E:48 Is the "One Big, Beautiful Bill" Bad for Family Business?

Speaker A: Donald Trump's one big beautiful bill may be putting money in the pockets of a select few, maybe even your family business, but at what cost? On today's episode of Fearless Family Business, we are breaking down the big beautiful bill and answering the question, is it good or is it bad for family business? And I really don't want to bury the lead here. I don't like it. I don't like it for the humanitarian crisis that it creates, feeding into the collective paranoia and manufactured fear that's ripping us apart. I don't like it for the short term gain at the expense of our long term prosperity. And I don't like it that we're mortgaging our kids generation so that a few folks can cash in now. I don't like that we are stifling value creation by suffocating the very programs that build tomorrow's value creators. And I don't like it for a lot of reasons. And it's going to be very bad for family businesses. It goes against everything that we stand for, everything that we have stood for throughout our history. And I'm here to argue that it's time to put aside our unhealthy obsession with reducing our corporate tax rates at the expense of our collective values and human decency. Even though many of us are celebrating permanent tax cuts and 100% bonus depreciation, which of course can be good thing. Let's be crystal clear, the bad of this far outweighs the good. And we all know it. Strengthen the love, the legacy and the lifestyle in your family business. This is Fearless Family Business. So obviously this piece of legislation has been all over the news, it's been everywhere. And, uh, there's a lot of opinions on this legislation. And as the name implies, it's big, it's massive, it has a lot of, a lot of stuff and a lot of meat on it, uh, to the tune of trillions of dollars. Uh, but what really is it like if we're really going to look into what this is in a nutshell, It's a piece of legislation. This big beautiful bill that we're talking about is a piece of legislation that was recently passed and signed into law by the President that has multi trillion dollar combinations of tax cuts, program cuts and spending increases. And what was originally intended to be a kind of let's cut everything to make sure that we're operating as efficiently as possible turned into spoiler alert. Um, despite the promises to the contrary, the spending increases far outweigh the cuts that were made. Um, and so what it does is it makes permanent, specific tax cuts that were put in place by the previous Trump administration, which in and of itself may not necessarily be a bad thing. Um, you know, there's arguments on both sides as to whether or not taxes are good or bad. And typically if you're the recipient of a tax cut, you're going to think it's probably pretty good. And if you're, if you're the recipient of a tax increase, you're probably going to think it's pretty bad. But we have gotten pretty militantly aggressive about how we treat tax cuts or tax gain or increases in this country, um, where we believe that it's just an absolute affront to us, to the point where we, ah, especially within the world of business, tend to look more closely and scrutinize tax law and, and tax implications over actually creating value in our business. And I think that's a big problem about that. We just put so much weight on the idea of being taxed, even though the tax rates in the United States are pretty modest compared to the rest of the world, especially for what we can get in return. Um, this piece, uh, of legislation. Those tax cuts are paired with about $1.1 trillion that were ripped away from vital social programs like Medicaid and snap, the nutrition program, that will help, that's, you know, helpful for the low, uh, some of the most vulnerable in our society. So what we're doing is we're essentially funding a lot of those tax cuts on the backs of the most vulnerable. So ultimately paying for the tax cuts by cutting programs that help some of the poorest and most in need within our country. Um, whether we like it or not, or that hits you anyway, that's exactly what we're doing. And we need to face facts on that. On the other side of it, more on this legislation is if that wasn't enough, um, we're also adding $150 billion to our defense budget, which is already the highest in the world by many multiples. It's higher than the next nine countries combined. And that's pretty bold for a country that borders exactly zero threatening countries. But you never know, Canada may just throw some hockey pucks at us or something, I don't know. Um, but then there's the $170 billion spike in immigration enforcement, and that's just a modest 17x increase over the previous budget. Yeah, we went from 10 billion to $170 billion just to really focus, fund our collective paranoia. Well, I'm going to talk about that in a bit, because that's one of the most heinous things in this bill. The Congressional Budget Office says that this, uh, piece of legislation adds $3.4 trillion to the deficit over 10 years. And with interest, that can be up to $4.1 trillion. So we're essentially adding more deficit to our economy. Um, and we're doing it by cutting a lot of the social progress programs that will serve the most vulnerable and funding tax cuts, um, in the process. And again, tax cuts are not necessarily a bad thing. Um, but when you do that, uh, by creating a deficit, you're putting future generations at risk. And that is not. Does not anywhere close to resemble what family businesses would value. We look out for future generations. We don't take money from them. We don't take the. We don't put future generations at risk for our current benefit. That's just wrong. 