“Ich Bin Ein Small Business”: Small Is So Beautiful To Mitt Romney
Our subject for today is the care and feeding of small businesses.
“I love you guys,” Mitt Romney told a teleconference hosted by the National Federation of Independent Business. “I love the fact that you’re working hard to follow your dreams and to build businesses. I — I love you guys. I love the fact that you’re — that you’re working hard to — to follow your dreams and to — and to build businesses.”
To summarize: We love you, guys.
And they’re everywhere! The Small Business Administration defines a small business as one with fewer than 500 workers, and that’s 99.7 percent of everything out there. “There are 5.7 million firms with employees in this country, and about 5.7 million have fewer than 500 employees — rounding slightly,” said Robert McIntyre, the director of Citizens for Tax Justice.
It’s sort of metaphysical, when you get right down to it. I am you as you are me and we are one and we are all small businesses. Ich bin ein small business. No wonder politicians want to get on their good side.
All of this takes us to President Obama’s call for Congress to extend the Bush tax cuts for families with incomes below $250,000 a year. Most people, the president said, believe it is wrong to “raise taxes on middle-class families.” It was certainly a triumphant moment for the administration’s economic policies. In 2008, who among us could have hoped that four years in the future, middle-class Americans would be making $250,000 a year?
But Romney called the idea “a massive tax increase on job creators and on small business.” He also denounced it as “another kick in the gut to the middle class in America,” thus signaling his determination to broaden the American middle even further, as well as to call everything the president does a “kick in the gut” for the rest of this campaign season.
How do we feel about this argument, people? We are not talking about business taxes, in the normal sense of the word. If we were, it would quickly become so incredibly confusing that you would be begging me to go back to the matter of the dog Romney once tied to the roof of his car.
The typical American business owner does not pay corporate taxes. He or she subtracts expenses from revenues and declares the bottom line as income. There are many, many advantages to this approach. You can avoid corporate tax rates, and it’s a lot easier to deduct things. If you’re a baker of gourmet cupcakes, you can subtract the entire cost of your new $50,000 ovens from your income, right up front, as well as lunch with your best friend who is also an occasional cupcake purchaser.
“There are rules, of course, but both the rules and the implementation of the rules are fuzzy,” said William Gale, the co-director of the Tax Policy Center.
And everybody can get into the game! Including partners in hedge funds and law firms and investment banks. “Here’s the beauty — each of the hedge fund principals themselves is a small business,” said Gene Sperling, director of the National Economic Council. Sperling is a small business himself because he gets occasional royalty payments for co-writing a few episodes of “The West Wing.”
This flight to small is so popular that the Congressional Research Service concluded that if taxes on high incomes went up, it would actually create more small businesses because more rich people would want to “seek self-employment because the opportunities for tax evasion and avoidance are greater.”
Small business growth. It’s what makes America great.
When the Republicans claimed that capping the Bush tax cuts at $250,000 would hurt small businesses, the Obama administration quickly retorted that only about 3 percent of the small business owners have incomes above $250,000.
Yeah, said the Republicans, but that little slice still represents more than 900,000 people, and half of all the nation’s business income.
Yeah, said the Democrats, but that’s because of the hedge fund managers and law partners and movie stars with rental property.
Yeah, said the Republicans, but the high-end sort-of-small businesses will still cut back on jobs or investment if their taxes go up. Taxes rise, bad things happen. It’s an article of faith. The Hartford Financial Group said it did a survey that showed just that, although as Robb Mandelbaum pointed out in The Times, only 2 percent of the small businesses surveyed actually cited taxes as their prime concern.
We do know these things: Republicans do not like income taxes, even for very wealthy people. Possibly particularly for very wealthy people. Barack Obama, who also has royalty income, is a small business. Possibly the only small business the Republicans do not love.
