Nearly all Americans are hurting from ongoing runaway inflation. Higher prices at the pump and grocery stores pinch all our pocketbooks. Last week, the Federal Reserve raised interest rates by another 75 basis points in an effort to tamp down historic inflation that remains near a 41-year high.
The Fed’s decision will make it more expensive for small businesses like my construction and janitorial services firm in Maryland to access credit. But maintaining the inflationary status quo is not an option for small businesses, which generally operate on thin profit margins that are being swamped by rising costs.
While the Consumer Price Index is officially increasing at an 8.3% clip, my parts and supply costs have in many cases more than doubled. Contracts are often priced out at least a year in advance. So unless the contract has an escalation clause (which many do not), the cost increases significantly reduce our profitability.
We’re counting on our elected leaders to put aside political distractions and partisan differences and treat the inflation challenge facing small businesses and all Americans with the urgency it deserves. The Job Creators Network-Newt Gingrich American Small Business Prosperity Plan provides policymakers with a playbook for reinvigorating small businesses and the economy as a whole to bring down prices and springboard the nation out of recession.
The plan assists the Federal Reserve in its efforts to deal with inflation by calling on policymakers to 1) end reckless federal spending that fuels the inflationary fire, and 2) unleash domestic energy reserves to lower outrageous gas and electric bills.
Since the price of gas is an input cost in every aspect of running a small business, increasing energy production is vital to lubricating the American economy. It is more expensive now than ever to operate heavy machinery and transport it from job to job.
One of the most critical aspects of the plan is its call to make the Tax Cuts and Job Act permanent. These tax cuts provided small businesses with a 20% tax deduction, funds from which we used to hire, expand and raise wages. This tax cut contributed to an economic boom in 2018 and 2019 that significantly improved living standards for all Americans.
Yet without congressional action, the tax cuts begin expiring next year. By locking in the tax cuts, Congress can give entrepreneurs some desperately needed cost assurances in today’s inflationary environment.
In addition to tax certainty, the Prosperity Plan also provides regulatory certainty by exempting small businesses from new regulations. This provision can protect small businesses like mine from the onslaught of costly labor and environmental rules that further erode our profit margins.
The plan will also help small businesses overcome the chronic labor shortage by calling for reinstating work requirements as a condition of welfare payments. It calls for market-based healthcare solutions such as price transparency to actually lower the ridiculous cost of American healthcare. And it calls on policymakers to expand credit access through policies like FinTech and fix supply-chain turmoil causing costly delivery delays for small businesses like mine.
The Prosperity Plan has the power to cure what ails small businesses and the American economy. It can turbocharge small business creation and expansion, boosting supply to bring down prices.
These bipartisan solutions should transcend political divides that so often bog down meaningful action to help small businesses. Let’s see if policymakers are up to the task. Small businesses and the American economy don’t have much time to wait.
Corina Morga is president and owner of CR Construction Services and a partner of the Job Creators Network Foundation.