100% wrong. Bottom line, massive giveaways, giant debt, and fewer safety nets for the most vulnerable. So now that we've shared a little bit about what it is, let's talk a little bit about what it does and what the implications are and specifically with family business in mind. And, um, I can't start this conversation without talking about the humanitarian crisis that this legislation creates or continues to fuel that has already begun. Um, and that is regarding the increase in the budget of the Immigration and Customs Enforcement. The horror show that is happening around us. And this bill feeds that collective paranoia, the fear that is driving it. Uh, ICE funding has jumped from 10, just about $10 billion per year to over $100 billion by 2029. It funds deporting up to a million people per year. And the budget for, for. For the Immigration and Customs Enforcement is now is going to be 62%, 62% more than our federal prison system, which is already one of the. One of the highest in the world, which is literally building this fear infrastructure around a certain group of people that are only that, that are mostly coming here to build a better life and to create value within our country, within our organizations. Um, and they're paying taxes, they're putting money into our systems. We are locking up humans without due process. Uh, and history has repeatedly worn through this as recently as I'd say, oh, yeah, the 1930s and 40s. That rounding up people always leads to something darker. This isn't strength. This is paranoia, pure and simple, and we all know it. This country and our family businesses, for the most part, which makes up 60% or more of the United States GDP, are founded on the backs of Immigrants, and there's no question about that, uh, uh, Einstein, Andrew Carnegie, Steve Jobs all come uh, from the either first or second generation immigrants. Uh, and additionally the millions of first generation Americans that have on the backs of their immigrant parents gone to college for the first time and started creating value in our country and in our companies, uh, family businesses employ many people who have immigrated to this country. And uh, and, and we're essentially tearing that fabric of our society, of our country, of something that is foundational to who we are as a country, away from it. What that's going to do is it's stifling value creation because the more that we can embrace those that are coming to this country in, in, in positive ways, in meaningful ways and are wanting to come to this country to contribute to value creation and um, building on our society and, and, and building businesses, the more that we are going to create value for future generations, the more we're going to make a valuable society. That's what we're here for. We should not be afraid of it. God knows we shouldn't be afraid of it. We should be welcoming of, of that and we should be doing better in terms of how we treat our fellow human beings on this front. Don't forget just how many of us looking back on our own histories and I'm sure and everybody who has a history within this country has somebody who came here at one point in time possibly and maybe probably even uh, in an undocumented fashion that's not uh, the same as being uh, as being nefarious or illegal. Very, very small percentages of the population are actually fit in that category. Uh for the most part we should be welcoming uh, those who want to come here and add value um, generations from now, there they are, are, are creating future generations of value creators and we need to embrace it. So now let's talk about the deficit uh, that we're creating through this legislation. $3.4 trillion. And what we're doing in that instance is we're essentially mortgaging our future or future generations in order to benefit those, in order to provide for those tax cuts uh, and uh, um, and spending increases right now. And I don't know what, I, I don't know what your definition of fiscal conservative is but uh, uh, but that is definitely not my definition of fiscal conservatism is basically mortgaging our kids future for the benefit of, of people today. And the only way that benefits uh, any kind of family business in my opinion is if you are looking to sell within the very Very near future. And uh, you have an opportunity to maybe sell the business to the highest bidder, whether it be private equity or something like that. And you're positioned to do so, meaning that you have already built your business to a point where it can operate without you and you can, you know, do everything that you need to do. Otherwise it's, it's a short term gain for long term pain. And what that means is like, you know what usually when we're going to make, put ourselves in debt into the future with no conceivable plan of paying that down, uh, uh, that there's no clear plan to pay down this $3.4 trillion. That's with a T, ultimately $4.1 trillion. That's a trillion dollars a year in, in interest spending which by the way almost matches our um, our, our, our defense budget which again is the highest in the world. So we're, we're going to be paying more interest on this debt than, or nearly as much interest on this debt as we are to defend our country. Uh, it's just insane to me. And all of that will be on the backs of the next generation. And I don't know about you, but as a family business looking at legacy and looking at long term sustainability, I would not want to indebt future generations. I would instead want to provide them with the ample opportunities to succeed and add value. When I'm looking, when I'm looking at a country that is most interested in tax cuts and reducing spending rather than sparking innovation through investing in education or investing in programs that will support future generations, I look at a country that no longer innovates, that no longer creates value. And as a country, that's what we are founded on is, is this, is this great building of a more perfect union that, that goes and creates value in the world and invests in value creators. And that's not what we're doing through this bill. We're stifling innovation, we're stifling value creation. Um, uh, you know, and, and there's this idea that floats around that when we cut taxes for corporations, what they're going to do is they're going to spend more money on hiring or uh, employment. Uh, history shows that that is not the case. When we've done massive tax cuts over the course of the next 10 years, we uh, don't see a massive hiring increase, we don't see a massive employment numbers. In fact typically a lot of times after uh, after those tax cuts or when we increase the deficit or um, when we try to cut taxes for corporations, what happens more often than they're going to either pay it out in a dividend or they're going to do stock buybacks. They're not just going to go out and hire for the sake of hiring. If there's not a need for new people in the organization, there's no need to. The thing that sparks hiring is value creation, is innovation. When we