Action Alert!!!

One of Governor Haley’s budget vetoes directly impacts on our state’s efforts to help our small manufacturers.  In Veto #49 the Governor has effectively slashed 23% of the state budget for the South Carolina Manufacturing Extension Partnership, which provides heavily discounted professional consulting to small manufacturers who can not afford private sector rates.

It is very important that you contact members of the state legislature before tomorrow when the House will begin considering override votes.

Our letter to the Legislators is below.  The message is this:

Please vote to override Veto #49, the S.C. Manufacturing Extension Partnership.  Reducing the state budget of the SC MEP by 23% will hurt our state’s efforts to grow our small business manufacturing sector. 

You can find a complete list of House members with telephone numbers and emails at:  http://www.scstatehouse.gov/member.php?chamber=H

The list of Senate members with telephone numbers and emails can be found at:  http://www.scstatehouse.gov/member.php?chamber=S

PLEASE CONTACT THEM TODAY!

Here is our letter to the General Assembly:

Dear Legislator,

The S.C. Small Business Chamber of Commerce asks that you vote to override the Governor’s veto of $200,000 in “one-time” state funds for the S.C. Manufacturing Extension Partnership (SC MEP).

The SC MEP is the state’s effort to help our small manufacturers be successful.  This is an important economic development effort in that 90% of South Carolina’s manufacturers have fewer than 100 employees and 84% have fewer than 50 employees. 

State and federal funding of SC MEP enables the organization to offer heavily discounted professional consulting services to small manufacturers to help them be more profitable.  The $200,000 of “one-time” state funds, which represents 23% of the SC MEP state funding, will be matched with $100,000 of federal funds enabling the SC MEP to assist approximately 30 additional small manufacturers.

As our state and local governments have invested hundreds of millions in recruiting large manufacturers like Boeing, SC MEP helps our small manufacturers achieve the necessary technical expertise to be certified as suppliers to these major S.C. industries.  In the case of Boeing, SC MEP helps our small manufacturers become AS9100 Aerospace Supply Qualified, an international quality standard essential for serving Boeing or any airline manufacturer South Carolina might recruit.

Thank you in advance for your vote to override veto #49.

Sincerely,

Frank Knapp, Jr.
President & CEO

House voting to keep their healthcare perks

The U.S. House is scheduled to take their 31^st vote on changing, delaying, defunding or terminating Obamacare today.  The outcome of today’s repeal vote isn’t in questions because every other vote taken on the issue has passed almost exclusively along party lines.

Obamacare opponents in the House will again claim that the healthcare reform is hurting small businesses.  And by now you should know that this is a crock. 

Small businesses defined as less than 50 employees have no mandate to offer health insurance.  Not now.  Not later.  That 50 or under workers criteria means that 97% of all businesses in this country have not been nor will be negatively impacted by Obamacare.  Of the remaining businesses, only 3 % do not offer insurance and will have to make decisions about shared responsibility for the healthcare of their employees.

But while there has been no downside for small businesses, there has been plenty of upside.  The Small Business Majority sent a letter to Congress this week agrueing against repeal.  “Since the enactment of federal healthcare reform, America’s 28 million small businesses have already benefited greatly from provisions such as tax credits, rate review and Medical Loss Ratio (MLR)”, read the letter.  The MLR alone is yielding $1.1 billion in premium rebates to small businesses across the nation.

Then there are the future benefits for small businesses starting in 2014 such as the health insurance exchanges.  These online marketplaces for health insurance will not only reduce premiums from less administration costs of small business health plans but also from the expected increase of carrier competition.

Assuming that the opponents of Obamacare know these facts and still put up the charade of voting to repeal for the purpose of protecting small business, then their real motivation must be something else.  Partisan politics certainly is a good possibility.

But there actually is a personal reason members of Congress would like to see Obamacare go away—their own health insurance.

One of the complaints during the construction of the healthcare reform legislation was that if the new process was good for American citizens it ought to be good enough for members of Congress.  So a provision was put into the law to have members of Congress get their health insurance through the new exchanges like everyone else and that when they retire they would no longer receive government-subsidized health insurance. 

