President Obama's new plan for helping small businesses recover from the recession will be a tough sell to the mom-and-pop employers behind so much of the economy, according to a Philadelphia economist in touch with thousands of business owners.

"I still need customers to make it justified to hire somebody," William Dunkelberg, chief economist for the 400,000-member National Federation of Independent Business, told me after reviewing yesterday's Obama proposals.

To boost employment, the president called for an income-tax cut for small businesses that hire in 2010, a one-year elimination of capital-gains taxes on profits from small-business stocks, relaxation of rules on expensing and depreciation, cuts on business loan fees, and extended loan guarantees.

Earlier in the day, Dunkelberg had issued the latest edition of his widely trusted monthly survey of small-business owners. It showed an optimism index on Main Street was still in the tank, and falling in November.

And he didn't hear anything yesterday that he thinks will quickly change the sour mood, he said.

Dunkelberg has been surveying small-business owners monthly on a wide variety of issues since 1973. He also teaches economics at Temple University.

Even the proposed tax break for new hires left him nonplussed. Dunkelberg described it as a "cash-for-clunker deal in the labor market," useful only to businesses that would have hired anyway, and a proposal that could even have the effect of postponing hiring while Congress debates the issue.

In the report on his survey, Dunkelberg said: "The legislative agenda in Washington is a major factor blunting consumer and owner optimism."

Tax-code changes are always on business owners' worry lists, Dunkelberg said. These days "Congress is promising higher energy costs, promising mandates for health care, promising higher taxes on health-care benefits that you have, promising to increase your tax rate if you make more than what they decide is 'rich.'
"It doesn't exactly cheer you up."

Mike Armstrong is on assignment. Contact Reid Kanaley at 215-854-5114 or