loss carryback period to four years from the present two. I encourage my counterparts in the House of Representatives to pass this provision, so it can enable small and large businesses alike to offset losses incurred this year against profits from previous years and, in so doing, obtain an immediate tax refund they can use to sustain operations and preserve jobs.

Small businesses are not only the engines that drive our economy, they truly constitute its backbone, generating more than half of our non-farm private Gross Domestic Product. And, at a time when small businesses are facing an ever-tightening credit market and questionable employment outlook, it is most critical we use every tool at our disposal to robustly invest in America’s entrepreneurs.

That is why we must also provide the SBA with additional resources to augment its considerable arsenal of capital access and entrepreneurial development programs. Yet, this year, the administration proposed an inadequate budget that would stall whatever progress the SBA could accomplish in helping small businesses stimulate our economy.

Therefore, earlier this month, I along with Small Business Committee Chairman Sen. John Kerry, D-Mass., called on congressional leaders to provide $101 million above the President’s request for the SBA. Given the economy is our most urgent domestic issue, it makes no sense to underfund one of our most successful catalysts for prosperity.

President Bush and Congress must work in a bipartisan, collaborative manner to address vital economic concerns for hardworking Americans. The slowing economy is having a real impact on Maine’s lower and middle-income families. It is imperative we take every opportunity to use this week to celebrate the considerable achievements small businesses have made. At the same time, our focus must remain on what small firms can create moving forward.

If we invest in America’s small enterprises, we will invest in a more prosperous America.

We cannot afford to wait.

Sen. Olympia J. Snowe, R-Maine, is the ranking member of the Senate Committee on Small Business and Entrepreneurship.