Sam Baker of The Hill reports that one Democratic Official has said, “House Republicans are set to repeal the promise that members of Congress have health care just like everyone else and to restart the perk of lifetime government health care for themselves.”

Now that is a big incentive for Congress to kill Obamacare.

Déjà vu all over again…with a bad twist

Yesterday President Obama reiterated his position that he supports extending the Bush-era tax cuts for the lower 98% of all taxpayers for another year.  Of course, that also means that he supports allowing those same tax cuts for the top 2% of tax payers to revert back to the Clinton-era levels (you remember the 90’s when the economy was soaring and we actually had a budget surplus)—a position shared by most Americans.

Of course the President’s GOP opponents argue that all the Bush-era tax cuts should be extended because to do otherwise would cause the wealthiest to stop creating jobs. 

Sound familiar?  It should.  We’ve been having this debate since 2010 when all the tax cuts were set to end.  The South Carolina Small Business Chamber, the American Sustainable Business Council, Business for Shared Prosperity, the U.S. Women’s Chamber of Commerce and other business groups support allowing the tax cuts for the upper 2% to expire and to use the new revenue for deficit reduction and investment in the nation’s infrastructure, first responders and teachers.

I wrote about this issue in The Hill once in 2010 and again in 2011.  The point is pretty simple.  Very few small business owners (less than 3%) fall into the upper 2% tax brackets and many that do have some business income are K Street lobbyists, hedge fund managers, high-powered consultants, Wall Street bond traders and the wealthiest Americans.  They are not your Main Street small business people.

Plus, businesses do not hire workers based on the business-owners income tax rate.  Businesses hire workers when the demand is there for products and services. 

But here is the new twist to this old debate. 

The traditional line against the tax rates going up for the wealthy is that it would hurt the small business job creators.  This argument recognized that small businesses create most new jobs but distorts the reality of the income of small business owners.  As indicated above, very few have incomes that would cause them to see a tax increase if the Bush-era tax credits on the top 2 tax brackets increased.

But yesterday in a radio interview, Presidential candidate Mitt Romney said, “What the president is proposing is therefore a massive tax increase on job creators and on small business.” 

AND???  Is Mr. Romney now making a distinction between “job creators” and “small businesses”? 

I thought maybe he simply misspoke but Romney spokeswoman Andrea Saul also made the distinction yesterday.  “The president’s latest bad idea is to raise taxes on families, job creators and small businesses,” she is quoted as saying.

This is apparently now the official position of the Romney campaign.  Small businesses are now not to be recognized as the same as job creators. 

Why is this important?  Because one of the few things small business has going for it in government is the deserved reputation as job creators.  But even with that we still don’t get the respect we deserve from government which at all levels heaps attention and incentives on big business while giving crumbs to small business.

If there is now an official effort to decouple job creator status from small businesses, we are in deep trouble.  The billionaires and multinational corporations that are trying to buy this election to totally control our economy and government will have driven the final stake into our hearts.

2012 State Legislative Wrap-Up

Numerous legislative efforts were on the South Carolina Small Business Chamber of Commerce (SCSBCC) agenda this year.  While the Legislature will make one more trip back to Columbia to address some gubernatorial budget vetoes, the die has been cast for everything else.  And because this was the second year of the two year session, what did not get done now has to start from the beginning in January.

First the bad news.

INSURANCE INDUSTRY DEFEATS CONSUMERS

Health Insurance

To really have competition between health insurance companies you have to stop allowing the dominant carrier in the state, Blue Cross Blue Shield (BCBS), from contractually forcing healthcare providers to charge BCBS competitors higher fees.  This process is called the “most favored nation” clause in a contract.

If one health insurance company is guaranteed to have the lowest reimbursement rates for doctors and hospitals, that company has lower costs and thus can be more competitive in premiums charged.  But that company also has no incentive to drive down healthcare costs.  In fact, it has an incentive to allow healthcare costs to increase thus enabling it to make more profit through higher premiums.  As a result the other healthcare companies are forced to have higher costs and thus less competitive premiums.  With no market-driven containment on healthcare costs, premiums for all health insurance companies increase.

