The war on the working class continues

I personally hate conspiracy theories. like most, I hear such and my eyes begin to glaze over and I eagerly wait for the person to stop talking so I can move on to another conversation. However, there is something about the Obama administration that makes it very difficult to not question the intent, as well as the consequences, of their policy choices.

Recently Eric Holder, the Attorney General of the United States, gave the commencement address at Boston University at which he told the students about the wonderful and "progressive" reforms that came out of bad economies. Essentially, he is arguing that major actions by government can only happen under the worse possible economic circumstances, because people are otherwise fine with the status quo. Holder's remarks reminded me of White House Chief of Staff Rahm Emanuel who quipped, "You never want a serious crisis to go to waste," Emanuel then went on to discuss the major changes you can make in just such an environment.

Essentially these high ranking public officials are sounding a mantra of more problems leading to more change. With such a philosophy, it should not be a surprise that we continue to see policies that are contributing to the continued destruction of the economy. Unemployment is at the highest level in over a quarter of a century, the national debt is growing at over $1 trillion dollars a year (in the early 1980s the accumulated debt of the US government was only making that mark for the first time), and inflation looms around the corner as cheap money is being produced to pay for this massive government expansion.

Particularly harmful will be the President's far reaching health care reform legislation, which will require small businesses to provide health insurance to their employees. It is being marketed by the administration as having a minimal adverse effect because this burden will be offset by a tax credit for each of the covered employees. Without such, it is unlikely the bill would have ever navigated through the Congress. However, with the federal government's incredible appetite, that will like be modified as the law is implemented. Even without a single change in the current law, the present credit is already arbitrarily reduced as a business grows, essentially discouraging employers from hiring more workers or increasing their salaries. Devon Herrick and Pamela Villareal (both of the National Center for Policy Analysis) have noted that this bill is going to clearly undermine job growth and be particularly harmful to higher paid workers.

The tax credit is suppose to be helpful to small firms. Businesses in select industries that have 25 or fewer employees will quality for a tax credit worth up to 35 percent of the employer's contribution to health insurance during the period of 2010 to 2014. After 2014 this is how the picture looks:

• Although employers may qualify for a 50 percent health insurance tax credit for the first two years, they must pay for at least half of the expense.
• Employers will have to make these purchases through newly formed "health insurance exchanges" in order to qualify. It is yet to be seen if these will be competitive. Since they are largely government controlled (and potentially monopolistic), it is highly unlikely.
• Than the law begins to get sticky and companies will likely slip through the tax credit cracks when it comes to being qualified as employers must have fewer than 11 workers, earning an average of $25,000 or less, in order to qualify for the full tax credit. Therefore the law is punitive towards individuals who make more than $25,000 a year. This is not affluent by anyone except the government.
• Finally, the credit is not available to sole proprietorships and their family members, yet this is one of the most common type of small business in the United states.

The policy implements an ugly trade off for firms that would like to do more for their employees. As the company's average pay goes above $25,000, the credit is withdrawn at a rate of 4 percentage points for every additional $1,000 in average pay. Eventually it is completely withdrawn once the average pay reaches $50,000. In addition to this, the credit is also incrementally withdrawn for each increase in the size of the business beyond 10 workers (regardless of average pay), and it disappears once the firm reaches 25 workers.

Therefore this legislation will mandate businesses to pursue low wage workers and avoid those who enjoy better skills and typically receive higher pay. It may also simply force employers to avoid the costs of having many employees by choosing technology over workers (which has a higher initial cost, but would clearly become cheaper over time in the new health care environment). Another option could find companies pursue vendors (particularly overseas) in order to avoid these prohibitive employee costs entirely.The war on the working class continues.

Kevin Price is a nationally syndicated columnist and host of the Price of Business on CNN Radio. Learn more about him and his activities at www.PriceofBusiness.com.

Obamacare will Harm Working Americans

There is something that is clearly seen in the policy changes that will come with Obama's radical health care agenda, but is largely being ignored by the mainstream media. It is being called by some health care watchers as "the President's dirty little secret." Essentially, Obama's policies will wage a war on America's labor markets, says Benjamin Domenech who was a political appointee at the Department of Health and Human Services and is now the managing editor of Health Care News.


The United States is suffering from the highest unemployment in a quarter of a century and in such an economic environment you would think the government would do everything in its power to soften or eliminate the barriers between people and jobs. Instead, Obama's health care legislation will place millions of American workers out of work or move them to contract employees. This, in turn, will only create turmoil for families that are already concerned about one of the weakest economies in US history.The President promised a health care bill that would allow one to keep their private insurance and give business owners some needed relief (such as in taxes and mandates) to make it more affordable. Thanks to record deficits and the largest percentage of government spending in the Gross Domestic Product since the Great Depression, there will not only be any additional relief, but there will be a dramatic increase on the costs for business owners when it comes to health care.


In fact, the President's legislation is full of pitfalls and paradoxes when it comes to the President's goal of making health care more available. These include:

• Obama's proposal actually punishes employers for not providing health insurance. These type of provisions will lead to layoffs or the shifting of employees to contract status.


• Meanwhile, the president will subsidize the health care of employers without employer-provided insurance. These dollars will largely come from employers, which will further create barriers between people and jobs.


