For more than three years now, business owners and managers have faced increased costs and uncertainty, along with threats from the Obama White House.
It’s been the case with taxes and regulations. And the groups or industries in the crosshairs include energy companies, private investors, banks and other financial institutions, as well as the health care industry. But the fallout spreads across the entire business community and economy.
Let’s consider ObamaCare.
President Barack Obama signed this measure into law in March 2010. Two years later, on March 5, Rasmussen Reports released a poll showing that 53 percent of likely voters favored repeal of ObamaCare versus 42 percent opposing repeal. Opposition has remained strong throughout the past 24 months. That’s striking.
One of the tricky aspects of ObamaCare, however, is that most of the really bad stuff does not kick in until 2013 and 2014 — conveniently after the 2012 elections.
In 2013, the Medicare payroll (income) tax for individuals earning more than $200,000 and couples more than $250,000 is increased from 2.9 percent to 3.8 percent, and it is extended to cover capital gains and dividends.
In addition, a 2.3 percent tax will be imposed on the revenue earned by medical device makers. That tax comes on the heels of a levy imposed in 2011 on pharmaceutical manufacturers.
If the objective here is to reduce the incentives and resources available for investment, innovation and job creation, then such tax increases are on target. If interested in growth, however, then they’re not exactly hot ideas.
As for 2014, ObamaCare’s two big mandates kick in. An individual health insurance mandate requires individuals to obtain “acceptable,” as defined by the government, health insurance coverage or pay a penalty, which would reach as high as 2.5 percent of income in 2016. Meanwhile, employers with 50 or more workers that don’t offer health coverage will face a $2,000 penalty annually for each full-time employee above 30 as long as at least one employee receives a health insurance subsidy.
For good measure, state-based health insurance exchanges must be established. Billed as pro-competition marketplaces, in reality, these will simply serve as vehicles for government to regulate and gain more control over health insurance.
As for taxes, a new levy will be imposed on health insurers in 2104. This might score a few populist political points, but it only means increased health insurance costs for all.
Finally, Medicaid eligibility expands in 2014 as well. That will mean higher costs for taxpayers in the states.
From the perspective of the general business community, the certainty of ObamaCare is that costs will rise, including higher taxes, fewer resources available for both investment and consumption, and assorted distortions and expenditures due to expanded regulation. The only uncertainty is the following: Just how high will the direct and indirect costs of ObamaCare run? For example, just in terms of the federal government, trillions of dollars will be spent in coming decades, surging far ahead of the assumptions laid out by ObamaCare supporters. That will translate into demand for even more taxes than those already included in the Obama health care law.
Additional uncertainty is added into the mix via the U.S. Supreme Court and the 2012 presidential and congressional elections. But this uncertainty might not be so bad.
From March 26-28, the U.S. Supreme Court is scheduled to hear arguments on ObamaCare. The big issue before the court is the individual mandate requiring the purchase of health care coverage. Can the federal government force individuals to engage in a commercial transaction simply because they exist as citizens? If so, that takes federal power to a level never imagined before.
In addition, the court will look at the Medicaid provision. The law mandates that states either cover the costs of expanding Medicaid coverage, or face losing federal Medicaid funding. Does this level of coercion violate state sovereignty?
Finally, if the court does strike down the individual mandate, what would that mean for the rest of ObamaCare? Would the court strike down the entire law? If not, what would be done with a messy, costly law that would get even messier and more costly?
As for the November elections, the leading Republican presidential candidates have made clear that repealing ObamaCare is a major objective.
According to his health care plan, “On his first day in office, Mitt Romney will issue an executive order that paves the way for the federal government to issue ObamaCare waivers to all 50 states. He will then work with Congress to repeal the full legislation as quickly as possible.”
Rick Santorum calls the repeal of ObamaCare “priority No. 1.” His focus then would be on “market-driven, patient-centered alternatives” to boost access and affordability. Those include strengthening tax-free health savings accounts; expanding choice and competition by allowing health insurance to be purchased across state lines; allowing health care coverage to be bought with pre-tax dollars; and implementing medical liability reform.
Businesses and investors usually do not like uncertainty. When it comes to ObamaCare, however, uncertainty is welcome when the choice is between the certainty of increased taxes, regulations and costs if ObamaCare labors on, versus the chance to repeal this ugly mess and get positive reforms implemented.
Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.