The U.S. Senate has been working overtime and on weekends to push through legislation that will increase the government’s role in health care, expand Medicare and do little to control costs in our health care system. In fact, the Center for Medicare and Medicaid Services (CMS) found that the Senate bill will increase national health care expenditures by $234 billion, or 0.7 percent, over the next decade.   That doesn’t sound like the kind of health care reform we need.

But the Senate bill is only one part of the equation.  The House of Representatives passed their own version of health care reform that includes a strong public options as well as higher taxes on businesses.  Members of the House have made clear they aren’t going to simply accept what the Senate passes as the final bill, setting up a show down between the House and Senate.

Slowing down the process is a good thing.  In their race to reform our health care system, Congress is replacing our current system with one that will likely result in higher costs and less choice for individuals and businesses. 

Instead, Congress should take a more incremental approach that addresses the real problems including costs and access.  But do it in a way that limits the government’s role by allowing small businesses to cross state lines to access health care for their employees, providing tax incentives for coverage and taking steps that will actually reduce the cost of our health care system.

Tell me what you think?

For all their talk of creating jobs, the Administration and Congress has done little for our small businesses – those who are actually in a position to create jobs.  More government spending doesn’t result in more jobs, just look at the so-called stimulus bill that was passed earlier this year.

What we need from our leaders in Washington is less taxes and less regulations so that our small businesses have the resources they need to invest in new jobs and grow their business.  We aren’t seeing any of that coming out of Washington and we probably won’t anytime soon.

• Instead of a payroll tax holiday, why don’t we just reduce or eliminate the payroll tax?
• Why doesn’t Congress and the Administration look at our overall tax structure and look for ways to decrease our taxes instead of imposing new ones to pay for health care or other government programs?
• Let’s do more to accelerate depreciation of costly equipment, especially those used by manufacturing companies? 

It is going to take more than a summit to kick start our economy.  Instead of talking to people “Inside the Beltway,” policy makers would be wise to talk to and listen to those who are actually in a position to create jobs.  If they listen, they might learn a thing or two about job creation.   

Tell me what you think?

Specifically, the new Consumer Financial Protection Agency would assume regulatory responsibilities related to consumer finance now performed by other federal agencies, including the Federal Trade Commission, the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA).  The role of the federal government in determining what financial products consumers can access would grow.

We can all agree that some reforms are needed, but a government takeover of our financial system is not the answer.  We can’t afford to limit access to credit, at a time when many of our small businesses need it most. 

How would this new agency impact small businesses?  Most of the 26.7 million businesses in the United States rely on sources of consumer lending to finance their business.  Thus, small businesses ability to access credit would have to go through a government run agency.  That is concerning since, according to the U.S. Chamber of Commerce, 97% of businesses with 20 or more employees use some form of credit.

While small businesses rely heavily on credit, they still have a difficult time accessing it.  Most new small firms do not have a credit or revenue history, and their high failure rate makes them a risky investment for lenders.  In 2003, “close to 20% of firms with fewer than 20 employees did not even try to apply for credit because they expected to be denied.”  Due to the poor economic climate today, small businesses have an even greater need to be able to borrow in order to either start their firm or keep it growing.

Regulations enforced by the CFPA, would alter the free flow of capital and reduce the market forces in our consumer lending system.  If small businesses cannot get the resources they need to serve their customers, they will likely be forced to close or significantly change their business.  According to conservative estimates by law professors at George Mason University and the University of Chicago, the implementation of the new agency’s regulations would:

• increase the interest rates consumers pay by at least 160 basis points;
• reduce consumer borrowing by at least 2.1 percent; and
• reduce the net new jobs created in the economy by 4.3 percent.

The agency would also dictate who can receive loans, taking that decision away from banks and other institutions.  This “one-size-fits-all” approach to financial services would, according to the U.S. Chamber of Commerce, “ignore the fact that small businesses use consumer financial products in different ways than the average (household) consumer.”

Small businesses are the backbone of our economy, creating most of the jobs, providing vital services and products to consumers around the world.  The proposed Consumer Financial Protection Agency would only make it even more difficult for small businesses to access credit and will do very little to actually protect consumers.  At a time when the economy is still struggling to recover, the last thing Congress ought to consider is an additional layer of government regulation that will hurt our small businesses.

What do you think?

