We are not living in an “entrepreneurial-friendly” climate. The economy is in the proverbial toilet. Health care costs continue to increase. However, on January 20 President-elect Barack Obama will take office, and if he fulfills his campaign promises for businesses and health care, aspiring entrepreneurs will have a chance to fulfill their dreams.
What are those campaign promises? Let’s start with statements Obama made this week during a press conference. “The pursuit of a new energy economy requires a sustained, all-hands-on-deck effort because the foundation of our energy independence is right here, in America – in the power of wind and solar; in new crops and new technologies; in the innovation of our scientists and entrepreneurs, and the dedication and skill of our workforce.”
Obama plans to create a Social Investment Fund Network that would use federal money to “leverage private sector funding to improve local innovation, test the impact of new ideas, and expand successful programs to scale.”
Obama’s transitional website, Change.gov lists what he proposes to do to help businesses. Three items stand out:
1. Create a national network of public-private business incubators and invest $250 million a year to create more incubators in “disadvantaged communities.”
2. Create an Advanced Manufacturing Fund that will invest in the “most compelling advanced manufacturing strategies.” It will be based on the Michigan 21st Century Jobs Fund which awarded over $125 million to innovative Michigan businesses.
3. Provide double funding for the Manufacturing Extension Partnership (MEP). MEP works with manufacturers to “improve efficiency, implement new technology and strengthen company growth.”
Last month a half a million jobs were lost in the U.S. Obama also plans to give tax credits to companies that add jobs in the U.S. Businesses will receive a $3,000 tax credit for every additional full-time employee hired.
Obama plans to help small businesses by giving them temporary tax incentives, eliminating capital gains taxes on investments made in small and start-up businesses, and making credit available to small businesses.
A better health care system would help businesses
A study released last February by the National Coalition on Healthcare (NCHC) revealed that health insurance premiums for employers increased almost five times faster than inflation. Premiums for employers increased almost 100 percent, but wages increased only 24 percent between 2000 and 2007. Higher premiums are a “drag on economic growth,” according to the study, because the job growth rate slows and wages are suppressed.
Last September the Urban Institute released a study that showed small businesses are more affected by rising health insurance premiums than large businesses. In 2006, only 35 percent of businesses with less than 10 workers offered health insurance to employees, but 98 percent of businesses with 1,000 or more workers did. Small businesses pay “significantly more” for the same health benefits than large businesses do.
The National Association of Professional Employer Organizations surveyed 365 of its
small business members, and found that almost one in 10 said they would drop health benefits in 2008 or were not sure of continuing coverage due to costs. The members said their premiums increased by as much as 10 percent in 2007.
Among Obama’s plans to reform the health care system are plans to help small businesses provide affordable health insurance to their employees by creating a Small Business Health Tax Credit. Other plans include establishing a public health insurance plan that is based on benefits available to Congress that would allow small businesses to buy health affordable health coverage.