AIFG Blogs

Small business owners and working families were not served well by yesterday's Supreme Court decision to uphold President Obama's Affordable Care Act as constitutional. Not only is the need for real reform of America's unwieldy healthcare system more urgent than ever, but also there are now far more concerns about the prospect for economic growth. By upholding the mandate as a tax, the court and this administration have ensured that taxes will go up for middle-class working families and small businesses everywhere—when they can least afford it.

Setting aside legal arguments and analysis, the ruling's fiscal impact is significant: Government spending will be $1.15 trillion higher over the next 10 years, and federal deficits will increase by $340 billion.

But more than that, the reality is that the Affordable Care Act is already making the cost of doing business much higher for small businesses. In my home state of North Carolina, the law is already causing healthcare costs to rise and fears of what full implementation might mean are contributing to a climate of uncertainty and stifling job creation nationwide.

As if the law's 2,700 pages weren't enough, the law will lead to tens of thousands more pages of new regulations. These new regulations, some of which have already started to come from the federal government and many which have yet to be written, will pummel small businesses that are already struggling under burdensome healthcare costs with additional requirements, taxes, and penalties. Even the so-called benefits are too complicated. All of these added costs mean, perhaps most importantly, that the Affordable Care Act will fundamentally restrict businesses' ability to hire workers, making our nation's unemployment crisis much worse than it already is.

The need for reform remains. American Institute for Growth understands that the success of small businesses and job creation depends upon a sustainable, efficient healthcare system that benefits both employers and workers.

Several common-sense solutions include: injecting real competition in the health insurance industry by enabling the sale of health insurance across state lines, healthcare portability that would allow employees to take their health insurance with them from job to job, and innovative ideas like health savings accounts which encourage individuals to make more cautious choices concerning medical costs.

A market-based, patient-centered approach would go a long way to addressing the real issue in healthcare: increasing costs.

If elected leaders and policymakers are serious about fixing the nation's broken healthcare system, they cannot afford to sit back and do nothing. Robust economic growth is dependent on the welfare of its businesses and workers, for which an effective healthcare system is a must.

This week the Supreme Court delivered one of the most consequential and highly anticipated rulings in history – it upheld President Obama’s healthcare law. In doing so, the Court – and this Administration – dealt a critical blow to free enterprise and ensured that taxes will go up for middle class working families and small businesses everywhere. This dims prospects for economic growth, while leaving in place the barriers to hiring imposed by the law, like costly, burdensome regulations and pervasive uncertainty.

I’ve always believed that President Obama’s healthcare law was and is bad politics and bad policy – mainly because the law fails to deliver what we so desperately need: true reform that will actually lower the cost of health insurance and fix a broken system.

Pursuing a drastic overhaul of our nation’s healthcare system – one-sixth of our economy – was bad politics. With over 5 million long-term unemployed, the top priority for this administration should have been getting the American people back to work. Instead, the policies coming out of Washington have been nothing more than a regulatory onslaught on small businesses, the engine of the American economy, making it more difficult and costly for them to survive.

Conventional wisdom holds that it will be extremely difficult for President Obama to win reelection with unemployment rates persisting above 8 percent. To lower that number by Election Day would require creating 200,000 jobs per month between now and then, making the president’s lack of focus on a pro-growth jobs policy all the more confusing.

But more important than the political implications, the law itself is bad policy.  Through a top-down, bureaucrat-centered approach based on bigger and more intrusive government, this ill-fated attempt at reform will most adversely affect small businesses. In fact, the law is already having a profound impact on small business confidence, optimism and hiring. According to the Chamber of Commerce, 73 percent of small businesses consider Obamacare a hurdle to hiring, as healthcare costs continue to rise and many employers see their health coverage terminated.

This law is and will continue to be a massive government expansion to the detriment of private sector growth. The fact is that we simply cannot afford higher taxes, more regulations or bigger government.