Last week the House Education and Labor Committee held a hearing on a proposal, H.R. 3991, the Emergency Influenza Containment Act.  If passed, this bill would require employers with as few as 15 employees to provide five days of paid sick leave per 12 month period to all full or part time workers who are sent home by their employer or directed to stay home by their employer because of contagious illness such as the H1N1 virus.  The Senate also held a hearing on the issue.

It is pretty clear that some in Congress are using the excuse of the swine flu to push through more mandates on our businesses.

There is no doubt that our small businesses want to ensure their workplaces remain safe and healthy during the flu season and beyond.  Most small businesses are already used to developing contingency plans and flexible schedules so the work can continue when people are out with the flu, taking care of a family member or simply on vacation. 

This legislation fails to give employers and employees the freedom to negotiate, with each other, the benefit structure that works best for the employee, the employee’s family needs and the company.  A one size government fits all mandate is not the answer.

New mandates bring new costs in the way of more paperwork and regulations, all at a time when our small businesses can least afford it.  Unemployment is hovering at 10.2 percent and we need our small businesses to help us out of this economic recession.  

Mandated sick leave is not a cure for what ails our small businesses.  A better solution is to look for policies that empower the employer and the employee.  What do you think?

The bill amounts to a federal takeover of our health care system.  It creates 111 new boards, bureaucracies, commissions and programs!  A few samples include the Health Choices Administration, Council for Emergency Care, National Women’s Health Information Center and the Public Health Investment Fund (a full list of all 111 new bureaucracies can be found below). 

There was another way.  House Republicans offered some common sense ideas that the National Center for Policy Analysis has been pushing for years – giving our small businesses the ability to cross state lines to purchase health care, providing them access to more affordable health care for their employees.  The alternative also works to reduce health care costs by enacting medical liability reform.

The debate is far from over.  The United States Senate will soon begin debate on their version of health care reform, while it is a “lighter” version of the House bill, it still has many problems. 

Congress needs to take its time to get it right and so far that hasn’t happened.  Any reforms made must help, not hurt, our small business owners with tax increases and costly new mandates.  There is too much at stake for our economy to rush through a reform bill that would only make our health care problems worse.  What do you think?

A list of all the new boards, bureaucracies, commissions, and programs created in H.R. 3962, Speaker Pelosi’s government takeover of health care:

• ANTI-family- Does not allow parents to pass their hard work and wealth on to their children
• ANTI-farm- Farms are especially vulnerable because they hold vast amounts of land which are subject to the estate tax as they are passed from generation to generation
• ANTI-small business- Hurts small businesses that don’t enjoy the same tax shelters and benefits as large corporations

Small business owners and family farmers have large investments in infrastructure and many don’t have the large capital assets they need to pay the tax, and many times are forced to sell the business just to meet their financial obligations. 

Our small businesses are struggling.  They are struggling to keep their doors open, their employees paid and access to capital flowing.  They don’t need any more taxes – not now and not when they die.   What do you think?

The three main components include: take further steps to provide small businesses with access to credit by supporting community bank lending through the Financial Stability Plan; seek legislation to increase maximum SBA loan sizes to allow more businesses to access the credit they need; and convening a Treasury-SBA Small Business Lending Conference to work with regulators, lenders and Congress to ensure credit is available to small business.  Do we really need more conversations on the issue?  Let’s get something done.

Access to credit is critical for many of our small businesses – as credit has tightened over the last year, many of our small businesses have felt the pinch.  But, if we have learned anything from Bailout Mania which has swept over Washington, DC, spreading around federal dollars and increasing government loans will do very little to actually stimulate our economy.  Instead we need policies that will have a positive, long-term impact on businesses and allow them to get more access to capital, reduce their overall costs and allow them to invest more in their employees and their business.  We need less government involvement, not more.

We have been arguing for a reduction (or elimination) of the payroll tax; allowing small businesses to cross state lines to purchase more affordable health insurance for their employees; elimination of the Alternative Minimum tax; and reducing federal mandates that cost time and money.

Long-term, free market solutions will do more to get our economy going and keep it going, than more federal handouts.  What do you think?

• Recognizes the importance of balancing work and family to job productivity and healthy families;
• Recognizes that an important job characteristic is a work schedule that allows employees to spend time with families;
• Supports the goals and ideals of `National Work and Family Month’, and urges public officials, employers, employees, and the general public to work together to achieve more balance between work and family; and
• Requests that the President issue a proclamation calling upon the people of the United States to observe `National Work and Family Month’ with appropriate ceremonies and activities.

