All My Business Problems Diagnosed

As explained by Steven Pearlstein, who presumably has created so much economic value in his lifetime that he can cast stones from the high ground

And some of it, to be quite frank, Robert, is an appalling lack of imagination and guts on the part of these same CEOs who are complaining and pointing the finger at every else. You know, these guys are very good at cutting. They're very good at blaming others. They're a little less good at coming up with creative new products and services, and they've got a little flabby in that regard in the last few years where the focus has been on surviving and cutting, as it should had been. But they're not the gutsiest group of people in the world.

And by the way, they get into this group think which you - you know, the fact that they all say it, it's sort of like a notion that starts in the country club locker room, and everyone is nodding, and then the one passes it on to the other. And now, you know, this similarity of the comments betrays this sort of group think that is almost self-fulfilling at this point.

Mr. Pearlstein is absolutely right.  As CEO of my company, I am out of creativity.  I will give you an example.  The new health care law appears (the implementation is still hazy) to impose a $2000 penalty per employee for not having a corporate health care plan (all my employees are retired, so they already have health care plans, but that does not affect the penalty).  With a bit over 400 employees, that makes the penalty something north of $800,000 a year.  This is larger than my annual net income.  And Mr. Pearlstein is correct -- I am absolutely at a loss as to how to deal with this, which just proves his point that all we CEO's have an appalling lack of creativity.

Mr. Pearlstein seems to be holding an image of the Fortune 25 in his head, but in fact most job creation is by smaller companies.  I wrote a while back on Forbes.com why CEO's of smaller companies have be having their creativity diverted.

Postscript: On January 10, 2008, our company actually, shockingly, had a creative idea.  Instead of refueling our boats at a lake in Ventura County, CA using zillions of 5 gallon gas carriers, lets put in a small double wall gas tank.  It would save a ton of useless labor, it would greatly reduce fuel spills on the lake (the nozzle, unlike the 5 gallon cans, has overflow protection), it would save lots of trips into town to fill gas tanks -- a winner all the way around.  Granted this was a pretty small idea, but sometimes success in small business is a lot of bunts and singles.

After hundreds of manhours of effort, numerous checks written to the County and the state, and I don't know how many forms filled out, on July 1, 2010, exactly 901 days after we got the creative idea, Ventura County gave us the last permit we needed to go forward.

  • caseyboy

    So you want to be a small business owner? Buy a big business and wait.

  • me

    See, and this is why it's good to live in the US of A instead of one of those terribly socialist european countries.

    Example: one of the worst of the worst is Germany, where, if you dared to attempt something like this, you'd have to present it before it's first commercial use and (just like any newly bought vehicle) once every three years for inspection. The result of the inspection plus proof of ownership gets you the operations permit for the next three years. Total cost $150 for a large boat. I know, shocking. Probably why there's such a huge vehicle modding community.

  • me

    Good thing we're not living in one of those terribly socialist European countries!

    For the record: in Germany, you need no special forms. Every seaworthy vehicle is inspected on first use and every three years thereafter. Same process for standard vehicles and modded ones. Three forms (inspection, proof of ownership and operators permit), total cost of max $150, or $50 per year. Probably why there's such a huge modder community there.

  • http://photoncourier.blogspot.com david foster

    "country club locker room"...how stereotypical can you get. Does he think they also wear top hats and fondle bundles of cash like Scrooge McDuck?

  • sam

    I'm not sure you're on top of the requirement:

    Penalty for employers not offering coverage. An applicable large employer who fails to offer its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an employer-sponsored plan for any month is subject to a penalty if at least one of its full-time employees is certified to the employer as having enrolled in health insurance coverage purchased through a state exchange with respect to which a premium tax credit or cost-sharing reduction is allowed or paid to the employee. The penalty for any month is an excise tax equal to the number of full-time employees over a 30- employee threshold during the applicable month (regardless of how many employees are receiving a premium tax credit or cost-sharing reduction) multiplied by one-twelfth of $2,000. For example, if an employer fails to offer minimum essential coverage and has 60 full-time employees, ten of whom receive a tax credit for the year for enrolling in a state exchange-offered plan, the employer will owe $2,000 for each employee over the 30-employee threshold, for a total penalty of $60,000 ($2,000 multiplied by 30 (60 minus 30)). This penalty is assessed on a monthly basis.[Source].

    You're liable only in the event one or more of your employees have purchased insurance through one of the state exchanges set up under the law and received a tax credit or some cost-sharing payment. BTW, if, since they are retirees, they have Medicare, you are absolutely not liable I'd bet.

  • Mike

    Sam:

    I'd take that bet. First of all, if *even one* non-retiree employee is in the exchange, it looks like the penalty applies to *all* the full-time employees over 30 (even retirees).

    I teach at a university, and I'm on a Benefits Advisory Group that works with our HR department in assessing effects of benefits changes. We just had a meeting in which a *very small* portion of Obamacare issues were discussed, and the best I can say is that our professionals in this area are totally flummoxed. No one knows what's going on.

  • William

    "[O]ur company actually, shockingly, had a creative idea. [..] It would save a ton of useless labor..."

    So your "creative idea" was to destroy jobs?

    (just kidding)

  • sam

    @Mike "I’d take that bet."

    Actually, the bet was that if all the retired are on Medicare, no liability would attach (I wasn't very clear about that, sorry). Since Medicare recipients do not receive health insurance through state exchanges, they would appear not to fall under the act for purposes of assessing the penalty.

