Many Americans would probably be surprised to learn that small businesses matter more to the U.S. economy than the corporate behemoths that comprise the S&P 500.

In fact, small businesses account for more than 50 percent of U.S. nonfarm private gross domestic product and employ roughly half of all private-sector workers, according to Small Business Administration data.

Unfortunately, individuals who really should be aware of this fact -- politicians and other public officials -- have persisted in enacting policies that make it ever harder for entrepreneurs and owner-managers to earn their daily crust of bread.

Ultimately, as Charles Hugh Smith, publisher of the Of Two Minds blog and author of Weblogs & New Media: Marketing in Crisis, argues in "Trends for 2009: The Death-Spiral of Local Government and Small Business," their obliviousness will backfire--on them.

State and local governments are responding to shortfalls in tax revenues and spiraling pension costs by raising "fees" (a.k.a. taxes or junk fees) just as the backbone of the economy--small business--is struggling for survival. The more government employees demand "what was promised" in pensions, the more small businesses will fold, cutting government revenues in a death-spiral with only one end: state, county and city insolvency.

I am starting a new series today entitled "Trends for 2009" which will attempt to describe those trends which will be working beneath the MSM-induced "everything's gonna return to 2007 real soon" fantasy.

Let's start with the death-spiral of state and local governments raising taxes and fees to offset their collapsing tax revenues.

Contrary to the illusion created by glossy adverts and a corporate-owned MSM (mainstream media), huge global corporations are not the primary provider of jobs and taxes in the U.S.--that role is filled by small business, which also provides roughly 80% of the job creation and innovation in the economy.

The MSM tries to make a distinction between "marginal small businesses" and "small business," but all small enterprises are marginal in our high-overhead, high-tax, high-fixed cost economy. So guess what happens as revenues decline but fixed costs (rent, business license fees, utilities, health insurance, etc. etc.) stay high? Small businesses will close en masse.

Slump Batters Small Business, Threatening Owners' Dreams (WSJ)

Now put these two together: higher taxes/fees and small businesses on the precipice. Welcome to "death spiral 2009" in which public employee union demands for higher taxes to pay their bloated pension and healthcare benefits will kill off an ever-rising number of small businesses, further depressing tax revenues.

Note to politicos, government managers, public employees and their unions: we don't have to keep our door open. You seem to think we do, but we don't. When we can't pay ourselves and/or we get tired of the endless stress and grind of all your regulations and taxes and fees, then we'll close our doors and issue a big sigh of relief. We'll make do somehow without employees, storefronts, offices, permits, and all the other sources of income you, our governments' employees, depend on for your paychecks.

I have to chuckle (bitterly) when I hear some corporate or government manager complaining of stress. If you have a steady paycheck, you have never experienced full-court stress. (With the exception of emergency medical care staff and U.S. Armed Forces personnel in combat duty, of course; I mean "regular civilian employment.")

Small business owners have to wear more hats than any corporate manager or government employee, and they do so without pay as times get tough. Many tap their own credit cards to pay employees and fill orders for good customers.