Standing on the Platforms: What Small Business can Expect from the Parties

The Democratic National Convention began with Beijing Olympics-style visuals, high-powered speakers including Michelle “The Closer” Obama, well-contained protesters and the usual suspects from mainstream media and those silly fringe media elements like Fox News, talk radio and blogosphere. Hillary received her faux roll call vote and gave it up gloriously, right on cue, so that the Democrats could minimize the expected wailing and gnashing of teeth from her die-hards and achieve something that looked like party unity behind Barack Hussein Obama whose speech, in what looked like a White house Rose Garden somehow replanted on the summit of Olympus, was notably vague but certainly gave his supporters the warm fuzzies. It was all nicely choreographed—even Denver’s legendary homeless population was under wraps (at least those who didn’t opt for the free haircut or the trip to the zoo). 

As for the Republicans, they were gearing up quite nicely, ignoring equally well-contained protesters of their own and putting the final touches on the set, though they couldn’t compete with the Democrats when it came to flashiness. They were almost ready and then the rains came. Still, now that Gustav—which provided a great stage for the Republican Gulf Coast Governors to show that they could take care of business while McCain could demonstrate presidential leadership in a national crisis—has petered out, the Republicans will be able to get down to the business of speech-making, nominating, and roll-call voting and disaster relief fundraising. 

The question remains, however, with all the speeches and posturing and back room deals that are made on both sides of the aisle, what do these well-packaged, flag-wrapped political infomercials really mean to you and your small business? 

The answer will not be found in the speeches, it will be found in their respective party platforms. 

Renewing the Democrat Promise

That’s where the Democratic Platform comes into play. Titled, “Renewing America’s Promise,” the platform is the party’s blueprint of what it believes and what wants to do if they should happen to win the election. 

Organized by topic, the platform details a manipulative, hands-on approach to the Federal Government’s role in the economy, as well as in healthcare, Second Amendment issues and other issues, with one section—that on economic stewardship—holding that “…the American experiment has worked in large part because we have guided the market's invisible hand with a higher principle.” No one has ever disputed that the market should be guided; the argument has always been about which “invisible hand” should do the guiding. To see how it will work in practice, let’s begin with a look at what the platform has to say about small business. From the text itself, here is what the Democrats have to say about small business: 

Support Small Business and Entrepreneurship

Encouraging new industry and creating jobs means giving more support to American entrepreneurs. We will exempt all start-up companies from capital gains taxes and provide them a tax credit for health insurance. We will provide a new tax credit for small businesses that offer quality health insurance to their employees. We will work to remove bureaucratic barriers for small and start-up businesses–for example, by making the patent process more efficient and reliable. Our Small Business Administration will recognize the importance of small business to women, people of color, tribes, and rural America and will work to help nurture entrepreneurship. We will create a national network of public-private business incubators and technical support. 

Sounds pretty good, right? Of course the current SBA already recognizes the “importance of small business to women, people of color, tribes, and rural America” and it already works to nurture entrepreneurship. But we’ll let that go. Then there is this new government entity that would manage their “national network of public-private business incubators and technical support,” but we’ll let that pass as well. Exempting start-ups from capital gains taxes and removing bureaucratic barriers of various sorts is helpful, as is offering tax credits for health insurance. My big question is why do they mention the same healthcare tax credit twice, the second mention clarifying the first? “…and provide them a tax credit for health insurance. We will provide a new tax credit for small businesses that offer quality health insurance to their employees.” This is evidently an important issue for the Democrats. Let’s see what they have to say about the relationship between business and healthcare: 

Health care should be a shared responsibility between employers, workers, insurers, providers and government. All Americans should have coverage they can afford; employers should have incentives to provide coverage to their workers; insurers and providers should ensure high quality affordable care; and the government should ensure that health insurance is affordable and provides meaningful coverage. As affordable coverage is made available, individuals should purchase health insurance and take steps to lead healthy lives. 

Later, the platform calls for citizens to have the same kind of insurance that members of Congress enjoy. That is probably where the tax credits come in. After all, our elected officials enjoy a level of health benefits that the rest of us can only dream about, a disparity that makes one think of the days when Russia’s Communist Party officials got the royal treatment at private hospitals while the average comrade in the street was lucky to even see a doctor. Is it a nice goal? Sure. Of course, unlike the old Soviet Union, we here in the US actually have to ask ourselves, where will the money come from to pay for all this great health coverage and these wonderful tax credits? 

