PHILADELPHIA – Linda McMahon joined President Donald Trump’s Cabinet as one of its most popular members: The pro wrestling pioneer collected rare support from Democrats as well as Republicans to clinch the president’s appointment as head of the Small Business Administration. The agency last year guaranteed $30 billion in lower-interest bank loans to more than 68,000 corporate franchisees, licensees, startups and family firms. It also wrote off around $1 billion it couldn’t collect.
As Cabinet jobs go, the SBA is fun: While her colleagues struggle with pollution, drug prices, or tariffs, McMahon gets to travel the country meeting family business owners that her agency helps. She also promotes Trump’s tax cuts and other pro-business policies as his ambassador to this critical sector. She’s an evangelist for the American way of working for yourself, with borrowed money and public guarantees.
There are some headaches: A target of conservative budget-cutters from the pre-Trump Republican Party, the SBA’s budget has been trimmed by Congress in each of the last few years even as the agency keeps making more loans. Delinquent loans are also up.
But McMahon says she’s used to financial pressure. She helped her husband, Vincent, found and run what’s now WWE, or World Wrestling Entertainment, building yearly sales to $500 million when she served as CEO from 1997 to 2009.
“President Donald Trump wanted somebody in this position who had actually created a business,” she said last week. “I’ve been through the ups and downs. I’ve been bankrupt and lost everything and built the business up.”
McMahon, who has run for the U.S. Senate in Connecticut, says part of the job is collecting business owners to hear “what their issues are.” Last year, it was taxes.
“Now, the issue I hear is workforce,” McMahon said. America’s small businesses complain that they are running out of people to hire. Fewer young people are entering the workforce; more older people are retiring.
Around 750,000 immigrants became U.S. citizens last year, down from a peak of 1.05 million in 2010. The government awarded 180,000 H-1 skilled-worker visas in fiscal 2017, down slightly from 2016. Advocates say immigration applications have risen, but approvals have slowed since Trump was elected after demanding “a pause” in immigration.
“Technology, carpenters, welders — around the country, we have over six million jobs available. We don’t have people to fill these jobs,” McMahon said.
What should the government do? She noted Trump invited the bosses of Lockheed Martin, Walmart, FedEx and other big firms to the White House last month to promote apprenticeship and skills training programs.
McMahon said the administration also wants to bring in more skilled immigrants.
That policy could make it tougher for U.S. workers, said economist Adam Ozimek of Moody’s Analytics in West Chester. He recommends that the U.S. bring in more unskilled workers for laboring jobs while encouraging employers to train Americans for the better-paid positions.
The SBA’s reputation for funding franchisees of wealthy corporations has drawn criticism.
“We went that route” with national franchise companies, but have shifted procedures to more stringently focus on businesses that benefit their owners, not only a corporate parent, said McMahon.
SBA guarantees have also become popular among federal contractors who set up their own small firms to do government work. SBA’s inspector general from 2015 to 2017 reported busting more than 30 contractors for ripping off more than $10 million through an SBA program, Small Business Innovation Research.
“We are a Band-Aid. The agencies needs to firm up these programs,” said Jim Ives, assistant inspector general for investigations at NASA. He urged SBA and the agencies who hire SBA-backed contractors to “get folks out to visit [contractor workplaces]. Review their financial records. It’s not brain surgery.It’s keeping an eye on what’s going on.”