Message to the Congress Transmitting the Annual Report on the State of Small Business

September 9, 1986

To the Congress of the United States:

I am pleased to submit to the Congress my fifth annual report on the state of small business. The State of Small Business report by the Small Business Administration, which follows this message, reconfirms the contribution that small business makes to our Nation's economy. In 1986 vigorous small business formation and job creation continues, reflecting the strength and perseverance of millions of men and women building better futures for themselves and for our country.

The freedom to choose a way of life and to build upon the strength of an idea is the cornerstone of American small business and the secret of small business success. Our job in Washington is to ensure that our actions do not stand in the way of small business opportunities; only the limits of entrepreneurs' own imaginations can hold them back.

A stable and growing economy is our most important goal to ensure small business opportunity. For business owners to contribute to that growth, our policies must be clear and government tampering with business decisions must be minimized. Consequently, I believe that two current initiatives of this Administration are critical small business issues: the effort to reduce Federal spending and to reform our tax laws.

Other policies are surely important too, but success on these two fronts will be the most beneficial to this Nation's 15 million small businesses.

Uncontrolled Federal spending and the deficits it has produced compete with private spending including small business investment. They also hurt the ability of small firms to meet foreign competition. Similarly, a tax system that is needlessly complex and built around high tax rates hobbles the business owner's ability to grow and operate in response to the demands of markets. We will be better off when tax considerations do not determine whether a certain investment is worthwhile or profits from a firm should be reinvested in job creating opportunities. Action in these areas is a small business priority; it is a critical priority of my Administration.

Our efforts cannot stop here. Continued steps to reduce regulatory burdens are important to a healthier small business climate. I call on all Federal agencies to continue the fight to eliminate burdensome regulations and to look askance at proposals for solving every problem with a Federal regulation. The Regulatory Flexibility Act, an important tool for agencies in this effort, requires economic analysis of small business impacts and the consideration of less burdensome alternatives.

Businesses are handicapped by uncertain or limitless liability for injuries arising from their products or services. It is important that our legal system provide redress for those injured by the negligent acts of others and incentives for safe products. But a runaway liability system prevents many small business owners from obtaining or being able to afford liability insurance. The Administration supports legislation that would reform the legal system to provide adequate safety for American consumers, without unduly burdening American business.

These and other issues have been clear priorities of the preliminary meetings being held across the country and which are leading up to the National White House Conference on Small Business in August of this year. Meetings held in every State are serving as a forum for America's small business leaders to let their voices be heard on public policy issues vital to small business and to the Nation.

Few experiences are more unique to the American character than going into business for oneself. Ever since small business owners opened their doors they have had to cope with the changing marketplace. Using wit, hard work, and initiative, they have successfully demonstrated that American trait of adapting while thriving in the face of adversity.

These basic talents are found in abundance in America's small businesses and now, as in the past, help us to meet world commercial competition. While some nations have chosen controlled solutions to their economic problems, our answers lie in the freedom that allows small businesses to adapt to the world's changing economic climate.

A nation's wealth and commercial know-how is molded by its culture. Our society, made up of risk-takers from other nations and cultures, is by nature willing to change and make sacrifices. This willingness to take risks is essential to our creative energies: it is the foundation of American entrepreneurship. The continuing economic recovery is a vivid reminder of the pivotal role small business has been playing in recent years.

Ronald Reagan

The White House,

September 9, 1986.