American Institute for Growth believes there are patient-centered solutions that could contain costs and increase access to health insurance without discouraging economic growth. A few commonsense, modern reforms, like expanding health savings accounts, making health insurance portable or allowing health insurance to be bought across state lines, would be important steps in the right direction.

This week’s ruling was as disappointing and damaging, as it was historic. Yet the real need for reform remains. More importantly the need to free our nation’s businesses from the crippling grip of increasing government control remains with no relief in sight.

“The Supreme Court of the United States has dealt a critical blow to free enterprise. By upholding the mandate as a tax, the Court and this Administration has ensured that taxes will go up for middle class working families and small businesses everywhere. Legal arguments aside, Obamacare is a disaster for small business owners and entrepreneurs. It will result in thousands of lost jobs, increased health care costs and an increased inability for small businesses to provide coverage to employees.

“Today’s decision not only leaves the hurdles to job creation that Obamacare posed untouched, but adds additional uncertainty to the economy which will make it much  more difficult for our economy to grow.

“American Institute for Growth supports consumer-oriented, patient-centered, free market solutions to our nation’s healthcare problems. Whether encouraging competition though the sale of health insurance across state lines, or making health insurance portable, or expanding health savings accounts, there are better ways to increase access and control costs than a top-down, bureaucrat-centered approach based on bigger government.”

For many decades, Americans have had the good fortune and innumerable economic, health and lifestyle benefits of using highly affordable energy.  While most Americans will remember periods where prices spiked, such price shocks have been relatively infrequent events, usually triggered by an outside cause, such as instability in the Middle East or unexpectedly rapid economic growth in China, says Kenneth P. Green, a resident scholar at the American Enterprise Institute.

This low-cost-energy blessing has not been an accident -- U.S. public policies have largely stayed out of the way, and shrewd American entrepreneurs have proven up to the task.

• Unlike many other countries, U.S. taxation on energy has been reasonably low.
• Further, while regulations have been significant, they have been offset by continued access to abundant and affordable energy.
• Finally, Americans have benefited from a highly efficient private energy sector that discovers, produces and brings energy (both in liquid form and as electricity) to meet consumer demand.

This ease-of-use is not the case for the rest of the world, however.  Despite the relative age of basic energy technologies, hundreds of millions still lack access to electrical power, stripping them of substantial economic and health outcomes.

• An estimated 79 percent of the people in the Third World -- the 50 poorest nations -- have no access to electricity.
• The total number of individuals without electric power is put at about 1.5 billion, or a quarter of the world's population, concentrated mostly in Africa and southern Asia.
• The situation is particularly acute in sub-Saharan Africa: in 11 countries, more than 90 percent of people go without electricity.
• In six of these -- Burundi, Chad, Central African Republic, Liberia, Rwanda and Sierra Leone - only 3 to 5 percent of people can readily obtain electric power.

Highlighting this widespread lack of access should cause Americans to better appreciate their low-cost energy that is a crucial ingredient in so many facets of their lives.  Additionally, this energy is cleaner and less harmful than ever before.  This is true both in terms of human illnesses and in damage done to natural ecosystems.

Source: Kenneth P. Green, "Energy Abundance vs. the Poverty of Energy Literacy," The American, June 12, 2012. 

Come join our discussion here or in our forums as we await the Supreme Court's decision this morning on the Patient Protection and Affordable Care Act (ObamaCare.) Watch this space for the latest updates.

What do you think?

Jabious and Anthony Williams were living crammed with their mom and eight other family members in their aunt’s two-bedroom apartment in Anacostia, a violent Southeast Washington, D.C., neighborhood. Every day the boys walked miles to the nearest Exxon station to pump gas for tips. “Typically, we would earn thirty to fifty dollars a day to help support my mom,” says Jabious Williams. 

One day, the Williams brothers met Mena Lofland, a caring business teacher at Suitland High School in Maryland. She got Anthony and Jabious into her entrepreneurship class, which was sponsored by the Network for Teaching Entrepreneurship (NFTE). The boys had developed independence, grit, salesmanship and hard-won street smarts. As a result, both showed great aptitude for entrepreneurship. 