By: Gail Collins, Op-Ed Columnist, The New York Times, July 11, 2012
“If It’s Sunday, It’s Meet My Friends”: NBC’s David Gregory To Headline Conference For Major Republican Advocacy Group
The National Federation of Independent Business (NFIB), which calls itself “the voice of small business,” is one of the Republican party’s strongest allies. The group spent over $1 million on outside ads in the 2010 campaign — all of it backing Republican House and Senate candidates (and, Bloomberg News reported last month, “another $1.5 million that it kept hidden and said was exempt” from disclosure requirements). The group is the lead plaintiff in the lawsuit against the Obamacare law and bankrolled state governments’ challenges to the law. The NFIB has also taken stances against allowing the EPA to regulate greenhouse gases, opposing regulations on businesses, and supporting curtailing union rights.
Given the group’s obvious Republican alliance, it comes as little surprise that the NFIB’s three-day 2012 Small Business Summit, which begins Monday, will feature headliners Karl Rove and House Speaker John Boehner (R-OH).
But the first name and photo on the invitation for the $150-per-person event — Tuesday’s “keynote address” speaker — is NBC’s Meet the Press host David Gregory. He is marketed by NBC as an anchor and “trusted journalist.”
The Society of Professional Journalists’ Code of Ethics states:
Journalists should:
— Avoid conflicts of interest, real or perceived.
— Remain free of associations and activities that may compromise integrity or damage credibility.
— Refuse gifts, favors, fees, free travel and special treatment, and shun secondary employment, political involvement, public office and service in community organizations if they compromise journalistic integrity.
Regardless of whether Gregory is being paid for this event and of what he says in his keynote, allowing the NFIB to raise money for its political mission using his name, reputation, and celebrity appears to be at odds with journalistic ethics.
Gregory did not to respond to a ThinkProgress request for comment.
By: Josh Israel, Think Progress, May 12, 2012
Bank Of America Cuts Off Credit To Some Small Businesses
Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.
The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can’t pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.
Business owners complain that BofA’s credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can’t seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.
One such customer, Babak Zahabizadeh, was told in a letter that the $96,000 debt carried by his Burbank messenger service must be repaid Jan. 25. A loan officer offered multiple alternatives over the phone that Zahabizadeh called unaffordable, including paying off the debt at 12% interest over two years. That’s about $4,500 a month, nearly 10 times his current interest-only payment.
Zahabizadeh, known as Bobby Zahabi to his customers, said he has cut the staff of his Messengers & Distribution Inc. to 80 from 200 to nurse his business through tough times.
“I was like, ‘Dude, you’re calling a guy who’s barely surviving!’ ” he said. “My final word was that I can double my payment — but not triple or quadruple it. I told them if they apply too much pressure they’re going to push me into bankruptcy.”
The capped credit lines stem from a corporate overhaul launched by Brian Moynihan, who became Bank of America’s chief executive in 2010. He promised to address losses caused by loose lending and rapid expansion by reining in risks and shedding investments deemed non-core.
BofA spokesman Jefferson George said a “very small percentage” of small-business customers have been affected by the changes. He would not provide exact numbers except to say it wasn’t in the hundreds of thousands. Some of the affected businesses had been customers of other banks that Bank of America acquired, but most were BofA customers from the start, George said.
“These changes were explained in letters to customers, and they were necessary for Bank of America to continue prudent lending to viable businesses across the U.S.,” he said.
The bank still has 3.5 million non-mortgage loans to small businesses on its books. The affected business owners were notified a year in advance that their credit lines were being called, George said, although Zahabi and several others said they had not received the early warnings.
The changes also include added annual reviews of borrowers and annual fees, and often reductions in the maximum amount of credit. George said the aim was to reduce Bank of America’s risks and to bring the loan terms in line with more stringent standards imposed after the 2007 mortgage meltdown and 2008 credit crisis.
Scott Hauge, president of the advocacy group Small Business California, called the credit cuts “a tragedy” for longtime BofA clients left vulnerable by years of struggle in a sour economy.
“If small businesses are going to lead the way out of the economic doldrums we now face in this country, they must have access to capital, not only to hire more people but to protect the jobs they are currently providing,” Hauge said.
Bank of America was a leader in the banking industry’s abortive attempt to impose debit card fees. But it appears to be a laggard in tightening business lending standards. Most other banks, having tightened lending standards in the aftermath of the financial crisis, had eased credit last year as competition for small-business customers heats up, bank analysts say.