We supported S.316 which would have outlawed most favored nation clauses in health insurance company contracts with providers.  But S.316, which was introduced in January of 2011, never even got a subcommittee assignment from the Chairman of the Senate Banking and Insurance Committee.  You can probably figure out why. 

The last reason given to me by the Chairman, who was defeated in his primary election, was that BCBS was under federal investigation for using the most favored nation clause to restrict competition thus harming the consumer.  The Chairman didn’t think it was appropriate for the state to get out in front of the feds and possibly pass a law that might have to be changed later depending on the outcome of the investigation.

I didn’t buy the logic.  While it was true that the U.S. Justice Department has been (and probably still is) looking into the contractual practices of BCBS, confirmed by a call I received from the Justice Department to discuss the matter, this was a poor excuse for not moving S.316 along the legislative process.  

First, since when does South Carolina kowtow to the federal government?  We think nothing of sticking a finger into Uncle Sam’s eye whenever it means scoring some political points.  And if we can do that for partisan reasons, surely we can do that to help make health insurance more affordable for our citizens.

Second, a federal investigation would be looking at the past behavior of BCBS.  Legislation would address future behavior.  We should have been taking action to correct uncompetitive behavior going forward and let the feds worry about the past misdeeds.

The bottom line is that because the Senate Banking and Insurance Committee failed to promote competition between health insurance companies either because of the lobbying power of BCBS or the Chairman’s reluctance to hurt the fed’s feelings, South Carolinians will still pay higher rates for the same coverage compared to Georgians and North Carolinians right across the border.

Read more

It’s a bird, it’s a plane, it’s . . . a Tax Penalty!

One of the big political stories yesterday was Republican presidential candidate Mitt Romney correcting his top advisor, Eric Fehrnstrom, thus giving us the accurate description of how the individual mandate to purchase health insurance will be enforced.  Yesterday Mr. Romney called it a tax and on Monday of this week Mr. Fehrnstrom called it a penalty.  So it’s a “tax penalty”.  Neither Mr. Romney nor President Obama has ever promised not to create a new tax penalty that is needed to promote the common good. 

Many people and businesses have experience with a tax penalty.  Don’t pay your taxes on time or file the proper tax forms on time and you get a tax penalty?

And just like existing tax penalties, relatively few ever have to pay them.

Citizens for Tax Justice estimates that “less than three percent of households”, ones that can afford to buy health insurance but choose not to accept personal responsibility ("free riders"), will face this tax penalty. 

The other big political story yesterday was my friend Nick Shaxson’s article in the August issue of Vanity Fair.  Nick, Rebecca Wilkins (Senior Counsel on Federal Tax Policy at Citizens for Tax Justice) and I gave a Congressional staff briefing on offshore tax haven abuse in April last year.  That briefing was sponsored by the Financial Accountability and Corporate Transparency (FACT) Coalition.  

The three of us in this photo taken on the Capitol steps are joined by another friend, Chuck Collins (naturally on the left), a senior scholar at the Institute for Policy Studies.

In the Vanity Fair piece, Nick “delves into the murky world of offshore finance” and discusses Mr. Romney’s “familiarity with foreign tax havens” such as his assets sitting in Bermuda, Luxembourg and the Cayman Islands.  Nick specifically points to the example of a “Bermuda-based entity called Sankaty High Yield Asset Investors Ltd.” formed in 1997, a corporation wholly owned by Mr. Romney.  The fact that Mr. Romney failed to report this business on his financial disclosure statements prior to 2010 and that Mr. Romney continues to not reveal the value of the corporation has reignited interest in the use of offshore tax havens to avoid paying U.S. taxes. 

And as we should all know by now that when the wealthy and multinational corporations hide their money to avoid paying our taxes, the rest of us end up subsidizing all the benefits of America—our infrastructure, education, military, courts, etc.—that have helped these “free riders” be financially successful.