The Williams brothers started a hip-hop clothing line with support from Lofland and two local mentors—Phil McNeil, managing partner of Farragut Capital Partners, and Patty Alper, a dedicated volunteer, philanthropist and former entrepreneur. 

Today, Jabious is a scholarship graduate student at Southeastern University and operates Jabious Bam Williams Art & Photography Company. Anthony heads a youth-mentorship program. They recently gave their mom $5,000 to use as a down payment on a house. “If it weren’t for the NFTE classes and the support of our teachers and mentors, we would have likely dropped out of school,” Jabious says. 

As an educator of at-risk youth for over thirty years, and NFTE’s founder, I’ve seen only one thing consistently bring children raised in poverty into the middle class: entrepreneurship education. 

(MORE: How Entrepreneurship Can Fix Young America) 

I’ve personally witnessed thousands of young people discover their potential through our owner-entrepreneurship courses. I’ve watched with pride as many of our 450,000-plus alumni have successfully moved into the middle class—as lifetime entrepreneurs or as educated, productive workers with good jobs. 

I’ve seen apathetic kids whose families have been on welfare for generations get excited about school and their futures. They discover that they can participate in our economy and earn money. They quickly realize that to do so, they must to learn to read, write and do math. 

I’ve also seen how owning even the simplest small business fills a teen with pride. 

Read the full article here.

The latest employment report from the Bureau of Labor Statistics suggests that the labor market recovery has lost significant steam in recent months, and is the first clear indication that excuses for prior mediocre job gains is not attributable to any other factors such as weather or temporary loss of momentum in the labor market recovery across jobs, hours worked and the unemployment rate. This raises the likelihood that the Fed will embark on a renewed round of policy easing. Furthermore, this makes a strong case for policies that encourage more small business lending. 

Small businesses are more dependent on external sources of financing because they have less ability to offset their exposure to financial crises through hedging and have less access to the bond markets. The pace of small-business lending in the United States fell by six percentage points from 2009 to 2010. Small-business lending as a percent of total number of commercial loans hasn't returned to pre-recession levels, the OECD report stated. Small-business loans were reduced by banks of all sizes from 2007-2010, reducing lending to small businesses by $43 billion.  

The recently enacted JOBS Act could be a huge boon in small business lending. The new rules coming from the recently passed JOBS Act are designed to reduce the regulatory burden on small banks and will create opportunities that didn’t exist and remove such restrictions. Previously many banks had to carefully maintain shareholder count at 350 because it wanted to avoid the cost and hassle of registering with the Securities and Exchange Commission – estimated at an average of $200,000 per year for filing alone. The JOBS Act includes a provision that raises the number of shareholders at which small banks must register with the SEC to 2,000. The newly enacted JOBS Act also makes it easier for small banks to deregister with the SEC, permitting them to do so with 1,200 shareholders, compared with the current threshold of 300. 

Other bills that could enhance small-business lending are currently being discussed in Congress. Some address the need to increase the cap on member business lending, and to allow credit unions to offer more opportunities and options to small-business members.  

Another approach other leading countries have taken to deal with the financing gaps for small businesses was to increase the number and amount of government loan guarantees. These nations provided additional programs such as tax exemptions and deferments and credit mediation to domestic businesses. Small business loans in these countries outpaced small business loans here by a significant margin.  

Reforms that aid job creation are part of the American Institute for Growth policy plan for economic growth, and the need to incentivize lending is particularly critical. Our plan for steady, sustainable economic growth covers such areas as education, energy, tax reform, fiscal policy, banking reform, immigration, and international trade. These are all areas that need to be fundamentally addressed if we are to have a comprehensive and cohesive economic recovery.  

Policymakers from both sides should put partisan bickering aside and put their focus on passing reforms and creating programs that will allow businesses to grow the economy and create new jobs. Small businesses are the primary source of the majority of new jobs in America, and they need access to this kind of credit, this kind of reduction in unemployment insurance taxes, and this kind of business-oriented education.  

