An Observation About the Changing Paradigm

For many people, Republican policy has always been seen aligned with business, and Democratic policy has been equated to big government. Now, with the Republicans out of power and the Democrats firmly in control, it has been interesting to observe the shift that is occurring.

President Obama and the vast majority of congressional Democrats are proposing big government solutions to every problem from the economy to healthcare and everything in between. Of course, that’s exactly what was expected. What wasn’t expected, at least not by me, is that the these same Democrats are not only out there promoting big government solutions, but the big government solutions have all been crafted in a way to put the interests of big business first.

Consider the bailouts, they have all gone to the biggest of the big businesses. The biggest banks, the biggest insurers, the biggest automobile manufacturers are the beneficiaries while the small businesses that drive our economy are left to languish with programs that are nothing but smoke and mirrors. Now, I’ve never thought of big businesses as evil empires. After all, as a small business owner, my goal is to one day become a big business. But, I’ve always been against legislation that specifically benefits one industry over another, or puts a competitor at a disadvantage.

Yet, this is precisely what is occurring on the federal level. A recent Business Week Behind This Week’s Cover Story podcast examines the ways that UnitedHealth has been a key player in crafting the healthcare legislation, and how at the end of the day, it is the giants of the healthcare insurance industry that are going to be the big winners:

As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group (UNH), Aetna (AET), and WellPoint (WLP). The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable. Health reform could come with a $1 trillion price tag over the next decade, and it may complicate matters for some large employers. But insurance CEOs ought to be smiling.

This is a theme that is being repeated over and over since the Democrats have taken full control. However, as a result of continued economic pressures, more and more people are finding themselves being laid off from large companies. More and more people are struggling to ensure their families have the basics. The Democrats in control may talk on the stump about being the advocates for hard-working Americans, but their actions speak louder than their words:

Missing from Washington’s health-reform discussion is a simple change that would make insurance more affordable for millions of the nation’s smallest business owners by letting them fully deduct the cost of their health insurance premiums.

By a quirk in the tax code, self-employed workers who buy their own health insurance essentially pay an extra tax on their premiums. They’re the only taxpayers in the system who pay taxes on premiums, which count as a business expense for corporations and pretax income for employees. Because self-employed workers have no corporate employers to match their payroll tax contributions to Social Security and Medicare, they pay double the rate of wage and salary workers in a levy known as the self-employment tax equal to 15.3% of their net earnings. That’s on top of regular state and federal income taxes, and the income they spend on health premiums is not exempt.

The nation’s 9 million self-employed—sole proprietors with few or no employees, contract workers, and freelancers—constitute about 8% of the total U.S. labor force, according to the Bureau of Labor Statistics. (The Census Bureau counts 22 million sole-proprietors, but it’s not clear how many of those may be payroll workers as well.)

Healthcare is just one example where inequities like these exist. Right now, there is a large section of the population that is not being represented by our elected officials. There is an opportunity for leaders to emerge that represent our interests. Those leaders will find their support crosses party lines. Their supporters won’t be made up of the radical fringes of the left or the right. Their supporters will not look for big government solutions to their problems or to further their pet causes, anymore than they want big business to solve their problems. It’s time for these leaders to step forward.

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