Developments in Washington from the Perspective of Small Businesses
PDE staff participated in a Virtual Summit organized by the National Federation of Independent Business (NFIB). Our report of the event follows:
On September 15, the NFIB held a Virtual Summit featuring interesting debates on the impact of health care reform proposals and the state of the economy on small businesses.
In the “Healthcare for Small Business” session, the panel discussed the difficulties small business are facing in attracting talent due to the disadvantages they face when obtaining adequate health insurance for their smaller workforce, and the ways that reform can address these difficulties. Stuart Butler, Vice President for Domestic & Economic Policy Studies at the Heritage Foundation, emphasized that “a mandate for small businesses is not the way to increase coverage” because it would actually hurt business formation. He called for: a) regulation that would encourage the creation of a much wider range of outside plan options, and b) for clarification of the tax code such that employees can receive tax benefits regardless of where they obtain their plans. Len M. Nichols, Director of Health Policy Programs at the New America Foundation, emphasized that for small businesses to have more choices, government should reorganize the insurance market through smart measures such as a guarantee that insurers will not discriminate.
Kent Hoover, the Washington Bureau Chief of the Washington Business Journal, commenting on the possible public option, explained that small business owners are divided on the issue. Some feel that such measure is needed to keep insurance companies honest, while others that a public option would undercut private insurers, raising costs.
Health care reform was also a topic of discussion in a second policy-related session, “Small Business and the Economy.” Panelist William C. Dunkelberg, NFIB Chief Economist, said: “Don’t use small businesses to do things the government does not want to do.”
Addressing the question of how the recession has affected small businesses, Dunkelberg explained that the biggest problem for small businesses has been weak sales, rather than a credit crunch. Lack of credit is not unusual for young businesses, but other factors do make this prolonged recession particularly challenging. Although it is more difficult to obtain credit, only 4 percent of small business owners reported access to credit as their major problem, according to a NFIB poll.
David Walker, President and CEO of the Peter G. Peterson Foundation, expressed more concern for the structural challenges that the United States faces than for the short term impacts of this recession. Among the most pressing challenges are the rising debt and deficit spending. Denny Dennis, NFIB Senior Research Fellow, mentioned the following future implications for small businesses: increased direct taxes (e.g., value-added tax), increased indirect taxes (e.g., employer mandate), and a reduction in benefits or expenditures (e.g., raising the eligibility age for social security, worse service at the post office, possibility of government borrowing crowding out credit for small businesses, etc.).
Besides a health care reform that will improve the financial outlook, panelists agreed that Washington can help small businesses by addressing the problems associated with deficit spending and the national debt.
[Reported by Cristina Fernandez and Marianne Sierocinski]