Our policy prescriptions include items like comprehensive tax code reform, the removal of the burden and uncertainty of the federal regulatory regime crippling small businesses, and a rational approach to government fiscal policy and entitlement reform. The American Institute for Growth’s policy platform can serve as a guide map for leading America back to sustainable, stable economic growth and job creation. 

In a public address last week, President Barack Obama stated that "the private sector is doing fine." Doing fine? That might be news to the 3.3 million "missing workers" or the more than 20 million Americans who are unemployed or underemployed.

It is particularly unbelievable in the context of a recent Federal Reserve report showing that the average American family lost nearly half of its net worth from 2007-2010. The president's comment has proved to be nothing more than a failed attempt to highlight what silver lining may be left in the cloud of uncertainty that hangs over the U.S. economy.

The numbers tell the tale: There were only 69,000 jobs created last month, the fewest in a year. To put that in even broader context, private sector employment growth has fallen in each of the last four months. Further, May was the 40th consecutive month that the U.S. unemployment rate has persisted above a painful 8 percent.

On a more personal level, my home state of North Carolina claims the fifth highest unemployment rate in the nation, at 9.4 percent. The not-so-good good news is that this is down two full percentage points since January 2010, where unemployment stood at 11.4 percent. It is evident that both North Carolina and the United States have a long way to go before anyone can claim that our private economy is doing "fine." And while I'm a huge proponent of "finding the good in the bad," I think now is the time to find the solution to the problem—and "fine" is not a solution.

The solution to the jobs problem is small business, not more government.

American Institute for Growth has laid out a roadmap to sustainable economic recovery—and that path is paved with commonsense regulatory reform, certainty about future taxes, and the return of spending sanity to our federal government. In recent years, the federal government has unleashed a regulatory onslaught on small businesses in the private sector and has made it much harder for the engine of our economy to function as it should. Until policymakers and elected officials start to listen to the voice of the entrepreneur and small business owner, it's hard to see how job creation will come back.

A March Small Business Outlook Survey conducted by the U.S. Chamber of Commerce shows that concerns about over-regulation are the highest we've seen in the past year. Small business owners are hesitant to hire because of uncertainty created by the plethora of threatening regulations coming from and pending in Washington.

There is something to be said about the correlation between the unemployment rate and the increasing concern about regulations coming out of Washington. America needs the government to step down and let true job creators lead the way to recovery.

This article originally appeared in US News & World Report.

In September, lead PhRMA negotiator Bryant Hall informed Pfizer’s CEO Jeff Kindler that deputy White House chief of staff Jim Messina “is working on some very explicit language on importation to kill it in health care reform. This has to stay quiet.”

As one of Mr. Hall's deputies put it earlier in the minutes of a meeting when the deal was being negotiated, "The WH-designated folks . . . would like us to start to define what 'consensus health care reform' means, and what it might include. . . . They definitely want us in the game and on the same side."

In particular, the drug lobby would spend $70 million on two 501(c)(4) front groups called Healthy Economy Now and Americans for Stable Quality Care. In July, Mr. Hall wrote that "Rahm asked for Harry and Louise ads thru third party. We've already contacted the agent."

Mr. Messina—known as "the fixer" in the West Wing—asked on December 15, 2009, "Can we get immediate robo calls in Nebraska urging nelson to vote for cloture?" Ben Nelson was the last Democratic holdout toward the Senate's 60-vote threshold, and, as Mr. Messina wrote, "We are at 59, we have to have him." They got him.

Entire editorial in the Wall Street Journal.

What government unit has the right to tax you - your local government, regional or state government, federal government or multinational organizations, such as the United Nations, the World Bank and the World Health Organization? The reason the question is becoming more important is that rising numbers of politically powerful persons and institutions are calling for global taxes on such things as financial transactions, tobacco, sugar and carbon emissions.

