Small Biz No Fan of $700B Rescue Plan – Gee, and to hear the Main Stream Media – you might think Small Business couldn’t wait for the Bailout.
Dunstan Prial FOXBusiness
The anger out in America triggered by Washington’s proposal to rescue the U.S. financial system to the tune of $700 billion is palpable — almost visceral.
That’s hardly surprising, given the broad knowledge that the executives in charge of the giant now-faltering financial institutions that stand to benefit most from the bailout make more money in a year than most Americans will in a lifetime (or two).
Small-business owners, in particular, are having a hard time reconciling the concept that bosses who essentially gambled big and lost will get another opportunity to play in the casino.
“They screwed up with all that money and they’re rewarded by a bailout from the government,” said the owner of Creative Design & Landscape, a Doylestown, Pa., contractor.
“Can you imagine if any one of us screwed up that way? I wish the government would come bail us out,” he quipped.
Talk to just about any small business owner and the response is virtually the same.
“It think it’s ludicrous. They’re taking my money to bail out these people who made major mistakes with their lending, but they can’t help the little guy — they don’t bail out hard working Americans. It’s not fair,” said 64-year-old Larry Peterson, owner of The Dog House restaurant in Bradenton, Fla.
An unfortunate paradox of these difficult times is that these very same business owners, in the same breath used to condemn the bailout proposal, make strong cases for why some form of action to ease clogged credit markets is so necessary.
The Doylestown contractor said his business is off sharply because his potential clients can’t get the home-equity loans and extra cash from mortgage refinancings typically used for the type of home improvements in which his company specializes.
The credit crunch, he said, has had a “direct affect on our jobs. When they’re not able to raise the money, that directly affects us as contractors.”
He’s not alone.
According to the 2008 Small Business Mid-Year Economic Report from the National Small Business Association, a trade group, 67% of small businesses have been impacted by the collapse of global credit markets brought on largely by the bursting of the U.S. housing bubble. That’s up from 55% in February.
A whopping 79% of small business owners, according to the survey, believe the immediate future doesn’t hold much promise, predicting either a flat economy or an outright recession awaiting on the horizon.
Peterson, proprietor of The Dog House, said the lousy economy forced him to close down earlier this week, and he will remain closed unless he can find an investor to help him pay off $300,000 in loans he’s already carrying.
Banks are no longer an option, he said.
“The economy is killing me and our government is not doing a damn thing about it. It’s terrible,” he said.
In fact, the government is trying to do something. But is it the right thing?
Treasury Secretary Henry Paulson, in testimony this week before decidedly skeptical members of Congress, argued repeatedly that, while imperfect, the plan to create a government-run haven of sorts for up to $700 billion in bad assets held by financial institutions is the only way to ward off a complete disaster. Hasty approval is needed, according to Paulson, to prevent tighter credit markets, significant job losses and a sharp rise in home foreclosures.
And Paulson assured elected leaders that he’s sensitive to the visceral concerns of the politicians’ constituents.
Are U.S. taxpayers best served by a $700 billion bailout of arguably mismanaged, for-profit financial companies? “This is all about the American taxpayer. That’s all we care about,” he said.
How about the widespread anger at the missteps that brought us to this point? “I share the outrage that people have. It’s embarrassing to look at this, and I think it’s embarrassing to the United States of America,” Paulson said.
But few small-business owners heard the nationally televised daytime testimony. They were working.
President Bush gave a prime time speech last night to address the widespread anger and confusion surrounding the plan.
It was sorely needed, because even some of the strongest detractors of the Bush Administration’s rescue plan acknowledge that doing nothing might be worse.
On Wednesday, Sen. Charles Schumer, D-N.Y., said there’s a consensus in the Senate that “we need to do something,” and that something will get done perhaps as soon as this weekend.
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