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A Voice from Fly-Over Country
December 2, 2009

Putting America’s Small Businesses in Intensive Care
by Robert L. Hale

MINOT, NORTH DAKOTA — Much is being said in the health care debate. Most of it is pure political gamesmanship that, if passed, would bleed American small businesses into a state of financial anemia. If the proposed legislation passed by the House and now before the Senate becomes law, we can expect that small business growth and vitality will stop dead in its tracks; millions more people will experience layoffs, and the unemployment rolls will exceed those of the Great Depression — and remain there indefinitely.

Is this claim simple fear mongering? Hardly. Those committed to imposing top-down health care on all Americans ignore the economic impacts — to say nothing of the implications of placing our health in the hands of a bureaucracy that has proven it cannot successfully operate any program.

Elected officials demonstrate little understanding of the laws of economics, or they chose to ignore those laws. Senator Kent Conrad, Chairman of the Senate Banking Committee, tells us we must get our financial house in order. He is correct, yet he voted for a health care bill that would break the back of small business — the engine of economic prosperity. He has actively participated in creating the dire economic situation in which we find ourselves. Conrad’s rhetoric and actions perfectly illustrate the adage, “Watch what they do, not what they say.”

The consequences of America’s financial mess are being felt. The irresponsible spending spree of the last 40 years unfortunately was not obvious to the American public. Debt accumulation instead of increased taxation hid the truth of what elected representatives were doing. Twelve trillion dollars of debt is simply deferred taxes, taxes whose interest alone will reach almost $1 trillion a year by 2019.

Congress continues to drag us to bankruptcy. National bankruptcy is just as real as personal and business bankruptcies. The debt is due, and high and growing unemployment are the first painful realities of our insolvency.

Instead of doing what every bankrupt citizen must do — tighten belts, stop spending, and go on a fiscal diet — Congress is doing the opposite. It has gone on a debt-funded spending spree. In the last year, we have spent $700 billion to bailout the financial industry, $787 billion in wasteful “stimulus” pork, and now we hear plans to impose a $1 trillion bill on the backs of small business through an ill-conceived health care bill. All of these actions defy the laws of economics.

The health care proposal will literally be the “straw that breaks the camel’s back.” As a small businessman, I operate retirement/assisted living facilities. Our business employs fewer than 100 people. The health care bill passed by the House would more than double our mandated health care costs, increasing them by $346,523.40 annually. The Senate bill would do virtually the same thing. This increase mirrors the bulk of our annual profit. Further, the financial market crash has denied us access to credit to grow our business. We cannot currently build new facilities, hire staff, or offer additional housing options to a growing elderly population.

If either “health care” bill becomes law, we will be forced to lay off workers and reduce services, increase rents, or both. The former will increase unemployment. The latter will force many of our residents out or severely stretch their retirement funds — funds already hit by the financial meltdown brought about by an irresponsible financial industry that these same taxpayers have since bailed out.

The President’s Chief Economic Advisor, Dr. Christina Romer, in her report, The Economic Effects of Health Care Reform on Small Businesses and their Employees, said, “Health care reform as envisioned in current draft legislation would reduce the current burdens on small firms and their workers.” As I read the report, I fully understood how Alice felt in Wonderland. There is a total disconnect among Congress, the President’s Council of Economic Advisors, and economic reality.

Health care proposals will increase unemployment. While neither bill would become effective for several years, the consequences will be felt immediately. Unlike government, businessmen plan for and anticipate the future and take steps to prepare for what they know will be coming.

Acknowledged unemployment is 10.2 percent. When we add those who have exhausted benefits or have given up looking for jobs, and factor in those working less than 40 hours per week, the rate jumps to more than 20 percent.

Either proposed health care bill will put small business on life support, crippling the economy and driving up unemployment. In short, Congress is about to put small business — and our entire economy — in intensive care.

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A Voice from Fly-Over Country is copyright © 2009 by Robert L. Hale and the Fitzgerald Griffin Foundation. All rights reserved.

Robert L. Hale received his J.D. in law from Gonzaga University Law School in Spokane, Washington. He is founder and director of a non-profit public interest law firm. For more than three decades he has been involved in drafting proposed laws and counseling elected officials in ways to remove burdensome and unnecessary rules and regulations.

See a complete biographical sketch.

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