They plan to regulate the profits that health insurance companies can take in a bid to lower rates. “…Premiums collected by insurers should be primarily dedicated to care, not profits.” That is fine, as far as it goes. After all, who doesn’t hate health insurance companies at one level or another? But it does beg a larger question about the Democrats and the platform they are espousing: How far do they plan to meddle in the economy? They also want to regulate oil investments to prevent “speculation,” shift the business environment to a pro-union, pro-worker footing, mandate paid sick days, have a “Manhattan Project” for energy independence and the elimination of oil as an energy resource…the list goes on and on, but aside from some spare language on tax hikes for those making over $250,000 a year and the need to rescind the Bush tax cuts, there is really very little specific info on paying for all of this. 

The 2008 Republican Platform

If you guessed that the Republican platform is business friendly, you guessed right. No surprise here, but it might surprise you to know that they see themselves as the party of small business and if the platform is any indication, they mean it. The Democratic platform mentions the phrase Small Business all of seven times. The Republicans mention it twenty-two times. This platform recognizes the importance of small business to the growth of the U.S. Economy and the prosperity of the American people. Small business has a section of its own and is also mentioned under topics like taxes, lawsuits, energy, technology, innovation and more. 

Small Business: the Engine of Job Growth

The Republican platform does a great deal to set the party apart from the Democrats. While it gives the reader a real sense of who the Republicans are, it also defines the Democrats by their track record in Washington. One does not see too much political hyperbole in this platform—what polemic does exist is minimal at best—but it does call the Democrats to account on the important issues of the day, including their treatment of small business. 

We proudly call ourselves the party of small business because small businesses are where national prosperity begins. Small businesses such as Main Street retailers, entrepreneurs, independent contractors, and direct sellers create most of the country’s new jobs and have been the primary means of economic advancement by women and minorities. 

Eight years ago, when Democrats controlled the Executive Branch, small business faced a hostile regulatory agenda, from OSHA’s ergonomics standards and attempts to intrude into the homes of telecommuting employees to IRS discrimination against independent contractors. Republicans turned back those threats, along with much of the onerous taxation that limited the growth of small businesses. We reduced their marginal tax rates, quadrupled the limit on their expensing of investments, and phased out the death tax on family owned small businesses and family farms. We enacted Health Savings Accounts to help small business owners secure health insurance for themselves and their employees.  

All those gains are jeopardized if Democrats gain unfettered power once again.

Republicans will advance a multi-pronged plan to support small business and grow good-paying jobs:

  • Through the energy agenda laid out elsewhere in this platform, we will attack the rise
  • in energy costs that is making it so difficult for entrepreneurs to compete.
  • Our tax reduction and tax simplification agenda will allow businesses to focus on producing and selling their products and services — not on paying taxes.
  • Our plan to return control of health care to patients and providers will benefit small business employers and employees alike.
  • Our determination to vigorously open foreign markets to American products is an opportunity for many small businesses to grow larger in the global economy.
  • Our approach to regulation — basing it on sound science to achieve goals that are technically feasible — will protect against job-killing intrusions into small businesses.
  • Our commitment to legal reform means protecting small businesses from the effects of frivolous lawsuits.

Using history as our guide, we look to innovative entrepreneurs for the ingenuity and daring that can give us the next generation of technological progress. The advances our country needs, in everything from health care to energy to environmental protection, are most likely to come from the men and women of small business. 

Taxes or Tax Reform, That is the Question

All of this is great, a solid “Us vs. Them” rhetorical set-up that frames the positions nicely, but I have to wonder how the Republicans plan to pay for it all? True to their ideology, the Republican stance on taxes is definitely a less-is-more position in which taxes are used only to support the vital services of the government and are not used for what they call (and accuse the Democrats of promoting) social engineering. As far as the Republican Party is concerned, there is already more than enough money making its way to Washington. The problem is what happens to it once it gets there. So, rather than promoting tax increases and worrying about who is or is not paying their fair share, the Republican platform calls, first and foremost, for spending cuts: 

The federal government collects $2.7 trillion a year from American families and businesses. That’s $7.4 billion a day. Even worse, it spends over $3 trillion a year: $8.2 billion a day. Why? Largely because those who created this bloated government will not admit a single mistake or abolish a single program. Here are some staggering examples of the overall problem:

  • Recent audits show that 22% of all federal programs are ineffective or incapable of demonstrating results.

  • 9 separate programs, administered by 10 different agencies, provide education or care to children under the age of 5.

  • Nine separate agencies administer 44 different programs for job training.

  • 23 separate programs, each with its own overhead, provide housing assistance to the elderly.

  With so many redundant, inefficient, and ineffective federal programs, it is no wonder that the American people have so little confidence in Washington to act effectively when federal action is really needed. 

