Job cre­ators brace for Oba­macare im­pact

Com­pa­nies plan to pay for health care man­date by

The Washington Times Daily - - Metro - By Rep. Dar­rell E. Issa

This week, the Over­sight and Gov­ern­ment Re­form Com­mit­tee is­sued a re­port, “Im­pact of Pres­i­dent Obama’s Health Care Law on Jobs,” de­tail­ing the neg­a­tive im­pact that Pres­i­dent Obama’s health care law has al­ready had and will con­tinue to have on job cre­ation. The re­port high­lights con­gres­sional tes­ti­mony from many busi­nesses about the health care law’s neg­a­tive im­pact on their com­pany and their abil­ity to hire.

The re­al­ity is that the pres­i­dent’s par­ti­san health care over­haul, passed with­out any Re­pub­li­can votes, is di­rectly con­tribut­ing to the na­tion’s un­em­ploy­ment prob­lem. As reg­u­la­tors busily cod­ify rules, em­ploy­ers are scram­bling to fig­ure out how to sur­vive the plethora of man­dates and taxes sprin­kled through­out the nearly 3,000-page law. And its worst pro­vi­sions have yet to be en­acted.

The most egre­gious pro­vi­sion is a tax penalty on busi­nesses with at least 50 work­ers who fail to of­fer ad­e­quate, gov­ern­ment-ap­proved health in­sur­ance. De­pend­ing on cir­cum­stances, these firms will face a tax penalty of ei­ther $2,000 or $3,000 per worker. Com­mon sense and data show that the bur­den of pay­ing this tax will fall on con­sumers in the form of higher prices, on share­hold­ers in the form of lower prof­its and on work­ers in the form of lower wages and fewer jobs.

The ex­pla­na­tion is sim­ple: The pres­i­dent’s health care law makes it more ex­pen­sive to hire peo­ple, so busi­nesses will hire fewer peo­ple. This is painfully clear for busi­nesses with about 50 work­ers. Many of these busi­nesses will avoid grow­ing their la­bor force or cut it un­der 50 work­ers to avoid all the new fed­eral rules and penal­ties.

Gail John­son, the pres­i­dent and founder of a preschool chain, tes­ti­fied that “small em­ploy­ers will be faced with de­ci­sions such as cut­ting back wages, for­go­ing new hir­ing and rais­ing prices for ser­vices. These mea­sures will fur­ther stunt any eco­nomic re­cov­ery and cur­tail fu­ture job growth.”

The law’s au­thors in­cluded a pro­vi­sion that ex­cludes part-time em­ploy­ees, de­fined in the law as those who work fewer than 30 hours per week, from the firms’ penalty. It is not rocket sci­ence to fig­ure out how busi­nesses will re­act. An­drew Puzder, the CEO of CKE Restau­rants (in­clud­ing Hardee’s and Carl’s Jr.) tes­ti­fied: “We would un­doubt­edly in­crease the num­ber of part-time em­ploy­ees; de­crease the num­ber of full-time em­ploy­ees and at­tempt to au­to­mate po­si­tions (such as re­plac­ing cashier po­si­tions with or­der­ing kiosks). These are not ac­tions we would choose to take. They are ac­tions the [law] will all but com­pel us to take.”

In or­der to fi­nance the new gov­ern­ment spend­ing, many new taxes were cre­ated. Michael Fredrich, pres­i­dent of a man­u­fac­tur­ing com­pany in Wis­con­sin, stated be­fore Congress that the law’s new 3.8 per­cent tax on all in­vest­ment in­come and ad­di­tional Medi­care pay­roll tax “is a tax in­crease on small busi­ness. It raises our reg­u­la­tory bur­den and takes away more of my cap­i­tal that can be used for in­vest­ment, pay in­creases or new jobs.”

Mr. Obama’s health care law also sin­gled out sev­eral suc­cess­ful Amer­i­can in­dus­tries, in­clud­ing drug and med­i­cal de­vice man­u­fac­tur­ers, for ad­di­tional tax bur­dens to fi­nance the over­haul. Drug man­u­fac­tur­ers and med­i­cal de­vice man­u­fac­tur­ers are among the most suc­cess­ful in­dus­tries in the United States, and tax­ing their suc­cess to fi­nance new spend­ing in the health care law will di­rectly de­stroy good-pay­ing Amer­i­can jobs.

Stryker Cor­po­ra­tion, an or­tho­pe­dicde­vice busi­ness based in Michi­gan, an­nounced plans to cut 5 per­cent of its work­force over con­cerns about the med­i­cal de­vice tax. Denis John­son of Bos­ton Sci­en­tific, a med­i­cal de­vice man­u­fac­turer, tes­ti­fied that this tax “will cost Bos­ton Sci­en­tific alone more than $100 mil­lion a year in ad­di­tional taxes. Such a se­vere in­crease in tax li­a­bil­ity will un­doubt­edly force us to cut crit­i­cal R&D fund­ing and in­hibit job cre­ation and re­ten­tion. . . . It will in­evitably sti­fle in­no­va­tion, de­stroy jobs and thwart pa­tient ac­cess to break­through tech­nolo­gies that have saved and en­hanced mil­lions of lives.”

While the em­ployer man­date and nu­mer­ous taxes will be grad­u­ally im­ple­mented over the next few years, the reg­u­la­tory power given to fed­eral de­part­ments and agen­cies has al­ready in­creased un­cer­tainty. Larry Schuler, a res­tau­rant owner, tes­ti­fied that “[r]egu­la­tory im­ple­men­ta­tion is mov­ing ahead at full-steam and it seems like a new re­quire­ment comes to light ev­ery day that is even more bur­den­some than the last.” Added un­cer­tainty dis­cour­ages busi­ness own­ers con­sid­er­ing ex­pan­sion and en­trepreneurs con­sid­er­ing new projects from mak­ing those in­vest­ments.

If the pres­i­dent is se­ri­ous about job cre­ation, he would ac­knowl­edge the fail­ure of his health care law and ad­vo­cate its re­place­ment with mar­ket-based so­lu­tions that re­duce gov­ern­ment man­dates and lower the cost of health in­sur­ance to busi­nesses. Ac­cord­ing to the non­par­ti­san Con­gres­sional Bud­get Of­fice, this ac­tion would add nearly 1 mil­lion jobs to the econ­omy over the next decade with the added bonus of dra­mat­i­cally re­duc­ing fu­ture gov­ern­ment spend­ing.


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