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White House Reality Check 21 — Small Business and Shrinking our Free Market

August 12, 2009

Yet another White House video addresses a concern that the healthcare proposal will raise the cost of doing business on small business owners:  The premise of the presenter appears to be that small businesses are at a buying power disadvantage in comparison to large business.  In short, because a large business has a larger pool of employees to be insured, it can leverage a discounted premium rate from health insurers.  The proposal presumably would either (i) encourage small business owners to band together to be able to negotiate like a bigger company, (ii) provide a tax credit or (iii) allow a small business to shift the cost of health insurance to the Government (though interestingly nothing is said in this video about the Government-insurance option).  

Is “leveling the playing field” between small and large businesses something our Government should be doing?  Isn’t that a part of free-market competition?  Wal-Mart can squeeze down the wholesale costs of products like no other because it provides an immense outlet and exposure for the producer’s goods.  Is there something wrong with that?  The presenter quotes from a note from a small business owner that she is concerned the proposal will raise costs for her.  The presenter then moves to say that small business already suffer under the burden of insurance costs.  Note that the business owner did not say “and I want to change the way it works now.”  Clearly, she has a business that is providing employment.  Do we need the Federal Government to interfere with normal market dynamics?   Assuming the Government should be promoting small business in some way, do we need a $1.6 trillion bureaucratic healthcare regime to do what can be done much more simply through reduced tax rates on small business income?  Why do we need such a regime in order to facilitate businesses grouping together to have more buying power?  Why do we need 45 new agencies and offices  to do the job that the IRS already is already doing when it administers numerous other tax credits?   Also, why doesn’t the Federal Government take aim at other perceived inequities between large and small businesses?  If changing the healthcare ratio is good government, nothing else is off the table, which leaves us with the question:  whence goes our free market?

Finally, the unspoken issue is whether the White House can really achieve its program without raising taxes on the middle-class and small business. 

These are all legitimate questions, but no one seems to have the time to answer them.  We submit, on an issue of such vital importance economically and personally good government is not a hasty government, but one that deliberates and considers and remembers exactly who we are as Americans.

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