Interview with SBA Administrator Linda McMahon
EDITOR'S NOTE: Boris Epshteyn formerly served as a Senior Advisor to the Trump Campaign and served in the White House as Special Assistant to The President and Assistant Communications Director for Surrogate Operations.
BORIS EPSHTEYN: FEMA estimates that about 40 percent of small businesses do not recover, don’t come back after a disaster such as these two. What is the SBA, the Small Business Administration doing to drive the number down to make sure the businesses do come back?
LINDA MCMAHON: There are a lot of people who really don’t understand what the SBA does for disaster relief because it’s not often thought about. That’s where SBA comes in, we do work really closely with FEMA. And FEMAis on the ground to help with life, limb, health issues, give people immediate sanctuaries to recover. Then SBA comes in for economic recovery piece. And it is the only time that SBA makes loans directly. Normally we guarantee loans that other lenders provide, but in disaster relief we ourselves make the loan, not only to small businesses but also to homeowners for mortgages, which is something SBA never does except in disaster relief to work with home mortgages. So, what we are doing is reaching out to those business, some of them who are trying to recoup, get back in business. But also, what we see in cases of disaster, people will start a business for the first time. Sometimes opportunities are created in disaster. So, what SBA has in place are loans for businesses, land, property, equipment, even loss of operating capital, of up to $2 million and for homeowners, up to $200,000.
BORIS EPSHTEYN: How long do you expect to be involved in the recovery process for Harvey and for Irma?
LINDA MCMAHON: We’re there for the long term. I think it will be at least a couple years. We are not going to abandon our businesses or our homeowners just because the waters have receded. In Houston, I think over the next 2-3 weeks you’ll see the peak period of applications come in for SBA for both businesses and for homes, but it’s going to continue for the next few weeks.
BORIS EPSHTEYN: The president has talked a lot about driving down the corporate tax rate to 15 percent but a lot of the small businesses you work with they actually pay taxes at the individual rate. What have you seen in the tax plan that addresses the concerns of the small businesses that are paying the individual rate?
LINDA MCMAHON: You know since I’ve become the administrator for SBA, I have traveled to many places around the country and I’ve visited the small businesses. I’ve been in their factories, their restaurants, their shops to see what they’re doing and really get their feedback as to what is meaningful for them which will help them grow. Certainly, tax reform, cutting the tax rate. They don’t talk about tax reform as much as they talk about bringing the tax rate down because then they will know how to plan. They’ll know how much more money they’ll have to operate with and without a doubt and without exception they all tell me that they would take that savings and reinvest in their business, hire more people, and grow and expand. So, we would see absolutely our economy continue to grow. We’ve kissed up to that 3 percent GDP rating but the president certainly wants to exceed that. I think we can and I know he believes we can. So, in tax reform specifics, the president has not yet released the items on his tax plan. One of the difficulties for small businesses that are LLCs, or sole proprietorships, is the pass-through income and they do pay at the marginal rates and if an LLC has had a profit in a good year they pay tax on that profit even if they don’t take it out of the company. So that is one of the things that disadvantages a pass-through business. So, I think that is one of the issues that will be addressed. But if you think about it, if we bring down the marginal rates especially for middle class then the small businesses that are paying at the ordinary income level will realize the benefit of that as well.
BORIS EPSHTEYN: Congress hasn’t been able to pass a healthcare bill and get it to the president. What are you hearing from small businesses in terms of their view, do they want healthcare to be reformed? Do they want Obamacare to be repealed and replaced?
LINDA MCMAHON: They absolutely want healthcare reformed. And again, it’s down to cost. I talked to small business owners. And they all want to provide healthcare for their employees. Many of them had good plans in place before Obamacare came into law, became the law. And they were mandated to change the policy that they had because it wasn’t as good as, if you will, the Obama plan. So, a lot of small businesses had to do that. It cost them a lot more and what happened was they stopped covering some of their employees if they had the opportunity, they were less than 50 employees, they just stopped covering. So employees had a pretty good plan, a reasonable plan, now they have nothing. Other companies have just bit the bullet and they’re paying the higher costs when they can. Other companies are downsizing so they don’t go over that number 50, so the healthcare plan that exists just has really had an incredible devastating effect on small businesses.
BORIS EPSHTEYN: Are you optimistic that some sort of healthcare reform will get done sooner or later? Will congress get its act together?
LINDA MCMAHON: I believe it will. The president really campaigned on healthcare reform, tax reform, regulatory reform. And he’s worked really hard already on regulatory reform - we’ve seen a lot of those regulations rolled back. Healthcare, we didn’t get the vote we wanted the first time around but he’s not letting up. We’re going to continue to push for healthcare reform. Tax reform right now is foremost on his agenda and we are all working very hard to really push that through because our businesses are really going to thrive and grow if we can reduce that rate, let them have more money in their pockets, let us see what that investment is going to be, and hiring more employees.
BORIS EPSHTEYN: You are an extremely successful businesswoman and you are bringing those lessons from business to the small business administration. The president is a very accomplished businessman and now he is taking those lessons to the White House. What have you seen in terms of your experience, how has it been applied to your new job here as the administrator?
LINDA MCMAHON: It was very interesting, when the president, then president-elect, asked me to come to Trump Tower in New York and talk to him about taking on this position. What he said to me was, "I want somebody who’s built a business, who’s walked the walk, talked the talk of small businesses." And when I go out and I talk to the small business community, and I say look I get where you’re coming from i was a sub-s corp then changed to a ccorp, I know how those regulations and taxes impact you, I know what heathcare is, I remember when we were not insured, we put our first policies in place I’ve seen those costs.
I’ve also traveled around the country now to talk to our small business owners so I get their feedback so what I learned building a businesses and becoming a CEO of a company that started with about 13 employees and is now a global brand, is that everything impacts what you’re trying to do in business –overregulation can just choke you at some points and I haven’t talked to any companies who tell me we don’t need any regulation. They’ve just said, "let’s have the proper amount of regulation." It’s volume of regulation. Companies are spending billions of dollars for regulatory compliance and we want to save that money so we reinvest it in our business.
BORIS EPSHTEYN: You’ve known the president for a long time. He’s famously participated in parts of your business, WWFand WWE. How have you seen him apply his experiences as a businessman and as an entertainer to the White House?
LINDA MCMAHON: Let’s focus on him being a businessman because I think that’s really what he brings to the table. That he pushes through policies. His organization style, his negotiating style, his ability to, sometimes it’s, as it is for me, not having been part of government, sometimes I look at a broader picture. You have to learn the regulatory environment. I am very confident in the direction that I give from the business perspective as the head of the SBA, but I continue to learn government and regulation and the ethical implications of the things that you’re doing that wouldn’t come up to speed on things you might not look at right away. The president has that outside view and he has put together a really strong, good cabinet. That he relies on. They are good people from government, but from outside governmet. He calls us together frequently. We really do have a lot of imput and a lot of impact on what he’s doing. So he treats it as a CEO. He has a strong cabinet around him. He seeks advice from all of his cabinet members and he acts on his intution, his guts and his experience and drives programs forth and I have a great deal of respect for what he’s doing.