start to innovate, we actually create new opportunities and new jobs to arise that is independent of tax increases or decreases. That part doesn't matter. What matters is how we are best investing in our country and in our innovation and in the people of our country. Not this, this legislation. It does not invest in the broader population, in the education and the innovation of the broader population. That, that can, that has the potential to bring value to our country. We need to invest more broadly. We're in, we're cutting taxes on a very, very small percentage of already wealthy individuals who have created organizations that are valuable. And they're not going to reinvest it in innovation. They're not going to reinvest it in uh, in hiring or people. They're going to invest it in things like stock buybacks or things that will increase the value for their shareholders. That is the bottom line. That is the absolute truth. Meanwhile, when we're gutting SNAP programs or Medicaid, we're kicking 3 to 10 million vulnerable Americans out from that system. And those are the people that build your workforce and often uh, the same disadvantaged families. Those kids can't, won't be going to college. They won't be able to step up and they won't be able to bring new value. We're yanking out the rug from under those people, future value creators. We should be supporting them more fully. And sadly we're also handing them in the future generations the bill for that. So uh, let's think a little further about how this will impact family businesses in particular. 60 again talking about 60% of the United States GDP or more is, are family owned businesses. And that is not necessarily. Those are not businesses that are traded on the public stock market or in the public markets. Um, uh, typically those are just mom and pop shops or, or small privately held company or mid sized privately held companies that are held by families. And a lot of times those uh, the implications or the belief is is that within those inherent cuts and taxes, uh, and the corporate tax rates that, that the, that uh, uh, that those small family businesses will benefit and in the short term maybe they will from those Tax benefits. But as we talked about ultimately over time, this is a very short term kind of solution. When we're going to cut taxes on, on those larger corporations, a lot of times you're going to see that first within the publicly traded markets because again they're going to take a lot of the, the cuts that they get. They're going to reinvest it or they're going to uh, um, they're going to buy back stocks or pay out dividends. So you're going to see an increase in the stock market and they're, we're going to use that as an indicator that the economy is thriving. Meanwhile in the middle market, in the private, private companies of America, the heartbeat of America, which account for the vast majority of businesses that are running and people that are working and supporting their families, um, they're going to see a modest increase possibly in, in their cash flow due to savings on taxes. Um, they may reinvest that in, in their business, they may for themselves. They may be, they may, they may buy a new car or, or, or some nice things that spark the economy for a short term but eventually that normalizes and eventually that uh, uh, that elastic uh, pull goes back and snaps back and we get another downturn and now we don't have a lot of funding to support it because we have this massive deficit. And, and chances are we're going to go into what has happened in history and um, and, and that's, that's what this short term thinking thinks about when we do these, when, when we perform these kinds of economic maneuvers to cut taxes or, or, or increase the deficit or whatever, what have you. No, what we're doing is we're creating this short term gain for long term pain. And um, and history teaches us that when we have massive debt and it, and it meets with these tax windfalls, uh, history has shown that we have, get these economic storms. We have increased volatility, that increased volatility increases our risk. We saw the effects of that in 1929 with the Great Depression. We saw it in 2008 with another financial uh, reckoning. When we combine those with massive deregulation which is happening on, on a larger scale as well, especially on the economic level, we also see that happen. And if we cannot remember back in 2008 when that happened and the importance of balancing healthy regulation with healthy taxes and healthy support through our system and investing in our uh, our country and our people, well then, then we don't learn from history and we're destined to repeat it. And that volatility, it gets dangerous and it kills family businesses. Those are the first to die because family businesses within, uh, within our country are not going to be the ones that are bailed out. Now Interestingly, the White House.gov website, um, which I've looked at to kind of review their myths and facts page about this, and it references absolutely no supporting data or evidence or anything like that. Um, basically just anytime it talks about the effects of, of these tax cuts for corporations or if it's a bailout for, for billionaires or whatever, essentially just deflects on that and, and refocuses on the fact that most, uh, most lower income families are going to get up to $10,000 extra every year. But that $10,000 extra or additional money is not necessarily going to help those families, um, when the programs that are the most important to them are being taken away. Uh, not to mention, I don't even know if that's necessarily true, which is another sad state of affairs that we can't trust the data that's on the whitehouse.gov website because it's just, there's just no data to support what they're talking about. Now some that may support this bill may talk about the idea that uh, we're reducing the size of government by cutting a lot of these programs, but I would argue that we're doing the exact opposite. In fact, we're making government much bigger. Now you may think that we're cutting the size of government, uh, if you like this bill, because it's covering, it's gutting the parts of government that you don't like, which is uh, you know, uh, programs for welfare or, or helping those that are most vulnerable. But in actuality we're increasing the size of government