While corporate CEOs are pressuring Congress to cut Social Security and Medicare as part of a so-called "Grand Bargain" to reduce the debt, small business owners say that cuts to Social Security and Medicare would be devastating to small businesses across the country.
A new series of reports from the Main Street Alliance and Social Security Works, Business is (Baby) Booming, analyze the important role Social Security and Medicare play in both strengthening the retirement security of small business owners themselves, and fueling consumer demand on Main Street in all 50 states and the District of Columbia.
Instead of cutting Social Security and Medicare, small business owners say Congress should crack down on offshore tax abuse that allows the wealthy and corporations to avoid more than $100 billion in U.S. taxes per year by sheltering their income offshore.
State "Business is (Baby) Booming" Reports
- Washington, D.C.
- North Carolina
- North Dakota
- New Hampshire
- New Jersey
- New Mexico
- New York
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
On June 21, the Department of Health and Human Services released figures showing health insurance customers are due rebates totaling $1.1 billion from insurance companies that spent too little of their premium dollars on health care in 2011. These rebates are thanks to the 80/20 “value for premiums” rule in the Affordable Care Act, which requires insurers to spend at least 80 cents of every premium dollar collected in the small group and individual markets on health care (as opposed to lobbying, advertising, executive compensation, and general administration).
HHS also released state by state numbers (available here) for the total amount of rebates and the number of insurance customers who will benefit. These figures include: $123.6 million for 1.3 million consumers in Florida; $86.5 million for 1 million consumers in New York; $61.8 million for 300,000 consumers in Illinois; $43.1 million for 687,000 consumers in Virginia; and $27.9 million for 141,000 consumers in Maryland.
While rebates are not due until August 1, small businesses are already benefiting from the 80/20 rule in another way: it’s been forcing insurers to hold premiums down in attempts to avoid owing rebates to customers. The Main Street Alliance released the following quotes from businesses that are already benefiting from the 80/20 rule in this way:
Louisa McQueeney, CFO of Palm Beach Groves in Lantana, Florida:
“Last November, our health insurance agent called with our renewal: after annual increases of 12 percent, 22 percent, and even 32 percent, our premiums in 2012 were going to increase by a grand total of 0.2 percent. That is, essentially flat. This flat renewal came with exactly the same plan – no dumbing down the coverage, no increase in our deductibles, everything was the same.
“I’m thanking ObamaCare’s 80/20 rule for holding my premiums in check. And now, with the new announcement of more than $123 million in rebates due to 1.3 million people in Florida, we may even get a rebate on top of that. For the first time in my twelve years running this business, the health care picture is finally looking up.”
Brian England, owner of British American Auto Care in Columbia, Maryland:
“We renew our insurance in August every year, so around June is when I usually start to get nervous. When we sat down with our agent last summer, I was bracing myself for the bad news. But when he gave us our quotes, my worry turned to disbelief. Our rates were going DOWN 6 percent! I almost fell off my chair.
“The first thing I asked was, ‘why?’ I just couldn’t make sense of it. Our agent explained the rate cut was thanks to the medical loss ratio requirement in the Affordable Care Act. The health care law is working for my business. It passes this technician’s inspection test with flying colors.”
On October 20, an all-star team of small business leaders from across the Main Street Alliance network made the trek to Washington, DC to represent the voice of Main Street small businesses in the nation’s capital.
Business owners came from Montana, New Jersey, New York, Oregon, and Washington to participate in meetings on Capitol Hill. In a day and a half, the team conducted close to 20 meetings with Senate and House offices, including three face to face meetings with U.S. Senators.
The group held wide-ranging conversations with congressional offices, covering topics including job creation and regulations, revenues and investment, health care, immigration reform, and fixing the housing market.
Some Hill staffers acknowledged that it was helpful – and refreshing – to hear from real small business owners back in their home states and districts, and to hear business owners with a different perspective on topics like taxes and regulations than you hear from the inside-the-beltway business lobbies. Mission accomplished!
Here’s a quick taste of some of the issues the group discussed in meetings on Capitol Hill:
Job Creation & Anti-Regulatory Attacks
Despite all the rhetoric in DC about “regulations,” what small businesses need is customers – demand – not deregulation. The focus on rolling back regulations is counterproductive in two ways. First, it distracts from the real issue, which is rebuilding the small business customer base. Second, the rules and standards that are under threat of being rolled back (financial reform, clean air, health insurance market reforms) are ones that protect small businesses and the communities they rely on from mistreatment by big corporate interests. Rolling back these standards and rules would only shift more risk and more costs onto the shoulders of small businesses.
See MSA’s 10 “dos and don’ts” for job creation
Revenues and Taxes
On revenues and taxes, Main Street Alliance small business owners stand squarely in support of efforts to raise revenues by closing corporate tax loopholes, ending the abuse of off-shore tax havens, and generally ensuring that large corporations and the wealthy are paying their dues. As MSA Executive Committee member Kelly Conklin puts it, “If you want to fly the American flag outside your corporate headquarters, you should be paying your way.” Raising revenues in these ways would generate resources for important investments in infrastructure and job creation, and it would level the playing field for small businesses (who don’t have access to things like off-shore tax havens) at the same time.
At the same time, MSA small business owners are strongly opposed to the push for a repatriation “tax holiday” for large multinational companies, or to giving big corporations a permanent tax holiday – and permanent incentive to off-shore jobs and profits – through what’s called a “territorial” tax system.
See the recent coalition letter MSA signed onto about tax reform
On health care, the MSA delegation discussed important advances in health care reform, and highlighted opportunities to continue building on health reform to maximize the benefits for small businesses.
The MSA delegation in DC also discussed the importance of a comprehensive approach to immigration reform for businesses, workers, and the economy. Enforcement-only policies like the mandatory E-Verify proposal currently in the House of Representatives would be bad for small businesses, bad for the workforce, and bad for the country’s bottom line.
See MSA’s fact sheet about the dangers of mandatory E-Verify
Fixing the Housing Market
On the importance of dealing with the mortgage crisis to create the space for consumer demand to bounce back and help drive the economic recovery, MSA’s small business owners believe more needs to be done. A newly announced program that may allow 1 to 2 million homeowners to refinance is a positive step, but with an estimated 11 million homeowners underwater in their homes, Congress and the Administration should advance proposals for mortgage modification and refinancing on a much larger scale to truly get at the problem of stifled consumer demand.