The modern concept of the nation-state goes back to the Treaty of Westphalia in 1648. Among other things, it limited the power of the sovereign to the territory of the state, including the power to tax. The American Revolution was, in part, fought over the demand for “no taxation without representation.” Despite the success of the Revolution, the principle of no taxation without representation was violated from the very beginning, for both good and bad reasons. Once government divides people into classes and allows some classes to tax other classes, people can be taxed without their consent. The original voting franchise was limited to male property owners; hence, the “classes” of women and non-property-owners were taxed without their consent, along with blacks in the slaveholding states.

People are no longer classified by sex or race in most countries when it comes to voting rights, but it is fashionable to classify people by income or occupation and then tax them differently - thus denying a fundamental human right of equal treatment. Now this concept of unequal treatment and nonrepresentation is being promoted across countries, whereby people (even the non-rich) in rich countries should pay more taxes to support people in poor countries - in practice, all too often the corrupt ruling class.

The American founders understood that people would have more say over their government the closer it was to them, which is why the United States was set up as a federal republic. Under the Constitution, the federal government has few powers, and state and local governments have many powers if the people so choose. The power to tax is one of the most coercive powers governments have, so it is extremely dangerous to both liberty and prosperity.

Think of the consequences if international organizations gain the ability to tax. The tax-exempt bureaucrats who run these organizations will have an endless list of “unmet needs” and thus will create reasons to have never-ending tax increases. The United Nations is pushing a global financial transactions tax “to offset the costs of the enduring economic, financial, fuel, climate and food crises, and to protect basic human rights.”

The World Health Organization, in the name of boosting expenditures for health research for diseases that “disproportionally affect the developing world,” has just proposed in a new report a “Financial Transactions Tax and a Solidarity Tobacco Contribution - that in addition to the airline taxes implemented in some other countries could be used to generate funds to be channeled through an international mechanism to supplement national resources” (global-bureaucrat-speak for taking your liberty and money and giving it to others).

James Hansen of NASA again recently proposed a “flat-rate global tax” on carbon to stop global warming. In 2009, then-House Speaker Nancy Pelosi expressed her support for a Group of 20 “global tax.” In March, Vice President Joseph R. Biden said, “We want to create a global minimum tax.” It goes on and on.

In sum, the global-tax advocates are demanding that the world’s most productive people and institutions give more money to global, nondemocratic institutions, which have been rife with mismanagement and corruption, so those within the global institutions can spend it as they see fit with virtually no accountability. The resulting misallocation of capital will make the world dirtier and poorer, with higher unemployment.

Tax money tends to be much better spent when the people can see how it is spent and who is spending it. This is accomplished more easily at local levels of government, where there can be more real representation and accountability, rather than at the national level and particularly at the international level, where there is no effective representation. The problems of poverty and environmental neglect most often occur where the people have no effective representation and accountability - i.e. authoritarian countries.

Switzerland is very prosperous, with little poverty, and has very high health, education and environmental standards. And individual liberty. Most taxation is done at the local and regional level, where there is a high degree of direct democracy, representation and accountability. Ask yourself whether the world would be better off if there were many more Switzerlands - or many more international, non-accountable bureaucracies to tax and spend your money.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

In recent weeks, I've read news stories about how traditional colleges have adopted programs to teach liberal arts majors the skills that will make them more employable and competitive in the 21st century workplace.

This is a much needed step in the right direction. Too many bright minds are coming out of college with little foundation in the practical business skills that will help them achieve their dreams, and with unrealistic expectations. You can't build the next great technology company or design firm if you don't know the basics of how to start and run a business.

It's not necessarily critical that someone knows how to read a spreadsheet or file for incorporation as it is they understand the fundamentals of what success requires in the free market.

 

I was fortunate growing up to learn these fundamentals early on. When I was 11, I announced to my mother that I had just gotten a job working on a bread delivery truck every Saturday.