Fourth of July

Everybody have a happy and safe Fourth of July holiday.  Then let's get back to work.

Big money behind misinformation on healthcare law

The Hill's Congress Blog

June 29, 2012

By Frank Knapp, Jr., president and CEO, South Carolina Small Business Chamber of Commerce

I received a call from a gentleman, Ralph, this morning asking about my statement to the press yesterday regarding the Supreme Court ruling on Obamacare. He wanted to know why I thought the law was good for small businesses because he had heard so much about how it was going to be harmful.

I’m sure that Ralph had also read the statement by the South Carolina state director of the National Federation of Independent Business (NFIB) following the Supreme Court ruling in which he insists that now that Obamacare has been ruled constitutional there will be an “onslaught of taxes and mandates” on small businesses that will result in “job losses and closed businesses.”

It turns out that Ralph is retired living along South Carolina’s coast but he has a brother in Pennsylvania who owns a small business with less than 10 employees. I learned that his brother does offer health insurance to his employees. So it was natural for Ralph to be concerned for his brother’s business.

I don’t blame Ralph for being concerned. For over two years the NFIB has been misleading the small business community and public on this issue. The organization spent about $4 million in fighting Obamacare in the Supreme Court arguing that the law was unconstitutional. Now with that line of attack gone, all the NFIB has left is continuing to lie about what the law does.

So I explained to Ralph that businesses with fewer than 50 employees, which account for 97 percent of all businesses, do not have to offer health insurance to workers and will not be penalized if they don’t. Therefore there can be no job losses or closing of the doors for these small businesses due to Obamacare.

I also explained that there are no other taxes imposed on these small businesses but there are health insurance tax credits available to millions of small businesses like his brother’s who offer healthcare to their employees. “Do you think your brother could use some tax credits,” I asked Ralph. “I’m sure he can,” was the response.

I asked Ralph to have his brother call me so I could help him on the tax credit issue. I also thanked him for calling and told him that I wish I could have a civil conversation with everyone who has concerns about Obamacare. It has been my experience since the law passed in 2010 that when I have the opportunity to have such conversations with individuals or small groups, the fears fall away.

But the real question is why do supporters of the reform have to continue to correct the misinformation being spread by organizations like the NFIB which are suppose to represent small businesses. Why did the NFIB work so hard and spend so much money trying to kill a law that has already benefitted hundreds of thousands of small businesses that have received the tax credits and will help in other ways to make health insurance more affordable when the law fully goes into effect in 2014.

The answer is money.

According to a Public Campaign analysis of IRS 990 filings from the NFIB and NFIB Small Business Legal Center for 2009-2011, the NFIB organizations have had dramatic increases in contributions since the Affordable Care Act was passed in 2010. But the new-found wealth is not from dues of the average NFIB member. The IRS filings show that the NFIB organizations received $10 million from just 10 contributors in 2010-2011. In the previous year the largest individual contribution was just $21,000. News reports have identified the conservative and superpac Crossroads GPS as one of the NFIB contributors in 2010 giving $3.7 million.

It is clear that the NFIB is acting on behalf of its partisan big contributors and not their members such as Mike Roach. Mr. Roach is one of the small business owners receiving the tax credits. He owns Paloma Clothing in Portland, Ore, and is a NFIB member for 36 years. In March Mr. Roach told the United Press International that “tearing down the law won’t help us; it would hurt….repealing the Affordable Care Act would send us back to the Dark Ages of health insurance.”

So while the Supreme Court Ruling is the end of this story as to the constitutionality of Obamacare, it is not the end of the political story and certainly not the end of the NFIB lies that are intended to scare people like Ralph and his brother. That is what the NFIB is being paid to do.


Knapp is the president & CEO of the South Carolina Small Business Chamber of Commerce. He is also the vice chair of the American Sustainable Business Council.

Source:
http://thehill.com/blogs/congress-blog/healthcare/235665-big-money-behind-misinformation-on-healthcare-law