The business community appears to be as divided as Congress over the need for costly changes required by the Obama administration’s climate change bill. This controversial legislation barely passed the House and threatens to be more contentious and possibly more harmful to the small business community than any element of health care reform.
The U.S. Chamber of Commerce, backed by most but not all major corporations, is a fierce opponent of this legislation, which could be passed by a strictly partisan vote in the Senate by late spring. Other business associations have also weighed in and have been critical. But the truly small business owners, those with one hundred or fewer employees, have not yet been heard from. Since this group constitutes more than 90 percent of all businesses and is the key engine for future economic development and jobs, it is time to hear from this community.
The Latino Business Chamber of Greater Los Angeles does not pretend to speak for all 24 million small businesses. But we can offer a perspective that well-paid special-interest lobbyists have been unwilling to offer Congress.
Truly small business owners have higher and more immediate priorities than climate change. Increasingly, there is some question as to whether there will be substantial climate change within the next three generations. And many doubt that governments, such the United States or the European Union, particularly based on what recently took place in Copenhagen, Denmark, can effectively address an issue that requires the full cooperation of nations hostile to climate change measures, such as Russia, China and India.
A growing majority of small businesses are concerned about the possible costs of climate change legislation. This includes large tax increases imposed on small businesses through possibly futile attempts to address climate change. The United Nations’ recent report contends that even if we could effectively address climate change, it would cost at least $10 trillion over the next 20 years, or at least $500 billion a year. And some European experts contend that the cost could be twice as great. Since China, India and Russia have no intention of absorbing their fair share, half or more of these costs, or $5 trillion, will have to be absorbed by the American taxpayer.
Given the problems truly small businesses face today that relate to inadequate access to credit, declining customers due to high unemployment rates, and growing health care costs (imagined or real), there is little likelihood if there were a vote, that even 20 percent of truly small businesses would favor a business tax of up to $5 trillion to address climate change.
Special interests
As the partisan Senate debate continues, it is likely that the support of small businesses will further diminish as it becomes clear that the House bill supported by the administration caters to well-connected special interests. The bill, for example, caters to special interests that may have caused climate change, such as the polluting coal industry. The bill also caters to ethanol corn farmer interests that impose unnecessarily high fuel costs on most American drivers.
Truly small businesses, particularly minority-owned businesses and small businesses in California, not only will be taxed to prevent climate change, but are unlikely to be the beneficiaries of the hundreds of billions of dollars of special-interest federal subsidies. For example, helping high-polluting coal is irrelevant to California interests since it produces neither jobs nor income here. Similarly, ethanol interests are irrelevant to California’s economy.
Without judging the increasingly controversial evidence as to the likelihood of substantial climate change being man-made, we would offer a few positive suggestions to the administration and California’s senators, Barbara Boxer and Dianne Feinstein, during the Senate debate.
• First, consider alternative energy methods that will not tax small businesses. For example, it is estimated that half of all U.S. energy costs could be eliminated if we practiced effective conservation efforts such as in Japan and Sweden.
• Second, consider and promote natural gas (it is increasingly available within the United States and at one-third the world cost of oil) as a significant alternative in terms of solutions to pollution and cost.
• Third, we should review and reanalyze our opposition to safe nuclear plants that could provide the same high level of nonpolluting energy as relied on by France and some other European nations (this would, of course, require a change in California legislation that presently bans nuclear plants, no matter how safe).
• Fourth, whenever government funds are involved, since they require greater taxation rates on small businesses directly or indirectly, legislation should require that 50 percent of any subsidy directly benefit truly small businesses and help reduce recession-level unemployment rates.
Boxer and Feinstein are frequently in the forefront of supporting climate change legislation. It is our hope that before voting to impose expensive and often discriminatory taxes on small businesses, they consider a true climate change bill that will change the energy behavior of and be fair to all Americans. This must include greater emphasis on conservation, and re-examining our biases in favor of coal and oil and against natural gas and nuclear energy.
Jorge C. Corralejo is the founding chairman and chief executive of the Latino Business Chamber of Greater Los Angeles. Victor Florian is the president of VRF Financial and is a founding executive committee member of the Latino Business Chamber.
