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On the Issues
Health Care
The rising cost of health care is a priority issue for most small business owners. Over the past five years, health care premium costs have risen by 59%, placing great financial strain on small businesses. Both candidates have devised detailed programs to address the problem. Bush’s approach emphasizes the use of newly created Medical Savings Accounts (MSAs), which permit employers to set aside funds that employees can use for health care expenses. Bush also proposes that small firms be allowed to band together and buy insurance through trade associations. By pooling funds and spreading risk, these Association Health Plans (AHPs) could help reduce overall health care costs.
Kerry’s health care plan would provide refundable tax credit to small businesses that could cover up to 90% of the cost of providing employee health insurance. Kerry would also expand Washington’s role in assisting those who must pay for catastrophic health coverage. This initiative would pick up 75% of total costs when an individual’s health care expenses exceed $50,000 a year.
Taxes
Kerry’s ambitious health care plan is not cheap. He proposes to pay for it by rolling back all Bush Administration tax cuts that assist those making more than $200,000 per year. Kerry would also cut corporate tax rates by 5%, and would continue to provide accelerated depreciation and other tax credits for equipment purchases made by small businesses. Unlike President Bush, who seeks a permanent repeal of the estate tax, Kerry would raise current exemptions so that individuals with less than $4 million in assets and small businesses with less than $10 million in assets would remain exempt from this tax.
President Bush continues to campaign on his past record of a tax cutter, and his economic plans are largely based on making permanent the tax cuts that he pushed in 2001 and 2003. Other priorities include restructuring and simplifying the tax code and providing tax breaks to encourage private investment in lower-income communities.
Regulatory Policy
By many measures, the Bush Administration has developed an impressive record in terms of reducing regulatory burdens on small businesses. The Small Business Administration’s (SBA) Office of Advocacy has expanded its role in reviewing new government regulations that might create burdens for small firms, and the President has eliminated many regulations, such as new ergonomics rules, that were especially disliked by business owners.
Kerry appears more open to new government regulations than is President Bush, but he also recognizes that such regulations can have both positive and negative effects. He has stated that he will consider exemptions for small business when reviewing new regulations, and is strongly opposed to placing undue new burdens on new and emerging companies.
Small Business Assistance
The candidates have differing views on various federal programs that support small business and entrepreneurship. In the Senate and in his Presidential campaign, Kerry has regularly supported full funding and funding increases for programs such as Small Business Development Centers, the Manufacturing Extension Partnerships (MEP), and the Advanced Technology Program (ATP). In contrast, President Bush had proposed elimination of both the MEP and the ATP. And despite a 25% cut in its budget, SBA has succeeded in expanding many of its key programs. For example, the 7(a) loan program has been making record numbers of loans in the past two years.
Manufacturing and Offshoring
The candidates also differ in how to address the challenges facing American companies, especially manufacturers, facing intense market competition from China, India, and elsewhere. Both candidates are advocates for free trade and open markets, but would respond differently to firms facing market pressure here at home. Kerry is more open to using government programs, such as the MEP and targeted tax credits, to support small manufacturers. He has also proposed creation of new Manufacturing Business Investment Corporations (MANBICs), a program that would provide new start-up investments in manufacturing-related businesses. Finally, Kerry would eliminate tax breaks for firms that move jobs overseas.
Bush has and would likely continue to be less interventionist than his opponent. He has not supported major programs to shore up US-based manufacturing and has instead undertaken a major push to help open overseas markets for American manufacturers. Bush does support a series of tax credits to assist manufacturers with investment and training costs.
Science and Technology
Both candidates have also developed forward-looking programs that seek to build a base for future innovation in the US. For President Bush, investments in leading technological fields must continue. For example, the National Nanotechnology Initiative, a major new federal R&D program, began under Bush’s leadership. Bush has also overseen a doubling in the budget for the National Institutes of Health and a thirty percent increase in the National Science Foundation budget.
Bush would also increase investments in life long learning opportunities, via new programs like his Community-Based Job Training grants ($250 million per year) and Innovation Training Accounts to be used by individual workers. As in many of his other initiatives, Bush believes that individual workers should take the initiative and be able to choose their own training programs.
Kerry’s program would significantly increase funding for R&D in critical areas such as nanotechnology and biotechnology. He has also committed to a major expansion of broadband services so that all Americans can quickly utilize this technology. In education, Kerry is focused on keeping college costs reasonable. He has also announced a New Economy Lifelong Learning Initiative designed to facilitate the use of distance learning and other new teaching tools by adult learners.
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