obviously by, by increasing the amount of spending that we have on things like ICE or uh, the military spending that we have. Um, those are government programs. That's, that's government spending. And so some, so yeah, some agencies are going to tighten, but overall the government is growing and they're growing based on fear, not value. And we need to change our mindset away from this fear based mindset and back to a value creation mindset, back to a come together mindset where we all do work together for the greater good. Do we remember what the greater good is of our nation? It's not rooted in fear. It's rooted in prosperity, liberty, and the idea that we can all have the opportunity to prosper. Now the final piece I want to talk about is the wealth gap and uh, how that relates to value creation. Um, you know, we've seen the wealth gap in the United States grow substantially in recent decades to the point where the richest of the rich are getting far far more wealthy compared to those on lower income standards. And this bill turbocharges that wealth gap. Now the WhiteHouse.gov website will tell you that that is somehow a myth, that it is not uh, uh, that it is not disproportionately uh, supporting the wealthier Americans over those that are, that are the less fortunate. But the truth is, is that when you're cutting, cutting that, that huh, when 80% of corporate tax cuts will benefit the top 10% of the, of, of, of the country, the $10,000 that the White House gov website is talking about, each family or lower income family will benefit, doesn't that pales in comparison to what uh, the wealthiest Americans will receive? So that wealth gap is going to continue to increase. And the danger in that is that when that wealth gap increases that a select few harness the wealth, most of the wealth of the United States while the, the rest of the Americans are, are left behind in the dust is again that stifles innovation, it stifles value creation. Because the more that we can offer, offer people the opportunity to prosper through educational programs, through uh, through opportunities, through, through uh, through being able to make sure that they can get nutritious meals, that they can get the right kind of health care, um, well then the more opportunity they have to prosper, the more that they are going to want to drive value. Now some people may think, and these people should not be leaders of organizations because they don't believe in people. But some people think that people's desires are to be primarily lazy or live off of a welfare system or what have you. I don't believe that. I believe that generally speaking, the majority of people in this world want to create value. And when they're, when they find the intersection, that sweet spot of what they love to do and what they're great at and they're given the opportunity to pursue that and the resources to pursue it, they pursue it with aggressive passion. And if we can offer people the opportunity to do that, we will have more successful value creators. We will be bringing more value creators into our organizations to help us to prosper, to help everyone prosper. It's a society of inclusion, not exclusion. We've built into this weird zero sum society right now that says that, that one side wins, uh, uh, or the only way that one side wins is if one side loses. And I don't believe that that's true. I believe that a rising tide lifts all ships. And family businesses in particular should believe this because most of us were built on uh, um, built from the ground up, um, with bootstraps. My great grandparents came to this country to basically start a business. And my great grandfather started his business with nothing but a telephone, a uh, desk and a bicycle. And we grew it into $100 million organization over the course of many, many decades, um, that employed 150 families and helped those families to prosper as well. And I believe that we can all have that, we can all do that, we can all be given that opportunity, but we need to support it through educational programs. Furthermore, we are no longer an industrial age economy. We are moving away from the industrial age more into a knowledge age, a knowledge economy. And in a knowledge economy we need education. We need to fund those opportunities. We need opportunity everywhere. We need to invest in education, we need to invest in healthcare, and we need to invest in inclusion. Um, not a fan of running deficits in our country, but I would support a deficit if we were investing in education, healthcare and inclusion. Because if we did that, then I would be fully confident that we would get a return on that investment. That's how we can make our country and our family businesses stronger. So here's the thing with this legislation. We're going backward, not backward toward greatness like some would say that we are. But we're actually compromising what could make us great. We're compromising the values that could make us great, the investments that we could make that would legitimately lead us to greatness. And in the process we're losing our soul. We're more divided. We're implementing new policies that are uh, incredibly dangerous and are inhumane. And I just hope that we can look at these and we can become more human again. We can become more like what we want family businesses to be like. And we can apply that to the nature of our nation. We as family businesses need to step up and do what we do best. That is not preserve what was or, or, or try to uh, try, uh, to cut our way or cut the expenses on our way to prosperity. Because that just won't work. Not in debt our future generations, because that won't work. But we need to do what we do best, which is create value. We need to get back into our entrepreneurial spirit if we want to get combat what we're seeing out there. We need to create new value. We need to invest in our people, we need to innovate and we need to grow roots so that we can build a lasting legacy that's built on value. Don't fall into that preservation trap. Raise new leaders. Invest in people who build, not just hold and not just preserve what was. If enough of us do this together, we can rewrite this story. We can lobby. We can vote with future generations in mind. Let's not indebt our future generations. Let's give them the opportunity to succeed. Thanks for joining me today. Hope to see you next time.