WIPP Works in Washington, September 2008
"So Much for the Free Market"
By Ann Sullivan, WIPP Governmental Relations
So, I get the message – make sure your company is big enough to cause a ripple in the economy and the government will bail you out. Need a loan for your business – how about an $85 billion loan from the government? Did you embark on a really risky business venture—no problem—the government won’t let you fail. And if you are a leader of a failed company which the government decided to bail out—no worries, you will be given an executive compensation package.
Are you a woman owned small business and need a loan? According to statistics by the Center for Women’s Business Research, it will take you at least four attempts to get one from your local bank. Need a much larger source of capital – no problem it will take you approximately 22 attempts to find equity capital. Did you embark on risky business ventures—sorry, no rescue team here- you are out of business. Are you an owner of a small business that is failing—sorry, put your house on the market and tell your kids they have to pay their own way through college. But you employ people—you have an effect on the local economy. Sorry, it’ the free market and if they are out of work because of you, well, that’s just how the free market works.
The point is—big businesses and small businesses are not even close to being treated equitably. As we learned this week, there is really no free market when it comes to big businesses failing—that only applies to small businesses. It seems to me that if the taxpayers are going to fork out the money for propping up big businesses, they ought to know more about their lending and business practices. The fact that small businesses pay 45% more per employee than larger firms to comply with federal regulations and 67% more per employee on tax compliance that larger companies, takes on a whole new meaning in light of recent market events.
While the Congress is busy worrying about the “tax gap” among small business and how to squeeze more taxes from the companies taking the risk, they apparently have missed the tax consequences to the U.S. Treasury from very large companies who have failed. The way I see it—they’ve got it all wrong.