“Everyone … is targeting commercial and particularly small-business lending as the real focus area for growth,” said Joe Morford, an analyst in San Francisco for RBC Capital Markets.
While Bank of America is advertising its own commitment to small businesses, it needs to send another message to its government supervisors because it has less of a capital cushion against losses than major rivals, said FBR Capital Markets bank analyst Paul Miller.
Restricting credit lines “is a way to show the regulators they are serious about addressing risks,” Miller said. “Bank of America is under great pressure, especially with another round of [Federal Reserve] bank stress tests coming up, as the regulators say: ‘We want you to tighten up.’ ”
The analysts said all banks monitor business customers and restrict credit on a case-by-case basis. But they said they were unaware of any other large bank systematically capping credit at this time.
Customers interviewed by The Times said they could understand how the turbulent economy might result in some restrictions. But they complained that the credit cutoffs threatened to undo businesses they shepherded through the downturn by slashing costs, hoping to expand when brighter days return.
Several small-business owners indicated that they had nearly used up all the available credit on their Bank of America lines. However, George said maxing out the lines wasn’t a major factor in the bank’s reevaluation of the credit terms.
Kathleen Caid’s Antique Artistry Studio in Glendale sells elaborately beaded, Victorian-style shades that she makes for lamps, chandeliers and sconces. She said she had understood that her $85,000 credit line would remain in place “as long as I wasn’t in default,” and she hadn’t missed any payments.
Caid and her husband, Tim Melchior, a video producer with a Burbank media company, insist they are not in serious financial trouble despite having laid off her eight full-time employees and downsized her business space by two-thirds during the recession.
Yet Bank of America says that her credit-line debt, totaling $80,000, is due in May.
“I wouldn’t have run it up if I knew what was in store,” she said, adding that she would be speaking to an attorney and other banks about her options.
By: E. Scott Reckard, Los Angeles Times, Jamuary 3, 2012
Job Creation: Small Isn’t Always Beautiful
I challenge you to find a stump speech by a politician running for any office from dog catcher to president that doesn’t invoke the importance of small businesses.
That’s not necessarily a bad thing. It’s a hat tip to American entrepreneurialism, evoking images like that of Steve Jobs planting a seed in his garage that grew into an amazing Apple orchard. Besides, don’t most people work for small businesses, and aren’t such businesses the engine of job growth?
Actually, no. In what may be the most misunderstood fact about the job market, although most companies are small — according to 2008 census data, 61 percent are small businesses with fewer than four workers — more than two-thirds of the American work force is employed by companies with more than 100 workers. You can tweak the definitions, but even if you define “small” as fewer than 500 people (as the federal government does, basically), you still find that half the work force is employed by large businesses.
It’s even more stunning when it comes to payrolls: 57 percent of total compensation is paid out by companies of 500 or more employees, with most of that coming from the largest, those with at least 10,000 employees. And new research by the Treasury Department finds that small businesses — defined as those with income between $10,000 and $10 million, or about 99 percent of all businesses — account for just 17 percent of business income, and only 23 percent of them pay any wages at all.
But don’t small businesses at least fuel job growth? Sort of. It’s not small businesses that matter, but new businesses, which by definition create new jobs. Real job creation, though, doesn’t kick in until those small businesses survive and grow into larger operations. In fact, according to path-breaking work by the economist John C. Haltiwanger and his colleagues, once they accounted for the outsize contributions by new and young companies, they found “no systematic relationship” between net job growth and company size.
It’s unlikely such findings will change politicians’ speeches trumpeting small businesses. But if we want to get our job market back on track, they should inform our policy thinking. For example, it’s not only the case that start-ups are of particular importance to robust job growth. They’ve been creating fewer jobs over the last decade. Employment at start-ups fell by almost half, and those losses predated the “Great Recession” — probably one reason job growth was so lackluster over the last decade’s expansion.
Economists do not yet have a good answer as to why start-ups and surviving young companies are creating fewer jobs, but it may have something to do with “allocative inefficiency.” Too many resources flowed to financial engineering in the last decade, and too few went to R & D and innovation outside of the financial sector. The decline of American manufacturing plays a role here as well, as the sector has historically accounted for 70 percent of job-creating private-sector R & D, often in partnership with start-ups and small suppliers.
