The conventional wisdom we usually hear from pundits and lobbyists about what politicians should do to help more people start businesses goes something like this: Cut corporate taxes, roll back “regulations,” slash public services … and voila, let a thousand flowers bloom.
As an entrepreneur, educator, developer and the executive director of a children’s foundation, I have something to say about that conventional wisdom: It’s straight out of fantasy land. And while fantasy play is a healthy and important part of children’s development, it’s not healthy for our businesses or our communities when elected leaders base policy decisions on unicorns and floating castles.
about the author
Dr. Steven R. Brier is executive director of The Little Dolphin School Foundation, an adjunct associate professor at the University of Southern Maine’s College of Nursing and Allied Health Services and president of The Dolphin Cos.
SUPPLY AND DEMAND, NOT TAX CUTS
Despite the fairy tales that big business lobbyists like to tell, the fact is tax cuts don’t help people like me start new businesses.
Not only that, but slashing services often makes the road to starting a new business rockier and riskier – and those cuts end up driving new business formation down, not up. Trust me, success in small business is dependent on supply and demand, not tax cuts. Ever.
To understand how this plays out in the real world, consider the Children’s Health Insurance Program. In 2013, CHIP provided health coverage to more than 29,000 children in Maine (and more than 8 million children nationwide) in families that earn too much to qualify for Medicaid but not enough to afford other insurance.
This gap is huge and made up of hardworking families that I see each and every day at our learning centers.
CHIP has been an impressive accomplishment, and explains why it has enjoyed overwhelming bipartisan support from both politicians and the public. But it turns out CHIP does more than expand health coverage for kids. It also acts as a powerful small-business startup accelerator.
PLUS FOR PARENTS’ BUSINESSES
Research by the Harvard Business School’s Gareth Olds, summarized in the Harvard Business Review, found that CHIP had substantial positive impacts on self-employment and incorporated business ownership. After CHIP was enacted, the self-employment rate for parents of eligible children increased 23 percent.
Meanwhile, the ownership rate of incorporated businesses for CHIP parents increased even more, by 31 percent.
These findings may seem surprising at first. But they’re consistent with something we already knew: that uncertainty about health coverage is a major barrier that prevents people from striking out on their own and starting new businesses.
Where concerns about health coverage for their kids kept would-be entrepreneurs in “job lock,” holding on to corporate jobs because of stable benefits, CHIP has served as a key that opens the door to entrepreneurial risk-taking.
CONGRESSIONAL ACTION NEEDED
But there’s a problem on the horizon: CHIP requires action from Congress to renew federal funding, or that funding will run out at the end of September.
Both Republican and Democratic leaders in Congress have put forward initial proposals for renewing funding for CHIP. That’s good to see, but there’s a devil in the details: The initial “discussion draft” proposal from Republican committee chairs includes cuts to CHIP funding and eligibility that would endanger health coverage for millions of kids nationwide – and also undermine CHIP’s role in giving parents in Maine and across the country the security to start small businesses.
U.S. Sen. Susan Collins has been a supporter of children’s health coverage in the past. We need her to show leadership now, oppose these cuts to CHIP that would reduce coverage for kids and discourage families from starting small businesses and push for a clean renewal bill that fully funds the CHIP program through 2019.
If Congress really wants to let a thousand flowers – er, startups – bloom, it should support public investments that accelerate new business creation and act fast to fully fund the renewal of CHIP. Doing so will help Maine continue the CHIP success story and help Maine families continue to pursue their small-business dreams.
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