• This strange series of policies will essentially allow workers to receive the same compensation package they have today (assuming they can keep their jobs), but with Uncle Sam paying the health benefits of the bill, employers will have neither the need or the incentive to make up the difference in cash.


• On paper, this proposal looks great for low income workers (those making less than $17,000 a year), but there is a terrible thing called reality, because the layoffs and other issues that will follow.

The heart of liberal policies is that they are filled with, what appears to be, good intentions, but are plagued with terrible consequences. Domenech notes that small businesses that employ lower-income workers will not find it sensible, economically, to offer health insurance. Any business that does so will virtually always fail because of the higher costs they will suffer compared to competitors.

Obama's health care agenda is full of paradoxes and odd agendas that, in the end, will make health care cost more, or lead to higher unemployment, or foster a less stable economic environment, or all the above. Solutions to health care problems continue to be found in the market and not in government.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Obamacare's war on the Poor

There are, in public policies, these inconvenient things called the "secondary effects." These are the unintended consequences of even the best intended laws. Critics of Obama's national health care program have questioned its intentions from day one. Few doubt the program will lead to a serious rationing of health care (adding 40 million on the system and allegedly lowering spending will have that impact) and will lead to increase taxes for millions of Americans.

According to public opinion surveys, the number one issue of most voters is unemployment. This sentiment is backed up by the hard fact that unemployment recently broke into double digits, increased employment is still dragging, and the numbers added to the dole are still in the hundreds of thousands each month. One of the main deterrents to the creation of jobs is taxes. Obamacare is nothing short of a direct tax on labor and the cheapest labor in particular.

Writer Eric Staib has spent some serious time with this massive legislation that will change health care and the economy forever. He points out that "According to pages 269-273 of the gargantuan bill, employers of full-time workers will be required to cover at least 72.5 percent of the premium of the least expensive health-insurance plan available that fulfills the bill's minimum criteria of 'acceptable coverage.' In cases in which family coverage is provided, 62.5 percent of the premium is to be borne by the employer. Depending on the specific plan and other variables such as location, this amounts to a direct labor tax of approximately $300 per month for an individual, or nearly $700 for family coverage." Simply put, that means an additional cost of $300 a month for adding an employee and more than twice that if he or she has a family. This, of course, leads to discrimination of potential employees if they have a family.

To make matters worse, if adding $300 or $700 to a preexistent employee and the return being given back to the company is worth less than that, he or she might be laid off or find themselves part time. That leads to another problem, Obama's bill leaves the definition of part-time in terms of the health care bill to Obama's Czar on the subject and not the Department of Labor. The lower the number of hours are used in defining part-time, the fewer the hours people will have at a job. It will create a devastating cycle.

The political left claims to hate regressive taxes (those that get higher as you make less income), but that is exactly what this bill promises to be. The less productive (lower paid) employee will be the one in the business decision makers' crosshairs. Instead of improving the lot of those who are in need of national health care, this legislation promises to do them more harm by also making them unemployed or under employed.

Another unintended consequence of this bill, but certainly tied in to it, will be the continued growth of outsourcing to foreign countries as a viable way of doing business. Cheap labor that is around the world will be a more attractive source for getting things done. Instead of helping the working poor and those who aspire to rise up the economic ladder, Obamacare promises to make the "working poor", simply "poor."

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Socialism in the Ballot Box

Daily I get some bizarre ideas across my desk for show topics and the latest I have found has taken the cake. There is a relatively new site out there called Votesizing.com. The thesis of the site is simple -- the value or power of a vote should be adjusted according to income level.

So if someone is poor, working class, and financially struggling, they would actually have a more "weighted" vote that those who are financially successful. The more you make, the less power you have.

This is a ridiculous proposition on so many levels, it is difficult to begin. The policy is, simply, anti-American. Our political system, built on concepts such as "equal justice under law" simply makes a policy such as this contrary to our core values.

Also, if the poor had more power, America would likely become more poor. They would continue to vote for politicians who would promote distributionist policies that would make the corporations that can fight poverty extinct. As Ronald Reagan liked to say, "the best social program is a job." Businesses create jobs, "Vote sizing' would destroy business

If anything, I get the impression that the most affluent may be under represented. Consider the following breakdown of who pays what in taxes:

* The top 5 percent of wage earners pay over 50 percent of the tax bill.

* The top 10 percent pay over 64 percent of the total tax bill.

* The top 50 percent pay over 96 percent of the tax bill.

That leaves 50 percent paying around 4 percent of the tax burden.

"Vote sizing" will simply make more Americans poor as politicians pander to that group. There are already "poverty pimps" whose political fortunes depend on people being poor and who promote excessive taxation, artificial wage increases, and other irresponsible policies that preserves poverty. "Vote sizing" will make it worse.

John Stuart Mill, the great classical economist, proposed a radical idea. He argued that the only way one could keep government fiscally responsible is to take the vote away from voters who receive government support -- be they rich corporations receiving subsidies or the poor. Now that is the kind of radical idea I would find interesting.

Best selling author Ken Blanchard recently revealed the secrets of entrepreneurship on a Houston Business Show. Receive a free copy of the complete program by emailing Info@HoustonBusinessShow.com.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.