President Barack Obama took dead aim at the economy during his State of the Union address last week before Congress, and he mentioned incentives he would like to make available to small businesses.

He said he would like to see tax breaks that would prompt owners of small establishments to hire more people and increase wages. He also would like to take $30 billion recouped from the Troubled Asset Relief Program, which was used to bail out mostly big banks in 2008, and help community banks make loans to small businesses.

‘I don’t think it’s right’

“I don’t know all the details, but I would not favor government money, the public’s money, coming to Central National Bank. I don’t need it, and I don’t think it’s right,” said Bill Nesbitt, chairman and CEO.

Jim Allmon, president and CEO of Blackhawk Modification, looks over work being performed at his shop in Waco. Allmon said job creation should have priority over waging wars or passing health care legislation.
Duane A. Laverty/Waco Tribune-Herald

That objection is based on the government buying equity in the bank, as it has done in the bailout of other financial institutions, he said.

“I don’t want the government as a partner,” Nesbitt said, but placing a deposit in the bank without strings attached would be a different matter that he might welcome.

Generally, Nesbitt said he has no quarrel with Obama’s approach to stimulating the economy through government spending — a plan that included a $787 billion stimulus bill.

“Ordinarily, I don’t want the government spending money to do things like this. But people who think these are ordinary times have missed the point,” Nesbitt said. “I think spending money to create jobs in these times is appropriate, and I think a good way to go about that is the use of tax credits.”

Obama said the stimulus bill passed last year has created or saved as many as 2 million jobs and is expected to add 1.5 million this year.

Still, the national employment rate is hovering around 10 percent.

Waco builder Ken Cooper, president of the Heart of Texas Builders Association, said the stimulus package “may have bailed out a few banks, corporations or whatever, which may have averted disaster.

“But I don’t think government spending is the answer to our problems. The stimulus has to come from business activity in the private sector,” Cooper said, adding that he applauds Obama if Obama is sincere about providing tax credits to businesses that allow them to hire more people.

“I do hope a growing bureaucracy is not included in that,” Cooper added.

As expected, Obama said he would impose a three-year freeze on discretionary spending not related to security. While the idea appeals to some deficit hawks, Republicans have criticized it as a public relations move that will not significantly reduce the deficit.

“I’m one of the oddballs,” Nesbitt said. “It’s not so much the amount we spend but the difference between what we take in and spend that bothers me. I’d like us to balance the budget, and if freezing spending leads to that, I’m for it. But if we give it away by reducing taxes, that’s not fiscally responsible.”

Jim Allmon, president and CEO of Blackhawk Modifications in Waco, said job creation should be “far above wars or health care” on the nation’s list of priorities. But he also said that the approach the government takes to stimulating job creation should not include so many strings that it turns off small businesses.

Baylor University economist Kent Gilbreath said a tax credit targeting small businesses “would be ideal for the government to turn its attention to during 2010.”

Focus on community

He also said funneling money to community banks makes sense.

“Who will know better than the government can know where the money can most productively be lent and spent?” Gilbreath said. “The idea is a combination of continuing to stimulate the economy and letting the decisions be made where the stimulation takes place by people in the private sector.”

Jennifer Wilson, owner of The Shops at RiverSquare Center, said if banks are going to get money to loan, “it’s important that they do that. Are banks going to be able to work with small-business owners?”

mcopeland@wacotrib.com

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