To deal with these issues, they are seeking to change the budget process in Washington that has been in place for nearly forty years, resulting in the titanic omnibus spending bills that we have today. According to the platform, current procedures should be replaced with simplicity and transparency. For example:

  • We favor adoption of the Balanced Budget Amendment to require a balanced federal budget except in time of war.
  • Earmarking must stop. To eliminate wasteful projects and pay-offs to special interests, we will impose an immediate moratorium on the earmarking system and reform the appropriations process through full transparency. Tax dollars must be distributed on the basis of clear national priorities, not a politician’s seniority or party position.
  • Government waste must be taken off autopilot. We call for a one-year pause in non-defense, non-veterans discretionary spending to force a critical, cost-benefit review of all current programs.
  • We call for a constitutionally sound presidential line-item veto.
  • If billions are worth spending, they should be spent in the light of day. We will insist that, before either the House or Senate considers a spending bill, every item in it should be presented in advance to the taxpayers on the Internet.
  • Because the problem is too much spending, not too few taxes, we support a supermajority requirement in both the House and Senate to guard against tax hikes.
  • New authorizations should be offset by reducing another program, and no appropriation should be permitted without a current authorization.
  • Congressional ethics rules governing special interests should apply across the board, without the special exemptions now granted to favored institutions.
  • We support the Government Shutdown Protection Act to ensure the continuance of essential federal functions when advocates of pork threaten to shut down the government unless their wasteful spending is accepted.
  • We will insist that the budget reasonably plan for the long-term costs of pension and health care programs and urge the conversion of such programs to defined contribution programs. 

Such spending cuts and budget reforms would be followed by a tax reform package that would, eventually, eliminate the tax code as we know it. The platform delineates such a proposal and discusses some of the pitfalls that might endanger it. 

Over the long run, the mammoth IRS tax code must be replaced with a system that is simple, transparent, and fair while maximizing economic growth and job creation. As a transition, we support giving all taxpayers the option of filing under current rules or under a two-rate flat tax with generous deductions for families. This gradual approach is the taxpayers’ best hope of overcoming the lobbyist legions that have thwarted past simplification efforts.  

As a matter of principle, we oppose retroactive taxation, and we condemn attempts by judges, at any level of government, to seize the power of the purse by ordering higher taxes. Because of the vital role of religious organizations, charities and fraternal benevolent societies in fostering charity and patriotism, they should not be subject to taxation.  

In any fundamental restructuring of federal taxation, to guard against the possibility of hyper-taxation of the American people, any value added tax or national sales tax must be tied to simultaneous repeal of the Sixteenth Amendment, which established the federal income tax. 

Note that these tax proposals are predicated on the idea that Washington already has enough of our money, and that by returning more of it to individuals and to businesses, we can restart America’s prosperity engine. Throw in a dash of energy independence and an intelligent border and foreign policy and America will be off to the races! 

The Bottom Line

The fact is that by telling a private company how it can spend its money, the Democratic platform takes us to a slippery slope where the government can tell any company, for whatever compelling reason it chooses to make up, what to do with its profits. Such things usually begin with industries that are unpopular but they rarely stop with them. Oil companies today, drug makers tomorrow, investment houses, food suppliers, hospitals and doctors…there are all sorts of industries in the country that some population segment feels justified in having the government take over. Where do you draw the line? 

Our Founding Fathers went to great pains to keep the tyranny of government away from the day-to-day lives of the citizenry. This ideal is embodied in the Republican Party platform, which calls for precisely the opposite of the Democrats. There can be no surprise there. Nor can there by any surprise that, taken as a whole, the Democratic platform is a blueprint for the slow socialization of America with the private sector coming under the domination of a government bent on reengineering society, one little step at a time; the Democratic promise to America since the 1960s. The Republicans, on the other hand, see no need to reengineer society. Instead, they want to reengineer government and the way it spends money and the relationship it has with citizens and businesses, bringing back the old adage that “what is good for business is good for America.” 

That is what the choice comes down to, the priorities of the two parties and the effects these will have on your small business. One is pro-business, the other is not. One is for fiscal responsibility and proper budgeting; the other is for higher taxes and the socialization of many currently private industries. One sees our greatest hope for prosperity in the private sector; the other sees America’s hope in government. What you have to ask is which side would be best for your small business? Which side will give your business the support and the atmosphere you need to get ahead? 

Read the Democratic platform with a clear and open mind, and then read the Republican platform with the same open mind. Study them both closely and decide for yourself. Your livelihood could rest in the balance.