Research Briefing

Obama Pledged To Focus On Economy, But His Government-Run Health Care Plan Will Kill Jobs, Stifle Economic Growth

DURING STATE OF THE UNION ADDRESS, OBAMA PLEDGED TO FOCUS ON ECONOMY …

Obama Pledged To Lead “Government That Matches” Decency Of American People By Beginning “With Our Economy.” “In this new decade, it's time the American people get a government that matches their decency; that embodies their strength. And tonight, tonight I'd like to talk about how together we can deliver on that promise. It begins with our economy.” (President Barack Obama, Remarks In State Of The Union Address, Washington, DC, 1/27/10)

BUT OBAMA USING SENATE DEMS’ HEALTH CARE BILL AS “JUMPING OFF” POINT FOR THURSDAY SUMMIT …

ABC News’ Jake Tapper: “As ‘Jumping Off’ Point For Discussions On Health Care, White House Will Post Senate Democratic Bill + Potential Fixes.” (Jake Tapper, “As ‘Jumping Off’ Point For Discussions On Health Care, White House Will Post Senate Democratic Bill + Potential Fixes,” ABC News’ “Political Punch” Blog, 2/22/10)

A BILL THAT HITS SMALL BUSINESSES WITH NEW JOB-KILLING TAXES, REGULATIONS …

Obama’s Tax On Health Insurance Would Hit Small Business Hardest. “Small employers would also probably be hit by the taxes ... small businesses tend to pay more for their insurance than bigger employers that can negotiate better premiums ... About 14 percent of small employers, counted as those with fewer than 500 workers, now offer policies that would be subject to the excise tax ... ‘That is a very heavy hammer on the cost of your premiums,’ said Donna Marshall, the executive director of the Colorado Business Group on Health ... ‘You don’t want to cause a chilling effect on the employers who are trying to do the right thing.’“ (Reed Abelson, “A Proposed Tax On The Cadillac Insurance Plans May Also Hit The Chevys,” The New York Times, 9/20/09)

• Almost 70% Of Employers Say They’d Raise Deductibles Or Change Coverage To Avoid The Tax. “Two-thirds of employers would raise deductibles, change insurers or scale back coverage to avoid the so-called Cadillac tax on high-cost benefits proposed in the senate democrats' health care bill, a survey released today by consulting firm mercer says.” (Julie Appleby, “Health Care 'Cadillac Tax' Could Hit Employers Hard,” NPR, 12/3/09)

“Punitive” Tax For Businesses Who Can’t Afford Government-Approved Health Insurance Will Kill Jobs, Reduce Wages. “An employer mandate with a punitive payroll tax: Research shows an employer mandate could cost 1.6 million jobs with more than 1 million of those jobs lost in the small business sector. The approach fails to increase affordability and, instead, devastates the economy - with the greatest impact being levied on the low-income community who will pay through depressed wages and lost jobs ...” (Susan Eckerly, Letter To Representative, National Federation Of Independent Businesses, 7/15/09)

• And Make It More Difficult For Employers To Hire Workers They Need, Especially Low-Income Workers. “[E]mployers who do not offer ‘affordable’ coverage to employees would have to help pay the cost of such benefits for their low-income workers ... The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal ‘could unintentionally discourage the hiring of lower-income people,’ by adding a new ‘health surcharge’ to the cost of employing them.” (Jeff Zeleny & Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurers,” The New York Times, 6/23/09)

New Regulations Will Force Businesses To Hire Less Workers. “‘Those who are likely to be affected are those who work at smaller firms where coverage isn’t as comprehensive and their employer doesn’t subsidize much of the premium cost,’ said Elizabeth McGlynn, associate director of RAND Health, a division of the RAND Corporation. … And for employers compelled by the mandate to add or enhance coverage, she said, the higher costs might very likely be passed on to consumers of their products or services, or prompt them to hire fewer workers.” (Katharine Q. Seelye, “Employer Mandate Becomes Sticky Issue In Reconciling Bills,” The New York Times’s “Prescriptions” Blog, 10/31/09)

AND RAISES CURRENT INCOME TAXES ON SMALL BUSINESS OWNERS, LEADING TO SERIOUS ECONOMIC DAMAGE

Obama’s Medicare Payroll Tax Hike Would Hit Many Small Business Owners. “The legislation would be paid for through a ... a payroll tax on the wealthy ...”; “In a 2007 survey, the National Federation of Independent Business found that about 15 percent of small-business owners -- and half of those with at least 20 employees -- said they expected their household income to exceed $200,000.” (Ricardo Alonso-Zaldivar, “Tempers Flare As Senate Debates Health Care,” The Associated Press, 12/2/09; Lori Montgomery and V. Dion Hayes, “Small Businesses Brace For Tax Battle,” The Washington Post, 4/27/09)

New Medicare Tax “Takes Money Out Of The System Needed To Create Jobs.” “Others say an extra tax on high earners would crimp the economy, and that taxing the high-value plans would limit wasteful medical spending. The extra Medicare tax ‘takes money out of the system needed to create jobs,’ said John Goodman, president of the conservative National Center for Policy Analysis.” (Naftali Bendavid, “Reid Weighs Rise In Medicare Tax,” The Wall Street Journal, 11/13/09)

And Will Lead To Serious Economic Damage. “Many of these people have considerable discretion in how much they work, spend and save.  A surtax would reduce work effort, reduce saving and investment, and increase tax avoidance and evasion.  The economic damage would be especially serious because the millions of people the surtax would target are among the most productive and economically dynamic people in society.” (Michael Schuyler, “The Surtax: Worse Than the Alternative Minimum Tax,” National Center For Policy Analysis, 10/29/07)