[Public Papers of the Presidents of the United States: George H. W. Bush (1992-1993, Book II)]
[September 29, 1992]
[Pages 1706-1708]
[From the U.S. Government Publishing Office www.gpo.gov]



Message to the Congress Reporting on the State of Small Business
September 29, 1992

To the Congress of the United States:
    It is my pleasure to submit my third annual report on the state of 
small business. America's small business owners are individuals with 
countless new ideas, employers and workers who produce a vast array of 
goods and services, taxpayers who pay many of the bills, and economic 
pioneers who help decide the future direction of our economy. In their 
endless variety, small firms help create a flexible, diverse, and lively 
marketplace.
    For generations, entrepreneurial business owners have been in the 
forefront of the dynamic economic changes that continually revitalize 
our democracy. In the early days of our Republic, small business 
innovators led the way in developing more productive farming 
technologies. Greater agricultural productivity eventually freed other 
entrepreneurs to develop and commercialize new manufacturing processes. 
These processes and manufactured products set a new standard for 
America--and for the world. But America's small business innovators did 
not stop there. They started another revolution by anticipating and 
responding quickly to the demands that grew out of the new,

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higher standard of living--demands for services and sophisticated new 
information technologies.
    Small businesses have made important contributions to the economy, 
not only by introducing new products and processes and creating jobs, 
but also by making the economy more adaptive and flexible--by retaining 
workers longer during recessions and hiring workers earlier as 
expansions begin.
    There is no doubt that 1991 was not an easy year for the American 
economy or for small business. The recession that began in the third 
quarter of 1990 carried over into 1991. Business formation rates were 
down, and business closings were up. The flow of financing slowed as 
banks and businesses grew more cautious about business expansions.
    Yet in this recession, as in other economic downturns, small 
businesses continued to function as a source of jobs, creating many of 
the new jobs in the economy. Rather than lay off workers, many small 
firms tightened their belts in other areas. And they continued to 
innovate, introduce new products, and contribute to their communities.
    Our economy has begun to grow again. Still, small firms face 
difficult challenges in the months and years ahead. The truth is that 
health care costs are too high and the unmet need for health coverage is 
great in small businesses. And of all employers, small businesses are 
least able to afford the expensive mandates that have been advocated by 
some. The proposal I presented to the Congress would not resort to 
mandates, but would build on the strengths of our private health care 
system to make health insurance affordable for America's workers and 
their families.
    Adjustments occurring in our financial institutions have made it 
difficult for many worthy small businesses to find the capital they need 
to start up or expand. Therefore, my Administration is taking steps to 
encourage investment in business ventures in a number of ways. I have 
proposed that the Congress cut the capital gains tax so that investors 
will have an incentive to buy into new ventures. Another proposal I have 
made is to create an investment tax allowance that would assist in 
starting new firms.
    And we can encourage some new investment by adapting programs that 
are already underway. For example, the Small Business Administration is 
working with banks to implement innovative loan programs that are 
channeling funds to smaller firms in some of the most economically 
depressed areas.
    Another obstacle that can stand in the way of small firm growth is 
too much regulation. My Administration this year instituted a moratorium 
on new Federal regulations to give Federal agencies a chance to review 
and revise their rules. And we are looking at ways to improve our 
regulatory process over the long term so that regulations will 
accomplish their original purpose without unduly hindering economic 
growth.
    We also need to encourage innovation--such as that exhibited by 
thousands of small high technology firms--by making the research and 
experimentation tax credit permanent. My Administration is committed to 
exploring the promise of new technologies.
    This report documents the increasing, healthy diversity of our small 
business community, as minority- and women-owned businesses enter the 
marketplace in record numbers. I want to keep encouraging that diversity 
through our Federal procurement programs.
    I also want to see more of the Nation's economically depressed 
communities reap the benefits of business growth. To that end, I have 
asked the Congress to pass my enterprise zone legislation, which will 
provide incentives to businesses that start up in specially designated 
areas, particularly in inner cities.
    Looking to the future, it is clear that we need to improve our 
educational system so that America's workers, particularly in small 
firms, will be in a better position to compete in a more and more 
sophisticated global marketplace. My America 2000 education strategy is 
designed to give parents, teachers, and communities more freedom and 
flexibility in designing education programs to meet their needs--and to 
make America the world's leader in education.
    Many of these proposals for economic recovery and growth are being 
enacted now; others will require action by the Congress. I

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am committed to working with the Members of Congress to develop and 
enact a broad economic plan we can all live with. These combined actions 
will help small business to move ahead to create the economic 
revolutions that will lead us into the 21st century.

                                                             George Bush

The White House,
September 29, 1992.