Dan Danner is president and CEO of the National Federation of Independent Business, America’s leading advocacy group for small businesses. The average NFIB member employs 10 workers. A former White House staffer, Mr. Danner served as chief of staff to the U.S. secretary of commerce and in the private sector as an executive with Armco Inc., a steelmaker. You can find out more about “the voice of small business” at nfib.com.
Danner: The primary argument we will be making is that the requirement that every American purchase health insurance is an unprecedented and unconstitutional overreach of federal power. More plainly, never before has the government forced individuals to buy a product, and if the mandate is not struck down, there will be nothing that the government can’t compel Americans to purchase. Congress has authority to regulate commerce but not to force people to engage in it.
If the mandate is found unconstitutional, NFIB believes that the entire law should be struck down. Just do the math- without the mandate, the law would be financially untenable. Further, it would no longer do what Congress intended it to do, which was expand coverage and provide insurance at a lower cost. Without the mandate, nothing even remotely resembling the current law would have been passed by Congress or signed by the president.
Decker: How important is this debate over health care for the small businesses you represent?
Danner: The health-care debate is of monumental importance to our membership. For decades, small-business owners have been saying that rising health-care costs are one of their top concerns. Unfortunately, it is abundantly clear to our membership that the new health-care law is not going to help reduce the cost of providing health care to their employees. In fact, this law goes as far as to punish and financially penalize small-business owners that both provide and do not provide coverage. The employer mandate and health insurance tax are small-business job killers. NFIB’s Research Foundation simulated the job-loss impact on the private sector should the health insurance tax go into effect, and we found that 125,000 to 249,000 jobs will be lost because of this one tax; small business will shoulder 59 percent of this burden alone.
Additionally, the employer mandate is already forcing members of ours to reconsider how they structure their work force. Some employers of over 50 employees are considering shifting their full-timers to part-time, dropping health insurance altogether, or reducing employment to drop below the threshold. These moves by small-business owners may drastically alter the private-sector work force as we know it. The financial penalties associated with the employer mandate are already factoring into the budget plans of small-business owners and many are already forecasting an inability to afford it. Simply put, the health-care law is a field filled with land mines, bear traps and pits ready to take down a small-business owner. Repealing these egregious provisions and getting back on the path toward reducing the actual cost of health care is a top priority for NFIB and our membership.
Decker: Obamacare is merely one example of new red tape instituted in recent years that threatens to strangle business. What other regulations - whether already on the books or in the works - are your members worried about?
Danner: Due to the sheer volume of new rules coming down the federal regulatory pipeline, there are far too many to list here. In fact, over 4,200 new rules are pending, 845 of which will affect small businesses. The Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), and the National Labor Relations Board (NLRB) are the worst offenders. For example, the EPA is working to finalize a new rule that would set virtually unattainable new limits on industrial boiler emissions. We are advocating that the EPA use a health-based standard rather than the technology-driven standard proposed in the new rule. We are leading a coalition advocating for sensible, rather than punitive, regulations called Small Businesses for Sensible Regulations. The coalition website has a more comprehensive list of troublesome new regulations that will cost small businesses - and the economy - potentially billions of dollars.
Danner: Let me be clear that the NFIB is not opposed to corporate tax reform. The problem we have heard in the current debate is that the corporate rate will be lowered at the expense of small businesses filing as individuals by eliminating many of the deductions and credits they currently use. Around 75 percent of small businesses file taxes on their business income at the individual rates. Tax reform must be done comprehensively to avoid these “pass-through” businesses from being unfairly punished. We believe that business tax rates should be lowered at both the corporate and individual levels and more permanence should be added to the tax code to avoid the annual guessing game of which credits and deductions, so-called tax extenders, will be continued, reduced or eliminated.
Danner: Small-business owners are optimistic by nature, but they are not encouraged by the current state of our economy. They have been plagued by economic uncertainty for years, and now with the expectation of new costs, taxes and regulations to come, there is little incentive for them to expand and hire new employees. The Small-Business Optimism Index - our metric for owner sentiment - was lower in February 2012 than it was in February 2011. In the course of the last year, small-business owners actually became more concerned and more uncertain, not in spite of what the government is saying and doing, but because of it. Until Washington shows Main Street that it is ready to listen and address the needs of the small-business community, our economy will continue its slow and incremental recovery.