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Archive for the “Mandates” Category

Today I want to hark back briefly to last week’s blog.

I received some utterly disbelieving correspondence from small business colleagues last week concerning the business mandates in ObamaCare (as well as FinRe) legislation. Well, accept it. It’s for real. Citing again last week’s prime example, it is utterly true that starting in 2011 all businesses must file separate 1099 forms with the IRS to report any purchases totaling more than $600. $600 for paper clips? File a 1099. $600 for a new computer? File a 1099. $600 for toner? File a 1099. $600 for Christmas cards? File a 1099. $600 for coffee? Yup. File a 1099. The National Federation of Independent Business says this will impact 40 million businesses. Congress should call ObamaCare “The Accountants’ Full Employment Act.”

The reason for this onerous bureaucratic burden is that the Congressional backers of ObamaCare hypothesize a ten year realization of new revenue of $17 billion from tax cheats. Well, I pay my taxes and I am all for those lousy tax cheats paying theirs. But, damn, the lost productivity from such madness will be phenomenal. Surely, there’s a better way to raise funds without impeding the free enterprise system.

Suffice it to say that this egregious single example of Congressional overreach (ObamaCare) is one of a plethora of expensive disincentives and distractions for most of us in growing our businesses or adding employees. If unemployment is to decline and this recession is to recede they will do so in tandem with the fortunes of entrepreneurs and small business. Why hamstring us like this? Regardless of your political persuasion, this level of bureaucratic interference is impractical and counterproductive.

As Rev. Henry Ward Beecher said in 1887, “The worst thing in the world, next to anarchy, is government.” Amen, Brother Henry.

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Well, here we go again. I’m worried. I don’t wish to be a small business Noriel Roubini or any kind of pessimist, but I continue to fear the economic myopia reflected in legislation recently enacted by Congress.

There is a little good news since I last wrote in this trope (see May 18, 2010, “Chicken Little and Entrepreneurship“). The major media are finally beginning to pay attention to the small business conundrum. Even the Obama administration is beginning to recognize the essential role of entrepreneurship in job creation and ending recession. Banks are finally at least giving lip service to loosening lending. But it ain’t nearly enough to assuage a looming bleakness that augurs nothing but ill for the small business community, with concomitant implications for the macro economy.

What is of increasing alarm to me is the issue of mandates. Let me list just a couple.

  1. A requirement that all businesses must file 1099 forms with the IRS to report any purchases totaling more than $600 in a year. This is a gigantic added paperwork burden.
  2. The unspecified rules and paperwork can now be imposed unilaterally and without explicit Congressional approval by well over 300 new bureaucratic entities legislated in ObamaCare.

The vagueness of all this is bloody scary. It creates a nightmarish chiaroscuro of uncertainty for business in general and the small businessman in particular. How do you plan, how do you budget, and how do you hire in such a hostile and fluid atmosphere?

I believe the current administration genuinely would now like to belatedly give small business a boost to aid the dismal employment picture. But there is a problem with this. The Obama government has lost the faith of most small businessmen not only because of hostile legislation, but also because of populist rhetoric that paints business as the venal enemy of the greater good. Explicit verbal attacks have been made on doctors, insurers, drug makers, oilmen, bankers, automakers, casinos, hoteliers, etc. It makes most of us feel like we have a big target on our chest.

Our trust that the government is on our side must somehow be restored. The heedlessly imposed new rules and mandates must give way to a practical and real sympathy to how business actually works. Bureaucratic mandates are a creativity killer for the entrepreneur and the capitalist risk-taker.

The Dallas Fed President Richard Fisher reports survey results that neatly sum up where most small business is in a recent speech to the San Antonio Chamber of Commerce. He says:

“…the politicians and officials who craft and enforce the rules are doing so in a capricious manner that makes long-term planning difficult, if not impossible. [Businessmen] are increasingly distressed by the lack of consistent  direction coming from Washington….So they are calling time-outs and heading for the sidelines while they wait for the referees to settle the rules of the game.”

Gore Vidal said in his 1968 book Sex, Death and Money, “There is something about a bureaucrat that does not like a poem.” Or an entrepreneur. Thanks, Gore.

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