Commentary: Why Do Small Businesses Support E.O. on Contractor Political Spending? Because "Deniability" is Not a Small Business Value
That’s why it’s encouraging to hear news of a potential executive order from the Obama Administration that would require government contractors to disclose their political spending if they surpass a $5,000 threshold. It’s a small step, to be sure, compared to the big problems of covert political spending and a broken campaign finance system. But it’s a step in the right direction (see this May 4 post from OMB Watch for more background on the potential order).
Not everyone in the business community seems to feel this way, though. In an interview for an April 26 New York Times story, R. Bruce Josten, top lobbyist for the U.S. Chamber of Commerce, said the Chamber “is not going to tolerate” the proposed transparency order.
Transparency is a Main Street value. Small business owners take pride in being straight-shooting, “what you see is what you get” business people. So why is the U.S. Chamber out guns blazing against this proposal?
You don’t have to dig far to find out. It turns out over 50 of the companies represented on the U.S. Chamber’s board of directors are government contractors, and to the tune of a whopping $44 billion in 2010, according to an analysis compiled by U.S. Chamber Watch.
So, that means almost half of the companies represented on the U.S. Chamber's board – including the likes of Lockheed Martin, Pfizer, Verizon, WellPoint, JPMorgan Chase, and even the U.S. Chamber itself – would have to disclose both their direct and indirect political spending. The indirect part is key, because it means contributions given by companies to the U.S. Chamber for political purposes – like the health insurance industry’s $86.2 million bankrolling of the Chamber’s anti-health reform activities in 2009 – would be part of required disclosures.
To understand why this is just so “intolerable” an idea to the Chamber, it helps to understand the organization’s business model. James Verini wrote about this in the Washington Monthly’s July/August 2010 issue, quoting an interview with U.S. Chamber CEO Tom Donohue:
“I asked Donohue what, exactly, the Chamber does. ‘Two fundamental things,’ he replied. ‘We’re advocates. Sure we do studies, sure we do events, sure we do meetings, sure we have all kinds of stuff, but we’re advocates.’ And then he surprised me again with his candor. ‘The second thing we do is really more interesting,’ he said. ‘We’re the reinsurance industry for individual industry associations and state chambers of commerce and people of that nature.’”What did Donohue mean by “reinsurance?” Verini elaborates later in his article:
“In other words, a large part of what the Chamber sells is political cover. For multibillion-dollar insurers, drug makers, and medical device manufacturers who are too smart and image conscious to make public attacks of their own, the Chamber of Commerce is a friend who will do the dirty work. ‘I want to give them all the deniability they need,’ says Donohue.”“All the deniability they need.” That’s why the Chamber is so up in arms about the proposed executive order – because it will take away that “deniability” by laying bare which corporations are laundering their political contributions through third parties, undermining one of the core benefits the Chamber offers to its high-roller members.
Deniability is not a small business value. In fact, it’s the polar opposite of one - the value of doing what you say and saying what you do. Small business owners take responsibility for their actions. Big corporations should, too, including their political spending, and that’s why the Obama Administration should forge ahead with this executive order. It would be a victory for transparency and for a more level playing field for America’s small businesses.
On April 20, the Montana Small Business Alliance hosted a business roundtable on clean energy and clean air issues with U.S. Senator Jon Tester. Small business owners from Billings and Eastern Montana communities got face to face and shared their perspectives on clean air and energy issues with Senator Tester, who serves on both the Energy & Water Development and Interior, Environment, & Related Agencies subcommittees of the Senate Appropriations Committee.
The business owners who joined the roundtable represented a true cross-section of Montana. They included a farmer/rancher, an architect, a restaurant owner, and a carpenter. Though they come from many different sectors, these business leaders were united by their interest in protecting Montana’s quality of life to support healthy communities and vibrant local economies.
Montana has seen many battles waged on the premise that economic growth can only come at the expense of the state’s natural beauty and environment. The business owners at the MSBA roundtable turned this premise on its head, making a compelling case that long-term economic growth goes hand in hand with preserving the state’s natural splendor.
Senator Tester and the roundtable participants discussed the potential for an expansion of jobs related to clean air, clean water and energy efficiency. The business leaders cited examples of maximizing energy efficiency at their businesses as a money-saving mechanism. The conversation also touched on the health care costs related to pollution.
"Nationally, we are spending tens of billions of dollars on health care related costs of using carbon based fuels," said Ben Reed, owner of Winpower West. "We want our children and grandchildren to enjoy the fruits of our labor, not have to pay the costs for them."
“Hearing from small business owners who are strengthening Montana’s economy and creating jobs is one of the most important things I do," Tester said. "Today’s roundtable was full of good ideas about working together to move our economy forward while making responsible decisions about Montana’s land, air and water.”
On March 30th, Main Street Alliance leader Rick Poore made the trek to Washington, DC from his business in Lincoln, Nebraska to testify at a hearing of the House Energy & Commerce Committee's Subcommittee on Health.
Rick discussed his support for the new health law. He told his story of steep annual rate increases - several times in excess of 30 percent - in the years before the passage of the health law. And he recounted how his current insurer does rating differently, spreading risk and costs more effectively across younger and older workers, and how he sees that as a microcosm of how the new health insurance exchanges will help small businesses by expanding risk pooling and spreading risk more effectively.