This isn’t to say that public policy should abandon small businesses. Many face distinctive hurdles compared with large businesses: they have tighter profit margins and thus less room for mistakes, they have diminished access to credit markets and, even with creditworthy borrowing records, many say they’re not getting the loans they need. Small manufacturers often have less access to export markets, and, with emerging economies growing a lot faster than advanced economies, that’s a big disadvantage.
Yet the sector’s primary lobbying group — the National Federation of Independent Business — tends to fight less for these pragmatic policies and more for the standard conservative agenda of lower taxes and deregulation. Indeed, the group has become a purely partisan operation, fighting more for Republican electoral victory than small-business growth. For example, it opposed the president’s jobs bill, even though independent analysts estimated it would significantly increase economic demand, and the federation’s own survey shows that “poor sales” — a k a weak demand — is a much bigger problem for its members than taxes or regulations.
The next time a politician tells you how he or she is for small business (which will likely be the next time you hear a politician say anything), be mindful that to the extent that size matters at all for job growth, it’s really about new companies that will start small and, if they survive, perhaps grow large. Everything else is largely noise — and too often, noise that has little to do with what this economy really needs.
By: Jared Bernstein, Op-Ed Contributor, The New York Times, October 23, 2011
The Anniversary of the Affordable Care Act: A Year Later, The False Attacks Continue
Conservatives often push myths and misconceptions of the Affordable Care Act of 2010 as a way to increase opposition. During the debate in Congress in the run-up to passage of the new health reform law, conservatives pushed wild accusations that the law would be a “government takeover” and establish “death panels,” claims that were labeled “the lie of the year.” Now, a year after the Affordable Care Act was signed into law, inaccurate claims and mistruths against the law continue.
Conservatives continue to make false claims against the law as a way to repeal it, undermine consumer protections, and put insurance companies back in charge of our health system. The reason these false statements endure is clear: There are those who would rather take us back to the way our health system was before when insurance companies were in charge rather than move forward and protect our care.
This issue brief is a response to recent false attacks conservatives have made against the law. As we will demonstrate, the Affordable Care Act will create jobs, lower health care costs for families, help small businesses provide health insurance to their employees while maintaining the private sector’s key role in health insurance, and ensure we provide quality health care to all Americans at a lower cost to them and American taxpayers.
The Affordable Care Act will help create jobs
The Affordable Care Act helps our economic recovery by bringing health costs under control, freeing businesses to use that money to invest in job creation. The real threat to job creation is the conservative push to take us back to the old health system where costs were on an unsustainable path. Harvard University professor and Center for American Progress Senior Fellow David Cutler found that repealing the Affordable Care Act—and going back to the unsustainable costs—would cost up to 400,000 jobs annually over the next decade.
To push this “job destroying” argument, conservatives cite the nonpartisan Congressional Budget Office’s estimates that the law will reduce the labor supply (although conservatives dismiss CBO reports when they conclude the law will cut the deficit and reduce premiums). Yet conservatives fail to recognize that one reason for this reduction is that older workers, now forced to hold on to jobs to get health insurance, will now be able to retire—with insurance—when they choose.
The Affordable Care Act lowers premiums and costs for families
The Affordable Care Act takes steps to get our health costs under control and lowers costs for families. The real threat to costs is the conservative push to repeal the law. Cutler found that repealing the Affordable Care Act would increase total health spending by $125 billion and raise family premiums by nearly $2,000.
More small businesses are providing health coverage to their employees, thanks in part to the Affordable Care Act
Conservatives try to downplay the impact of the small business tax credits to provide health insurance to their employees. The truth is that last year, more than 4 million small businesses were eligible to receive a tax credit to make health coverage more affordable. According to the Los Angeles Times, “major insurers around the country are reporting that a growing number of small businesses are signing up to give their workers health benefits,” adding that an “important selling point” was the small business tax credits.
