With the U.S. credit rating on shaky ground, stock markets in chaos, and Congress fleeing Washington D.C. after passing the deficit package, America’s small business are feeling unsettled this summer, and are tightening their belts.

That uncertainty has translated into a plunge in economic confidence. According to the Wells Fargo-Gallup Small Business Index, the percentage of owners anticipating that their revenues would increase over the next 12 months fell to 42% in July, down from 49% in April and 54% in January.

The percentage of small-business owners expecting the overall number of jobs at their company to increase over the next 12 months also fell in July, to 16% from 19% in April and 23% in January. Simultaneously, 12% of owners expect a decrease in the number of jobs at their companies over the next 12 months.

The problem is compounded as small business owners and consumers curb their buying as they try to protect themselves from another possible recession, according to a recent article in The Wall Street Journal. “The danger now is a new downward spiral, with businesses and consumers cutting back even more aggressively as they wait to see how the crisis unfolds,” according to the article.

But there is much that Congress and the administration can do to create more jobs, economic growth, and an upward path to fiscal health, according to U.S. Chamber Senior Vice President and Chief Economist Marty Regalia. “Rather than trying do more for the economy, perhaps we should try to do less to the economy – removing impediments to growth and allowing the economy to respond more naturally to the stimulus that has already been provided,” Regalia wrote recently on Chamberpost.

Regalia reinforced that message during an appearance on CSPAN to discuss public-private partnerships. He proposed more partnerships on infrastructure and energy development projects, passing the implementing bills for the free trade agreements (FTAs) with South Korea, Colombia, and Panama; and streamlining the regulatory system to put in place more effective regulations, not just more regulations in total. “A big mistake we’ve made has been not focusing on the economy, but focusing on jobs, but you have to get the economy growing to create jobs,” Regalia said. Looking at the jobs sides without looking at the growth side is a disservice. Removing impediments that are creating uncertainty will cause businesses to grow and begin hiring.”