Politics: Time for Stability

TORONTO, ONTARIO - Now that the highest hurdle to health insurance reform in the United States has been overcome, everyone should have a pretty clear outline of what will happen as a result of the legislation. (That doesn't mean, of course, that Republicans will not persist in mis-characterizing it.) We know what kinds of things happen soon (such as children not being denied coverage for pre-existing conditions) and what kinds of things happen in 2013 and later (such as the taxes on more comprehensive health insurance plans). That means businesses can now start planning based on the new health insurance reality, and I believe the Obama administration should continue to provide some certainty to business by providing more details on what it intends to push in legislation for the remainder of the legislative session.

In interviews with various small business owners and entrepreneurs in recent months on various shows, most of whom opposed health insurance reform, there was actually a clear undercurrent of opinion that the better interviewers started to reveal. What the businesspeople really objected to was the legislative uncertainty. They didn't know what the health care legislation was going to look like or what it might cost them, but even beyond that, they didn't trust what the Democrats would do next. Would it be climate change legislation that would include a carbon tax, direct or implicit? Would it be financial reforms aimed at big banks that would cause them to further reduce credit available to small business? Would be it additional union rights, that might even cause problems for a growing small business? If they just knew what might be coming, they could at least plan for it and make intelligent decisions on whether to continue or grow their businesses.

Considering that the biggest wildcard, health insurance reform, is largely settled and that the Democrats have comparatively limited ability to advance a legislative agenda without a filibuster-proof majority in the Senate and no expectation for any cooperation from any Republicans at all, there is an opportunity to map out some degree of certainty. The administration--presumably in concert with Congressional leaders--can now decide its basic road map for the balance of 2010, announce some policy positions, and provide some certainty.

A likely scenario seems to be passing some financial accountability reforms. None of these would directly impact small businesses, except insofar as they impact credit markets. Politically, this really stands out as a sore thumb--essentially nothing has been done yet to prevent another replay of 2008 in the coming years. Then, focus could be on the economy--it wouldn't be called a stimulus package even if it involved some spending. The "laser beam focus on the economy" might be a bit late, but would likely help the Democrats' narrative for the elections in the fall. All other large legislation, such as climate change and card check, would not be pursued.

Maybe the Democrats would come up with a different plan, and start with the economy. In any event, if they really want to improve the economy and gain the trust of business, they need to start injecting certainty. Their limited ability to pass legislation makes it more palatable for them to aggressively pursue a limited agenda, rather than a broad one. The more we all can see what is coming, the more rationally we will all behave for the rest of the year.