The political consequences of the impeachment inquiry have been – and will be – analyzed to the point of exhaustion. The economic consequences must also be considered in any fair analysis of impeachment’s real-world impact.
A full view of impeachment’s effect on our economy requires a full view of the American business community — not just the currently thriving stock market, but also the other part of our economy, made up of independent business owners.
American business owners tend to like President Trump. Their optimism has been at record highs since he took office in 2017. At this point there is a sense that the opportunity for small businesses to continue to grow and be profitable is tied to the president’s ability to move forward with his policy agenda. Entrepreneurs are keenly aware of the opportunities that may be lost, thanks to a hyper-partisan impeachment inquiry that is slowing down the machinery of governing in Washington, D.C.
For example: Prior to the commencement of the impeachment inquiry, there was a good chance Congress would ratify the United States-Mexico-Canada Agreement (USMCA). This NAFTA-replacement policy is incredibly important to small businesses, which make up 98 percent of all U.S. exporters. Nearly 300,000 small and medium enterprises (SMEs) – which support about four million jobs – are exporting to foreign markets today.
USMCA would very likely increase those numbers because it includes provisions to improve investment opportunities for smaller businesses. It is, in fact, the first trade agreement in U.S. history to include a chapter specifically focused on SMEs. USMCA also considers the disproportionate impact of regulations on small businesses, and would actually remove some of the potential barriers that could discourage smaller firms from engaging in international trade. For example, the agreement would eliminate the requirement of opening a foreign office to do business in another country.
This policy improvement on international trade could add to the already improving landscape for American business owners. USMCA would serve as the perfect economic complement to tax reform and ongoing regulatory reforms. But thanks to impeachment, finishing USMCA seems unlikely any time soon. This Congress will likely miss this rare, important opportunity to help the job-creating small-business community engage in international trade.
Infrastructure reform is another economic imperative and opportunity that the current Congress will almost certainly forego in favor of the impeachment show.
The tragic state of disrepair of our nation’s roads, bridges and tunnels is not only dangerous; it is a drag on economic growth. The American Society of Civil Engineers (ASCE) gave the U.S. an embarrassing D+ grade in its most recent infrastructure report card, and I hear from small-business owners every day who are frustrated with how our crumbing infrastructure is slowing the pace of business, both locally and nationally.
The White House Council of Economic Advisors estimates that a 10-year, $1.5 trillion program of infrastructure investment – as proposed by President Trump – could add between 0.1 and 0.2 percentage point to average annual real growth in GDP. The president’s infrastructure plan could also add hundreds of thousands of well-paying jobs to our economy.
The benefits to the small-business community would be twofold: The roughly 10 years of contracts and sub-contracts that would almost certainly result from a major federal investment, and the much longer-term impacts that would come from safer, more highly functioning bridges, roads, railways, airways and ports.
Larger businesses and special interests will weather the impeachment storm the way they always have: Their lobbyists and lawyers will help them find ways around outdated laws and regulations. But small-business owners and their employees don’t have those resources. They need their government to create and maintain a fair environment in which they can prosper. A polarized, ineffective government disproportionately impacts the smallest businesses.
Congress should think more about all of their constituents – and consider the full view of our economic landscape – as this fight drags on. Small business owners aren’t the loudest voices on social media. But they are the engine of our economy, and they expect more from their elected officials than endless political fights.
Hector Barreto is chairman of The Latino Coalition and former administrator of the U.S. Small Business Administration.