Entrepreneurship is key to economic growth
The greatest responsibility we have as American citizens – certainly as elected officials – is to make certain the American Dream may be lived by those who follow us. In my view, the greatest threat to our children and grandchildren being able to pursue their own dreams is our staggering national debt and deficits. It is our responsibility to deal with this issue.
Much of the conversation in Washington about how to reduce the national debt focuses on spending levels and tax rates. While these are important issues to debate, we must not forget about another equally important way to help reduce the federal deficit: growing the economy.
No matter what tax rates are, more tax revenue is generated when the economy is growing. With a projected budget deficit of $514 billion this year, economic growth is desperately needed to fill the hole. Increased economic growth rates of just 0.1 percent per year for 25 years would add more than $1 trillion in deficit-cutting revenue. Just imagine the impact of significant and sustained growth; it has happened before in America and it can happen again.
From our nation’s earliest days, entrepreneurs have been the driving force behind U.S. economic expansion and they remain so today. Data from the Ewing Marion Kauffman Foundation shows that companies less than five years old account for nearly all net new job creation in the United States. Since 1977, new businesses have created an average of 3 million jobs each year. What is shifting today are the locations of these startups. Research by both Engine and Kauffman shows that high-tech startups are forming in communities across our country – not just in the cities traditionally known as high-tech hubs. And as these young companies grow, they will contribute to the economy, hire more workers, and take on the flavor and personality of the cities they call home.
Kansas City’s Startup Village is one example. It began mostly by chance when a group of entrepreneurs decided to start companies in Kansas City, Kansas, in the first neighborhood equipped with Google’s high-speed Internet service. Within just 10 months, the Startup Village has become home to more than two dozen startup companies. Kansas City’s reputation as a growing tech hub is creating a buzz across the country.
Technological advancement, especially access to the Internet, has enabled high-tech firms to take root in other smaller cities like Omaha, Boulder, Provo and Wichita. So it’s no surprise that innovative new products and significant high-tech job growth are emerging in those same regions.
This is good news, but entrepreneurs today face stinging headwinds: an arcane tax code, an oppressive regulatory environment, limited access to capital, global competition for talent, and increasingly bloody scraps with our nation’s patent system.
If we’re interested in an America with higher levels of employment, bigger paychecks and better products at lower prices, Congress should make life easier – not more difficult – for entrepreneurs. To do this, I introduced legislation called Startup Act 3.0 to help create a better environment for entrepreneurs and address the growing challenges new businesses face.
Startup Act 3.0 changes the federal regulatory process to lessen government burdens on job-creators, modifies the tax code to encourage investment, and seeks to accelerate the commercialization of university research that can lead to new ventures. The bill also provides new opportunities for highly educated and entrepreneurial immigrants to stay in the United States where their talent and ideas can fuel economic growth.
For more than two years, this legislation has been earning praise from business owners, entrepreneurs, economists and elected officials. The California State Senate passed a resolution calling on Congress to pass Startup Act 3.0 and the President’s Council on Jobs and Competitiveness has voiced support for several of the bill’s provisions. Unfortunately, that hasn’t translated to progress within the halls of Congress.
Recent “all-or-nothing” approaches to lawmaking have proved to be unwieldy and highly problematic. One needs to only look back to the Dodd-Frank Act and the Affordable Care Act to know that this strategy doesn’t produce promised or desired outcomes. Today, a handful of practical bills like Startup Act 3.0 lay waiting to be granted a vote. Many would pass overwhelmingly if only given the chance.
Congress should seize this opportunity to address the challenges entrepreneurs face in a targeted and thoughtful manner. Entrepreneurs bring us innovative products, more consumer choice and create jobs along the way. When startups thrive, society is better off and we all enjoy the benefits.
Sen. Jerry Moran represents Kansas in the U.S. Senate.