    About that one-employee situation, the source I reffed says:

    Penalty for employers that offer coverage but have at least one employee receiving a premium tax credit. An applicable large employer who offers coverage but has at least one full-time employee receiving a premium tax credit or cost-sharing reduction is subject to a penalty. The penalty is an excise tax that is imposed for each employee who receives a premium tax credit or cost-sharing reduction for health insurance purchased through a state exchange. For each full-time employee receiving a premium tax credit or cost-sharing subsidy through a state exchange for any month, the employer is required to pay an amount equal to one-twelfth of $3,000. The penalty for each employer for any month is capped at an amount equal to the number of full-time employees during the month (regardless of how many employees are receiving a premium tax credit or cost-sharing reduction) in excess of 30, multiplied by one-twelfth of $2,000. For example, if an employer offers health coverage and has 60 full-time employees, 15 of whom receive a tax credit for the year for enrolling in a state exchange-offered plan, the employer will owe a penalty of $3,000 for each employee receiving a tax credit, for a total penalty of $45,000. The maximum penalty for this employer is capped at the amount of the penalty that it would have been assessed for a failure to provide coverage, or $60,000 ($2,000 multiplied by 30 (60 minus 30)). Since the calculated penalty of $45,000 is less than the maximum amount, the employer pays the $45,000 calculated penalty. This penalty is assessed on a monthly basis.

    Notice that these requirements are directed to companies who, rather than provide health insurance to their employees, throw the employees onto the exchanges and the employees receive tax credits or (tax supported) cost-sharing reductions.

    I do admit, though, that with any new and major piece of legislation, there's going to be some flummoxification (tm).

    BTW, this is a really nice site.

  • sam

    sorry about all that ital...

  • Danimal

    I heard that interview on the way home the other day, and I was thinking of your post (from that very day) about investments you're not making because of regime risk in the market. By the end of the story I was shrieking at my radio in a most unseemly way.

    You know what really ticked me off about that NPR story? It opened with a discussion about how the president was getting flack from the business community. That was all of 30 seconds, and was followed by Pearlstein's blather for 2 or 3 minutes. NPR biased? Nah, not them!

  • http://mangyredbonehound.wordpress.com/ MangyRedboneHound

    Pearlstein clearly has no idea what he is talking about. I like this part:

    "Look, the big problem is there's not a lot of demand for services and goods, and there's a lot of unemployment. And that's what is the wet blanket on the economy, and that's what's causing them not to hire new people and invest."

    But what, Steven, is causing what is causing diminished demand for services and goods? Consumers are worried about unemployment and higher taxes.

    And what is causing unemployment to remain at high levels? Businesses are worried about higher taxes and incredible uncertainty as regulators issue their new volumes of regulation under all the new legislation. Astoundingly, these 2,000 page bills have each left a huge amount of gaps to be filled by regulators through untold thousands of pages of regulations and dozens of rounds of litigation.

    For example, I have litigated many cases arising out of the 1996 Telecommunications Act. It took about a decade and literally hundreds of district court cases and circuit Court decisions before the regulatory environment settled down. That kind of uncertainty is why businesses are hoarding cash instead of investing and hiring.
    Obama is the wet blanket, not CEOs.

  • frankania

    Instead of getting all the permits for the gas tank, I would have bought an old tanker-truck, then fill it with gasoline and park it discretely in a place near the boats for their re-fueling.
    As a small business owner (various ones and in many places) all my life, I have discovered that it is better NOT to ask permission for anything; just do it and be low-profile. I have great faith in the INCOMPETENCE of burequcrats.

  • Plungerman

    @frankania et al;

    My motto used to be "It's easier to get forgiveness than permission." Then I found out it was also the motto of the band "The Great White". See: Crackle crackle crackle.

    But you are correct in being judicious in your methods and the battles you choose to take up.

    P

  • Weeble

    I would have just gone head and done a morally and ethically correct install. Then waited for some drone to fly past and see if it transgreased an unwritten law.

    A possible container would be a vehicle mounted double walled vacuum tank with a built-in leak dyke that would fall under the Motor Vehicles Act to really screw their heads around.

    It probably would have been cheaper.

  • John S

    Obamacare will make a royal mess of business for years. But it will keep millions of overpaid lawyers busy. After a 37 year uninterrupted career, I was laid off from a 60 person business the week Obamacare was signed. And I fear the law will make it impossible for me to find work again. One thing is certain: in the minimum wage service industry no one will work more than 29 hours. Or you’ll be a 1099 employee. The mandate to buy insurance under penalty of imprisonment is so blatantly unconstitutional that I expect it will be the first thing the Republican Congress kills (to be met with an Obama veto to be sure). But if by 2012 we have 50 million un- or underemployed, and 25 million of those have exhausted unemployment benefits, the specter mandatory insurance payment will be a potent issue in the presidential race.

  • DrTorch

    I thought Orwell introduced the term "doublespeak" so it could be identified and thwarted, not so that it could be a model for future gov't bureaucrats (and gov't bureaucrat champions).

  • sam

    @John S.:

    "The mandate to buy insurance under penalty of imprisonment is so blatantly unconstitutional that I expect it will be the first thing the Republican Congress kills (to be met with an Obama veto to be sure)."

    There is no penalty of imprisonment for nonpurchase in the bill:

    [A]ccording to the act, the failure to pay the penalty “shall not be subject to any criminal prosecution or penalty with respect to such failure.” Nor shall the IRS “file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section,” or “levy on any such property with respect to such failure.” [Source

    You know, you can be against the legislation for all kinds of reasons, but I'd suggest that the reasons be real rather than some made up bullshit calculated to scare people.