Economy needs more than tax cut extension-SBA economist

By Harriet McLeod

COLUMBIA, South Carolina (BestGrowthStock) – The lead economist at the U.S. Small Business Administration said on Thursday that the U.S. economy needs a bigger bounce than it will get from the compromise tax cuts extension legislation now being considered by Congress.

“Economists are predicting this will lower unemployment 1/2 percent. If unemployment comes down a half a percent, is that a bounce? That’s a little bounce. We really need a bounce that will put 10 million people back to work,” Zoltan Acs of the SBA Office of Advocacy said in an interview on Thursday.

He was in South Carolina to speak to the 30th Annual Economic Outlook Conference at University of South Carolina’s Darla Moore School of Business, on the subject of job creation and the Great Recession, “a dangerously hot topic,” he said.

Half of Americans work for small businesses, defined by the SBA as those with fewer than 500 employees. There are 5 million such businesses in the country, he said, against about 18,000 businesses with more than 500 employees.

“Small businesses create, surprisingly, more than their share of jobs. All firms started off small,” Acs said.

“But if you have 17 million people unemployed for two years, the impact on families is huge. It’s the only issue. Everyone is trying to figure out how to get the economy to bounce back.”

The $40 billion jobs bill that passed Congress in late September has helped get money to community development banks, he said.

“Those loans are making a difference. They’re going to businesses that really needed money and those businesses are hiring people. The problem is it’s too small. We have a $14 trillion economy, Acs said, adding that U.S. banks are still carrying significant bad real estate loans.

“So there are billions and billions of dollars of unperforming loans still on the balance sheets … The first place a bank will stop lending to is small firms.”

The two fields with greatest growth potential for small and large companies are nano-technology and materials technology, but businesses would have be created at a breakneck pace to move unemployment numbers downward, said Acs, who is also director of the Center for Entrepreneurship and Public Policy at George Mason University in Virginia.

Americans who want a quick economic fix are “like a 5-year-old,” he said. “You have to tell them you can have this, you can’t have that. I think in the great middle we have woken up to this. If you look at the political fringes, no.”

Short-term fixes that would help create jobs and boost the economy, he said, are reduced payroll taxes on employers, and reduced FICA payments to “baby boomers” over a certain age who are self-employed or under-employed.

“They’ve paid their share,” Acs said.

(Editing by Jerry Norton)

Economy needs more than tax cut extension-SBA economist