Her response was, "Bobby, you are too young." I informed her that I had already made a commitment and that I really wanted the job.

My mother was our family disciplinarian, moral compass, and first teacher. In light of my determination, she supported my plan. She was like that—protective, but she encouraged us to push ourselves and to use our judgment well.

For my work I received $2 a day and was able to bring home a surplus of sweet rolls and loaves of bread for the family. Our mother's trust in our judgment allowed my siblings and me to mature quickly. In effect, she taught us some of the early tools of entrepreneurship.

[See the 10 best cities to find a job.]

She instilled in her children common sense ideas, and the importance of working hard and being resourceful. We all started working early. Beginning in elementary school I babysat, shoveled show, and had a paper route.

In junior high I sold greeting cards, and worked on the bread delivery truck. My sisters baked cookies, made clothes, and babysat. We were encouraged to be active, and were praised for our accomplishments. I chose to save my money and invest it.   

When I was hired to deliver prescriptions and stock shelves at the local drug store at the age of 15, I valued my job and the opportunity to be involved in real business. The owner, Dr. Bayer, taught me the basics of running a small company, including cash management, inventorying, ordering, and customer relations. I was learning and getting paid. Bliss!

[See a slide show of 5 bright spots in the U.S. economy.]

The money and savings were important to me, but more important was learning how the world worked and how to deal with people and handle money. Some of my friends told me I would never enjoy life if I spent my time working so much, but what they did not realize was that I loved these jobs.

I learned the ins and outs of business at a very young age. The basic lessons I learned early on are lessons every success is built on. I learned to show up on time, be courteous, do a thorough job, and make sure the customer was happy.

No matter how much business evolves and technology innovates, what will never change is that others will place value on doing things well and doing them right. Maybe not everything you need to know about creating a business can be learned as a kid with a job. But few achieve real success without those fundamentals.

Robert Luddy is a member of the North Carolina Leadership Team for American Institute for Growth and president and founder of CaptiveAire Systems, Inc. 

NPR looks into the vague and often contradictory rules for determining who is Hispanic, and why it matters.

Who is Latino? Who counts as Native American?

The debate over who is considered a minority was brought to the spotlight by the Senate race in Massachusetts. Democratic candidate Elizabeth Warren claimed she had Native American heritage, but there's no records to indicate that. Still, Warren insists that she learned of her background through family stories and that she is proud of her heritage.

Today, The New York World ran a story that talks about the real-world implications of these questions. Essentially a New York City program that assists minority business owners is asking Latinos to provide proof of their ethnicity by showing a birth certificate and an affidavit confirming their ethnic identity.

Read the whole story here.

A recent Government Accountability Office (GAO) report recommends that Congress take action to alleviate the pain of the recession that is felt by America's oldest workers.  Within the recommendation, the GAO offers several policies to accomplish this objective, including subsidies to employers who hire older workers, training programs for older workers and compensation for older workers who accept lower-paying jobs, says Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute.

This excessive concern offers relief to a portion of the population that has felt the least pain in the recent downturn.  If assistance must be offered to a specific classification of workers, it is the youngest who are most in need.

• Since 2000 the labor force participation rates of workers age 55 and over have been rising steadily, whereas the labor force participation rates of workers 16 to 24 years old and workers 25 to 54 years old have been declining.
• The biggest decline in labor force participation rates can be observed for workers aged 16 to 24.
• Over the past 10 years employment has increased among Americans age 55 and over by 8.9 million.
• At the same time, it has declined by 3.1 million in the 25 to 54 age group, and by 313,000 among those aged 20 to 24.
• The labor force participation rate of seniors has increased by 5.7 percentage points from 2002 to 2011, yet declined in other age groups.

Furthermore, the long-term prospects of younger workers are far bleaker than those of their older counterparts.

• A new paper in American Economic Journal: Applied Economics found that graduating in a recession leads to earnings losses that last for 10 years after graduation.
• Researchers also found that earnings losses are greater for new entrants to the labor force than for existing workers, who might see smaller raises, but who have jobs.
• In addition, recessions lead workers (especially younger workers) to accept employment in small firms that pay lower salaries.

