President Trump’s proposed budget for 2018 would hit small businesses hard. If enacted, the plan would slash Medicaid, the U.S. Small Business Administration (SBA) and the Community Development Financial Institutions (CDFI) Fund — all programs that small businesses depend on.
The most egregious cut in the White House’s proposal is the gutting of Medicaid, a program that delivers health coverage to millions of small-business employees nationwide and self-employed entrepreneurs. In fact, Medicaid expansion under the Affordable Care Act grew the number of small-business employees receiving insurance through that program by 1.7 million between 2013 and 2015 alone, according to the Center on Budget and Policy Priorities. Those gains would be reversed under the president’s plan, however, as approximately 10 million people would lose coverage thanks to Medicaid cuts. This would harm the low-income self-employed and self-employed entrepreneurs who are getting their businesses off the ground, as well as small businesses that are unable to offer health coverage to employees.
Another major problem for small employers would be the president’s proposed cuts to the Community Development Financial Institutions Fund, which is the single-largest source of capital for CDFIs. Eliminating this funding would drastically decrease investment in small businesses in underserved communities.
Should that happen, fledgling small businesses in need of loans will find it extremely difficult to get much-needed funding and entrepreneurs looking to start new businesses will be unable to get their firms off the ground.
President Trump’s proposal also includes a 5 percent reduction for the SBA. Under the plan, the SBA would see a $12 million decrease in available grants.
It’s notable that all of these cuts assume the Affordable Care Act will be repealed and replaced and that President Trump’s outlined tax reform will be enacted. Since these proposals would also hurt small businesses, it seems the president is attacking entrepreneurs from all sides.
President Trump’s budget shows that he either does not understand the needs of small businesses or he has no interest in helping them succeed. Lawmakers must reject this budget proposal and should instead craft a plan that will actually enable the success of America’s job creators.
John Arensmeyer is founder and CEO of Small Business Majority, a national advocacy organization for small businesses.