Business Braces For New Taxes, Costs, Regulations

The Obama Administration has operated at a withering pace in its efforts to resuscitate and remake the American economy. As I write this, Al Franken was just seated as the 60th Senate Democrat, giving the Democrats absolute control of both houses of Congress as well as the White House. Business—especially small business—is bracing for the effects of this concentration of power.

Granted, the economy was a mess before Obama took office. But if you spent money the way the Democrats have this year, your business would not be solvent for long. First, they passed a $787 billion stimulus package, which so far has not stimulated much of anything because much of the money will not enter into the commerce stream for one or more years.

Next, the House passed an energy bill including carbon emission cap-and-trade provisions intended to drive up electricity costs and force coal-fired power plants to restructure or cease operations. If enacted, this legislation will likely increase the cost of every item produced using electricity or other forms of energy (pretty much everything bought or sold). But the White House is acting as if it would not be a tax on consumers because it doesn’t involve actual tax revenues. Fortunately, the Senate is taking a slower approach to energy legislation, and the bill may die in that chamber.

Health care is also on the agenda. The Congressional Budget Office (CBO) estimates the net impact of a bill sponsored by Senator Edward Kennedy at $1.04 trillion from 2010 to 2019. But CBO officials warned that the cost of the plan would likely increase if lawmakers expanded the eligibility of Medicaid or otherwise subsidized health insurance for people earning below 150 percent of the federal poverty level, or $22,000 for a family of four. Even liberal health policy experts estimate the cost of the Senate plan to approach $1.5 to $2 trillion over the next decade.

Who pays for this? Most likely, employers will be asked to share an increasing burden of health care costs. And the White House now may be backing off of Obama’s campaign pledge not to tax health benefits for employees. Although candidate Obama vilified Senator McCain for suggesting that health insurance benefits might be taxed to stabilize the budget and provide additional coverage, President Obama has put that option back on the table.

How will this affect the budget deficit? For some perspective, the Bush Administration was rightfully condemned when annual deficits approached $400 billion for the last two fiscal years. In contrast, the CBO estimates that the Obama Administration will run a deficit of $1.85 trillion for fiscal year 2009, even without the health care bill. Deficit projections exceed an average of $1 trillion annually for the next ten years. But the White House claims that it will not raise taxes on anyone who makes under $250,000 per year.

Then there is the Employee Free Choice Act, or card check. Senator Arlen Specter joined the Democrats, so the ability of Senate Republicans to filibuster this bill is even more precarious. (It has already passed the House.) If the bill is enacted, union organizers will be able to force union recognition by obtaining signature cards from a majority of workers at a facility, without any secret ballot election. (An election would still be required to decertify a union, however.) The employer might not know that a certification effort is even underway until presented with the results.

Once a union is certified, the employer must bargain for a new contract; if no agreement is reached within 120 days, then a federal arbitrator will impose a collective bargaining agreement on the parties for up to two years. The union probably will not have much incentive to bargain away wages or benefits if the default is a wage and benefits package established by the government. Labor loves this bill, and business correctly views it as a ticket to higher labor costs and less control over employee productivity.

Is there any light at the end of this tunnel? Well, there is that election in 2010. We just have to hang on until the people get another chance to assess their Congress.

Gases and Welding Distributors Association

Rick Schweitzer Meet the Author
GAWDA’s Government Affairs and Human Resources Legal Consultant Richard P. Schweitzer, Esq., is president of Richard P. Schweitzer, PLLC in Washington, D.C. Members can reach him at 202-223-3040 and rpschweitzer@rpslegal.com.