The Affordable Care Act keeps the employer-based health system intact
Conservatives claim the Affordable Care Act will undermine the employer-sponsored health coverage that millions of Americans enjoy when the state health insurance market exchanges become functional. This is not true. According to Mercer’s recent “National Survey of Employer-Sponsored Health Plans,” the vast majority of employers, particularly large employers, will continue to offer their employees health coverage. Indeed, the survey notes that if the Affordable Care Act follows the Massachusetts health law, “few employers of any size” will choose to drop coverage.
The Affordable Care Act ensures quality care and has flexibility for states
The Affordable Care Act provides states with considerable flexibility. Each state gets to decide how to set up their own marketplace of health options for consumers to choose which plan suits them best. States have flexibility in how they implement insurance reforms and consumer protections. The law encourages state innovation by allowing them to obtain waivers from some requirements provided the alternative proposal provides comparable coverage and affordability. President Obama recently endorsed legislation from Sens. Ron Wyden (D-OR) and Scott Brown (R-MA) that would move the start date for those waivers by three years.
At the same time, conservatives argue there is not enough flexibility in the Affordable Care Act. They criticize the Obama administration for granting too many waivers on so-called “mini med” plans that have a low annual limit. Since many of the consumer protections and mechanisms to increase patient choice—such as the state marketplaces—are not operational until 2014, the administration has in some instances granted waivers from the law’s early requirements, to avoid leaving people with nothing. CAP Senior Fellow Judy Feder told Congress that until the law is fully implemented, the goal should be to “make matters better, without making them worse.”
States can save money from the Medicaid reforms under the law
Medicaid is a federal-state health program that provides health coverage to predominantly lower-income families, elderly people, and people with disabilities. The federal government matches state funding on the program. For people made newly eligible for Medicaid by the Affordable Care Act, the federal government will pay 100 percent of costs in the early implementation of the Affordable Care Act. In the later years, states will have to pay only 10 percent.
Conservatives charge that the Affordable Care Act will increase state Medicaid spending by $118 billion. An Urban Institute study, however, found that states will save between $40.6 billion and $131.9 billion from 2014-2019 by replacing state and local spending for uncompensated care and mental health with federal Medicaid funds and by replacing federal Medicaid funding for adults with incomes over 133 percent of the federal poverty level with federal subsidies in the marketplaces.
There is no secret $105 billion hidden in the law
Conservatives such as Reps. Michele Bachmann (R-MN) and Steve King (R-IA) claim that $105 billion of mandatory funding was secretly put in the law unbeknownst to members of Congress. This is false. The Washington Post’s Fact Checker said this claim is “bordering on ridiculous” and “does not have credibility.” The truth is there was a considerable amount of transparency before the Congress approved the Affordable Care Act. In the House alone, there were: 79 bipartisan hearings, totaling 100 hours; 181 witnesses; and 239 amendments considered. The House bill was posted online 30 days before committee markup.
The law keeps Medicare solvent and cuts the deficit
Conservatives argue that the Obama administration “double counted” the Medicare savings for the law, arguing it went to save the Medicare Trust Fund and cut the deficit. The facts are these: The law cuts the deficit by $1 trillion over the next two decades and keeps Medicare solvent until 2029—12 years longer than before the law was passed. The Center on Budget and Policy Priorities explained how this works before the House Budget Committee:
There’s no double-counting involved in recognizing that Medicare savings improve the status of both the federal budget and the Medicare trust funds. In the same way, when a baseball player hits a homer, it both adds one run to his team’s score and also improves his batting average. Neither situation involves double-counting.
Conclusion
The conservative false attacks are meant to repeal the Affordable Care Act and bring our health system back to the time when insurance companies could discriminate because of a pre-existing condition. Despite these false attacks, the facts are clear: Millions of families, small business owners, and seniors are seeing the benefits of the Affordable Care Act. More than 4 million small businesses are eligible to receive tax credits to make health coverage more affordable. As many as 4 million seniors received help to make their prescription drugs more affordable. Already this year, more than 150,000 seniors with Medicare had a free wellness exam. And children with pre-existing conditions can no longer be excluded from insurance plans. We should move forward with this law and tell those who want to repeal it that we won’t go back.
By: Tony Carrk, Center For American Progress, March 21, 2011
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 