Rick's opening remarks from the hearing are pasted below:
Chairman Pitts, Ranking Member Pallone, and members of the Health Subcommittee,
Thank you for the invitation to testify today. My name is Rick Poore, and I own DesignWear, a screen printing business in Lincoln, Nebraska. I’m also a member of the Main Street Alliance small business network.
I’ve been a small business owner for 17 years. I started with 3 employees, and we’ve grown to employ 29 people.
I offer health insurance to my employees. It makes sense for morale and retention. But our rates have gone up every year – several times over 30 percent.
At the same time, our benefits were whittled away, in an effort to keep things affordable, until we had little more than a fig leaf left.
Two years ago, I switched to a new insurer. They do rating differently, spreading risk and costs more evenly, and it’s markedly cheaper for me overall. I see this as a microcosm of the new health insurance exchanges coming in 2014.
The country counts on small businesses to create jobs, but if you want to talk about a job-killer, look no further than runaway health insurance costs. Small businesses’ ability to create jobs has been seriously undermined by insurance costs more than doubling in 10 years.
We saw years of steep increases, with no tools to do anything about it. Without bargaining power, I had better odds from a midway carney than I did from my insurance company.
The Affordable Care Act is finally changing that, for the better.
The argument that the health law will cost our economy jobs ignores reality. It ignores the lessons of the last decade, where it was the lack of action by Congress to curb skyrocketing costs that left small businesses in the lurch.
The real threat to job creation is the threat of repealing the law and going back to a system that stacks the deck against us.
On the employer responsibility requirement, we’ve got to remember two facts. First, over 95 percent of our nation’s businesses have less than 50 workers and won’t be impacted. Second, 96 percent of businesses with more than 50 workers already offer coverage.
If some larger businesses complain that paying for health coverage will harm their ability to create jobs, remember that when they don’t pay, the rest of us pay their way for them, and that hurts our ability to create jobs. This is anti-competitive.
Imagine if my competition stopped paying wages and I was held responsible for making their payroll. It may sound crazy, but that’s effectively what we’re doing with cost shifting in health care.
Recent data from insurers in Nebraska, Kansas City, and national companies like UnitedHealth Group and Coventry show encouraging increases in small business coverage. ,
From the tax credits to stronger rate review and the value for premiums requirement, the health law is already helping small businesses offer coverage, save money, and plow those savings back into job creation. We’ll get even more help in 2014 when the insurance exchanges open.
I’m looking forward to broader risk pooling and bargaining power in a Nebraska insurance exchange.
There are 40,000 firms in Nebraska with less than 50 employees that could buy in the exchange, employing 230,000 people. Talk about increasing my bargaining power.
I know insurance lobbyists are trying to blame recent rate increases on the new law. But insurers find an excuse to raise rates every year. If they’re raising them again, it’s in spite of the law, not because of it.
Even insurance executives admit this: an executive in Massachusetts said recently that only one percentage point of his company’s increases this year was due to the new law.
Small business people are problem solvers. We wake up every day looking for a better way to do business. We take whatever pitch is thrown at us and do something with it.
Problem solving is what the American people send Representatives to Washington to do.
Here’s the thing about problem solving: most solutions aren’t perfect out of the box. But that’s no reason to scrap them. We make a start in the right direction and correct the course as needed.
Our country and our economy can’t afford to go back to a health system that stacks the deck against small businesses. We’ve got to move forward.
The other day I had to ask my wife when we actually started DesignWear – as a habit, I believe most entrepreneurs look mainly forward and rarely back. That’s what I’m asking you to do.
By moving forward, you can level the playing field for small businesses, allowing us to focus on creating jobs and building our local economies.
Every day until the end of the Congressional recess on September 8, MSA is featuring a real-life story of a small business owner impacted by the health care crisis here on our COUNTDOWN page. It’s our SMALL BUSINESS COUNTDOWN TO HEALTH CARE, and it’s part of our national STAND WITH SMALL BUSINESS initiative. MSA small business owners are calling on Members of Congress to stand with small business, not the insurance industry, and pass real health care reform when they head back to Washington DC on September 8.
DATE: SEPTEMBER 1
COUNTDOWN METER: DAY 7 - ONE WEEK TO END OF RECESS
STATE SPOTLIGHT: ILLINOIS
Radha Jaya Raghavan
Systems Integration Consultant
I’m a certified IT professional, and I recently started my own consulting business. As a self-employed person, my insurance premium has skyrocketed in recent years. Since November 2007, it’s gone up five times, with an overall premium spike of 55 percent to 60 percent.
The premium hikes all started when my doctor sent me for a test because of family medical history. I was then hit with a higher premium and an out-of-pocket expense to cover the cost of the test. Every time I called, they had a different story about what was covered and what was not. Eventually, I paid a lot of money out-of-pocket, because I was afraid that my credit history would be destroyed while they delayed payment.
My fear is that my insurance rates will keep rising, and I’m very unsure whether I’ll be able to maintain coverage. I’m afraid to go to my doctor for a check-up or get any routine exams done. I’m worried that I'd be giving the insurance company an opportunity to increase my premium yet again.
We need to have care and treatment that is easy to obtain, without having to mortgage one’s house or file for bankruptcy. The system should encourage entrepreneurs, not penalize them with confusion and higher insurance costs. That’s what health care reform means to me.