Nearly everyone understands that our work force is dramatically different than it was decades ago.  The findings included in the House Resolution also make the point that “85 percent of United States wage and salaried workers have immediate, day-to-day family responsibilities outside their jobs and job flexibility allows parents to be more involved in their children’s lives.”

Unfortunately House Resolutions have little teeth – they are good talking points and certainly help to bring attention to important issues.  But Congress needs to take this resolution one step further and actually support and pass policies that back up these ideas, without imposing new mandates on our businesses.

For one, we need more flexible work arrangements – as the Resolution suggests.  Many families struggle to balance work and family, making sure they have enough time off to care for a sick child or attend a soccer game.  We need to give private sector hourly employees the option to take time off in lieu of overtime wages, a benefit that our federal government employees have enjoyed for three decades. 

Working families, men and women, will continue to re-shape and re-define our workforce.  We need to make sure that our laws can keep up with the changes.  What do you think?

This year has produced some compelling numbers in financial performance:

• 31% of companies have grown and 21% are stable and have neutral performance. 
• 54% have made their business environmental friendly.
• 35% are interested in making their business environmental friendly.

These women members of WPO say their greatest threats to the bottom line  are economic conditions, customer retention, competition, and human resources.  Fifty five percent plan to hire additional employees in 2010 and 53% have kept employee salaries the same with 15% increasing employee salaries.

At a time when unemployment is headed toward 10% in this country (this rate hasn’t been this high since the ‘80’s), women owned businesses continue to grow.  Have we heard about this new survey in the mainstream media?  Are people talking about this success?  Can we find strength and motivation in these numbers?  Yes, we can!  This is the free market at work.

Membership in WPO requires a member to have $2 million in gross annual sales or $1 million for service-based business.  WPO members collectively generate $14.5 billion in annual revenue and represent about 22,000 years of collective business experience.  The membership comprises 1,400 accomplished women entrepreneurs at the multi-million dollar level who aim to increase their business success.  Women now drive the world economy.  Globally, they control about $20 trillion in annual consumer spending, and that figure could climb as high as $28 trillion in the next five years. 

What say you about this ray of sunshine?

October 3^rd marked the one-year anniversary of the largest government bailout in U.S. history.  The passage of the Troubled Asset Relief Program (TARP) gave our government (and taxpayers) a majority ownership stake in most of our financial services companies.  This is one anniversary we shouldn’t be excited to celebrate.

In the year since the TARP was launched, things have gone from bad to worse.  In the last nine months we have watched as the federal government took over General Motors; passed a “stimulus” bill that did little to stimulate small business or our economy; transformed itself into a used car salesman with the Cash for Clunkers program; and it is now working around the clock to take over our health care system.

As small business owners and entrepreneurs, we know that innovation, hard work, ingenuity and capital investment are key components to a healthy economy.  There isn’t much the federal government can do except keep taxes low and resist the temptation to add new mandates.  Unfortunately, that hasn’t happened much this year.

With small business representing 99.7 percent of all U.S. employer firms, legislators need to move beyond more mandates and regulations and look for ways that really help our small businesses.

Let’s take a look at the health care debate. The legislation advancing in Congress would require all Americans to get insurance—through an employer, a government program or by buying it themselves.     The more people learn about the health care reform proposals, the more they don’t like them. 

I have heard from small business owners across the country that what they are hearing about current legislation will do little to help them provide access to health care but does a lot to penalize them for not providing coverage.

There were nearly 500 amendments lined up for the “Baucus” health care bill (the bill that Senator Baucus has introduced in the Senate and will likely be the vehicle for any reform).  It is clear there are a lot of people who don’t like the bill in its present form.  And, there is enough opposition to a “public” or government option that it was voted down in Committee last week.

Health care reform legislation will be debated on the Senate floor during most of October.  All indications are that another effort will be made to re-visit the public option as well as many other ideas – some good, some bad. 

Still absent from the debate over health care are some common sense, free market solutions that will incentivize employers to offer coverage instead of imposing new surcharges on employers.  Instead of taxing employers why don’t we let them cross state lines to purchase health care for their employees?  Why won’t Congress allow people to carry their health insurance from job to job or keep it if they lose their job?  And, why aren’t we debating the need to expand Health Savings Accounts?  Can you answer any of these questions?  Talk to me………

Terry Neese

Distinguished Fellow

National Center for Policy Analysis