'Cliff' Causing a Crisis of Confidence for Small Business: Sorrentino
The "fiscal cliff" is casting a pall on a small business owners' decision-making ability.
While most are focusing on their businesses day in and day out, they are putting the cliff issue in front of all others when discussing future plans. Concerns regarding tax planning for the coming year are trumping critical business decisions around growth, hiring and future investments.
Small business owners are asking questions such as:
•Will my taxes go up?
•What will the capital gains rate be?
•Will this send the economy into a recession?
•What will be the fallout from all the spending cuts?
•Should I change my estate plan?
•Should I pay out my retained earnings as dividends now?
New Crisis of Confidence for All Businesses
So what effect does this all have on the economic landscape, small business owners and consumers?
It is creating a new crisis of confidence for all businesses, particularly for small businesses, as it hampers their everyday operations and clouds their outlook for growth. (Read More: Small Business Optimism Tanks, Owners Lose 'Hope'.)
While the cliff has unintended consequences, the effects are going to be very difficult to undo, especially given the years of a slow and stalled recovery that have plagued the nation. The public discourse around the fiscal cliff is taking the wind out of the economy's sails and bringing everything to a halt.
Threat to the Small Business Recovery
Today, the economy is actually seeing consistent improvement from almost all sectors for the first time since the Great Recession, including manufacturing and a recent tailwind from the housing industry.
Despite this economic progress, every day that goes by without a deal or action by Congress heightens the risk that small business owners will fall into a state of paralysis, or worse—make decisions based on non-economic events that do not turn out as perceived.
We are talking about jobs and people's lives here. When the small business recovery is stalled and the outlook is increasingly uncertain, the job market suffers as people do not get hired, construction spending slows as projects are put on hold and economic activity as a whole is put to a jarring halt. (Read More: Amid 'Fiscal Cliff' Stalemate, Main Street Deteriorates.)
The heated political debate does not have as much influence over our economic recovery —it's the lack of a sense of a sustainable direction and confidence in the future policy of our government that is concerning Americans.
The Path Forward
We as a nation are putting the future of our economy at risk. We need a sensible plan that takes all the stakeholders' needs into account, and cares the most about jobs and doing no harm, rather than about being true to a political ideology. (Read More: Four Reasons Why Companies Are Still Reluctant to Hire.)
Small business owners have supported this recovery, and have made the necessary investments, taken the appropriate risks, and put it all on the line in order to thrive despite the strained environment.
The small business sector should not suffer at a time when there is an opportunity for businesses to continue on their recovery, prosper, expand, and hire. Now is the time to come to the middle, put politics behind us, and lift this much talked about issue off the table.
Frank Sorrentino III is the chairman and CEO of North Jersey Community Bank.