How to profit from the president’s proposed budget
Earlier this month the president announced the last budget of his administration, which if passed, would take effect on Oct. 1.. There are many I know who feel that Mr. Obama’s policies over the past seven years have done more to hurt the economy (and their businesses) than help. They point to the country’s tepid post-recession growth, the historic increase in our national debt, the stagnation of wages, the number of unemployed who have stopped working, higher taxes and increased regulations, particularly in the areas of healthcare and employment law.
And I agree.
The president’s budget does little to ease their concerns. It’s a $4.1 trillion monster, a boost of almost 5 percent over last year. It contributes another $600 billion to our deficit and national debt. It’s heavy on domestic spending and populist appeal. More than $2.5 trillion of the proposed spending will go to fund healthcare, social security and income security. The budget assumes new taxes on the energy and financial service industries, higher rates of future economic growth than we’ve seen so far and continued low unemployment and low inflation. Most in Congress consider the budget dead on arrival in this year of election politicking.
None of this matters. Sure, there will be changes (or even no budget approved at all as has happened in the past). But some of the president’s spending proposals will survive. Over the years, I’ve found that many smart business owners, regardless of their political leanings, frequently look past the politics of Washington and instead figure out ways to profit from the government’s spending plans. They realize that they are responsible for putting aside their personal feelings and making bets on the facts. That’s our job. We have employees, partners, customers and family members who are depending on us to do this. And we know that even in this world of higher taxes, slower growth and talk of “fat cats” on Wall Street, there are still plenty of ways for small companies to get their piece of the pie too. And there will be some tasty morsels if even some of the president’s proposals get approved.
For example and according to this White House summary, the president has proposed more than $320 billion to be spent over a 10-year period to “build a clean transportation system for the 21st Century that speeds goods to market while reducing America’s reliance on oil, cutting carbon pollution, and strengthening our resilience to the effects of the changing climate.” His budget also provides $7.7 billion government-wide “for fundamental and transformative clean energy R&D across 12 agencies.”
In addition, the president wants to spend heavily in research and development, providing $14.6 billion in 2017 for the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards and Technology, which invest in basic research. The White House believes that this is the type of research that is “most likely to have spillover impacts to multiple endeavors and in which the private sector typically underinvests.”
The budget also provides $33.1 billion to support biomedical research at the National Institutes of Health which will result in about 10,000 new and competing grants. It also includes investments to grow the National Network of Manufacturing Innovation, a national network of innovative R&D centers to help keep U.S. manufacturing in the lead on technology. There are also investments planned to expand supercomputing, Big Data, robotics, advanced materials, nanotechnology, and synthetic biology, as well as the development of autonomous vehicle technologies and self-driving cars.
There are other incentives in this budget that will benefit the savvy business owner if he or she wants to pursue them. The president has set aside billions for expanding workforce training for manufacturers and wants to invest $3 billion in mandatory competitive funding for regional partnerships that “bring together employers, education and training providers, and workforce boards with the goal of training a half million people and placing them into jobs in high-demand sectors.” There is an expansion of the research and development tax credit and the continuation of rules that allow businesses to accelerate their first-year depreciation deduction on the purchase of capital equipment. He’s providing resources to support the Trans Pacific trade agreement which is backed by many business groups and a proposal to make 401(K) plans more affordable and portable.
What does this mean for smaller companies? It means a lot – particularly to those that want to follow the money.
It means that, if the budget is passed, billions and billions of taxpayer dollars would be spent through government agencies and their intermediaries that would affect dozens of industries from construction to healthcare to education to manufacturing. It means plenty of opportunities for small businesses to go after these contracts assisted by the more than $700 million allocated to the Small Business Administration to help them do this. It means there will be money available from larger companies who will likely receive the lion’s share of these contracts but who will need jobs completed by their smaller contractors and partners. It means more opportunities for minority and female business owners and those that run companies in urban zones. Regardless of whether your business is a direct recipient of these funds you can rest assured that all of these companies will in turn need accounting services, office supplies, shipping and computer maintenance. And you can bet that an expanded government will offering more jobs for people at government facilities in Virginia, Maryland, California and Texas and those people will need houses, car repairs, lawns mowed and pizza to eat – all provided by small businesses in their community.
Am I supporter of the president? Do I think his budget is good, bad, tragedy or fantasy? It doesn’t matter. We all have our political leanings. And the smart business owners I know keep them to the voting booth. After their ballot is cast, they look at each administration objectively and figure out ways to profit from the government’s spending. So whether you support President Obama or not you can’t argue that there are plenty of opportunities to profit from his latest proposals. There will always be, regardless of who sits in the White House.