A $5K Tax Credit Doesn't Work Without Health Care Reform

President Obama wants to give a $5,000 tax credit to every small business that creates a new job. Meanwhile, health care reform or no, medical insurance premiums are rising. What kind of incentive is that for an already-struggling business to expand its payrolls?

Therein lies the small business conundrum amid the great jobs creation debate. What good is $5,000 when health care costs are sucking away at any savings?

For small businesses, the prospect of a health care fix is looking dim. Republicans leaders succeeded on Wednesday in getting Scott Brown sworn in as Massachusetts' newest senator — as week earlier than expected. Why? They want to make it more difficult to pass a health care bill by the needed supermajority of 60 votes.

So no we've returned to slow-track debate on health care form. And perhaps a filibuster or two on extraneous issues.

Last week, we were implored by the president at the State of the Union speech for Republicans and Democrats to work together to pass health care legislation. Well, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have yet to reach an agreement among Democrats to meld the House and Senate bills. That may be the only way to pass the comprehensive health care bill that the administration wants quickly. And if that does not happen, where are we? Things have been very quiet this week at both ends of Pennsylvania Avenue.

The White House strategy appears to be to get the Republicans to offer their own strategy, and then to vote on smaller pieces of the health care reform package. For example, a bill limiting medical liability lawsuits at the federal level is a distinct possibility. A bill preventing insurance companies from canceling policies or significantly raising premiums for pre-existing conditions is also a possibility. It is even possible that some of these bills could be tied together with a jobs bill.

Meanwhile, small business owners continue to wait. Health care premiums have increased another 8-10% this year. Some small businesses will increase co-pays, drop spousal coverage and raise deductibles to cope. Other new firms will institute long waiting periods for new employees to obtain health benefits, if they offer insurance in the startup phase of a business. A few owners will drop coverage, increasing the number of uninsured.

So business owners continue to wait while the clock ticks. Perhaps the Congress should be reminded that a small firm has no incentive to hire a new employee if costs are rising, but sales are sluggish, tax credit or not. Senators Charles Schumer and Orrin Hatch — in a bipartisan effort — want to eliminate Social Security taxes this year for small businesses that hire new workers. A good idea. Unfortunately, some of the positive steps are negated by ever-rising premiums.

 Small owners continue to wait for help. Can we move this along? Now, please.