Finally, younger workers tend to have larger debts and fewer assets than older workers.  Young homeowners tend to buy their houses during the buildup to the housing bubble, subsequently witnessing a bottoming out of their home value.  Older workers who have owned their homes longer were more protected from the bubble.

Source: Diana Furchtgott-Roth, "The Unemployment Crisis for Younger Workers," Manhattan Institute, May 2012.

For text, click here.

The White House estimates that only a small minority of companies thought to be eligible for the Small Business Health Care Tax Credit made use of it in fiscal 2011, according to a report released by the Small Business Majority and Families USA.  The immediate question then becomes, why would these businesses voluntarily forgo a tax provision meant to help them, asks Scott Shane, the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.

John Arensmeyer, founder and CEO of the Small Business Majority, argues that there is a lack of participation due to a lack of awareness -- that is, small business owners simply don't know about the credit.  However, surveys of relevant parties suggest that this isn't the case.

• A report from the Treasury Department's inspector general explains that the IRS has tried hard to educate small business owners and tax professionals about the tax credit.
• A survey of more than 300 small business owners undertaken by the Small Business and Entrepreneurship Council a year ago showed that most business owners knew of the credit, with only 20 percent saying that they were unaware of the tax benefit.
• A majority (51 percent) of respondents said that while they knew about the credit, they were not taking advantage of it because either "their business was not eligible," the credit was "too small" or offered "no real benefit," or the credit was "too complex."

These surveys suggest that though many businesses are ineligible for the tax credit, even those that are elect not to pursue it.  Further analysis of the financial decisions involved suggests that this decision is a well-informed one.

• The average credit is $800 per employee, the Small Business Majority and Families USA reports.
• However, analysis by the Kaiser Family Foundation shows that the average premium for health insurance at a small business in 2011 was $5,328 for single employees and $14,098 for family coverage.
• Since an employer needs to pay for half the premium to get the credit, that means incurring a cost of $2,664 for employee-only coverage in return for a credit of $800.
• Moreover, the credit only lasts for six years, while the cost of insurance will continue indefinitely, and is likely to increase, given historical trends.

Source: Scott Shane, "Why Small Businesses Aren't Using the Health Insurance Tax Credit," The American, May 24, 2012.

The U.S. economy added just 69,000 jobs in May, continuing a downward trend since winter that is leaving the strength of the job market in serious doubt.

The worst part about this jobs report is that it was the last chance for a decent report before the full consequence of the slow-moving European implosion really starts to influence the global and U.S. economies. Between the bad economic news in the U.S. this week and the terrible global economic headlines, businesses are going to be taking a very hard look at hiring plans for the foreseeable future. Markets have already started to react negatively in response to the weak jobs numbers and the disappointing GDP figures released earlier in the week.

This month’s report was not completely without redeeming qualities. The labor force participation rate went up, contributing to the rise in unemployment. Also, the Household survey showed stronger job growth (after two negative months). But the terrible headlines in the employer survey combined with the unemployment rate have swamped any underlying silver lining in the report.

Last month, the President only needed the economy to add 146,000 jobs per month to get the unemployment rate below 8 percent if the labor force participation rate held steady, 250,000 if it returned to trend. With the bump in participation this month, the President now needs the economy to add 204,000 jobs per month if the labor force participation rate stays at 63.8 percent and 295,000 if the participation rate continues to rise back to trend.

There has been some question about when the economic context will solidify before the election. Voters tend to form their opinions before all economic data is known. What we see now is that there is still more economic news that is likely to hit between now and the election.

Matt McDonald is a partner at Hamilton Place Strategies and a veteran of two Presidential campaigns and the White House. Prior to joining HPS, Matt worked for McKinsey and Company. He holds an MBA from MIT’s Sloan School of Management and a degree in economics from Dartmouth College.