There's a toxic stew right now in Washington: a White House whose credibility is completely gone; a federal government whose abuse of power against citizens, political opponents and the media is out of control; a policymaking apparatus that is defined by inaction and malfeasance; and an economy in which businesses have little confidence, and expansion is almost impossible.
The Benghazi story is a major problem for the White House because it gives citizens good reason not to trust their government. The administration still cannot get its story straight, with multiple explanations of what happened the night that our ambassador to Libya was murdered by terrorists. The revelations that the Internal Revenue Service has been selectively enforcing tax laws against conservative groups is a big deal for the White House, as well, because it gives citizens good reason not to trust the government. In this case, credibility is one problem – again, the White House can't seem to get the facts right – but added to that is the abuse of power. This year marked the first time that Pew researchers found that a majority of Americans view the federal government as a threat to their personal rights and freedoms. I'll bet that majority has grown from 53 percent at the beginning of this year because abuse of power against one's political opponents is something no American wants to see coming from the White House.
That poll was taken before the Associated Press announced that the Justice Department had secretly seized phone records of reporters and editors as part of an unprecedented leak investigation. When the Pew poll was published, the press seemed mystified at the numbers. Now journalists get it. Abuse of power against political opponents is outrageous enough, but to reporters abuse of power against the press is beyond the pale.
The administration is now facing a crisis of its own making. The two narratives – first, that the White House is incapable of telling the truth; and, second, that this administration is willing to allow the abuse of federal power against citizens and the press – mean there's a disaster in the making for the president's entire second term.
For example, even the most ardent gun control advocates have to admit they now have a problem. This administration has lost its ability to convince the American people that turning over sensitive background check information to the federal government is a good idea, given the recent behavior of the IRS and the Justice Department. For that matter, is trusting your health care to the government a good idea?
Speaking of health care reform, in about six months the IRS will charge a new tax on health insurance plans. As a result, small businesses with between 50 and 500 employees that purchase health plans will see their premiums go up. According to the White House publication titled, "The Affordable Care Act Increases Choice and Saving Money [sic] for Small Businesses," the law will provide "enormous benefits" to millions of small business owners and employees by, among other things, "lowering costs." That's just not credible coming from the White House.
Large businesses with more than 500 employees are exempt from the tax because most self-insure. Small businesses with fewer than 50 employees – which make up 96 percent of all small businesses, according to the White House – are also exempt. That means the tax will apply to only 4 percent of small businesses.
Here's the problem: The revenue generated by taxing that small slice of small businesses helps pay for expanding coverage to millions of uninsured Americans – which gives you an idea of how massive that tax will be. Given the IRS's current problems with selective enforcement, I'd say the agency has more trouble coming. It's going to look like they are doing the same thing to small businesses that they did to conservative groups: singling out the president's political opponents.
The rational thing for small business owners to do is to stay under 50 full-time employees, either by laying people off or by forcing people to go part time. That's exactly what's happening: last month, unemployment stayed stubbornly high and the number of persons employed part time for economic reasons ("sometimes referred to as involuntary part-time workers," explains the Bureau of Labor Statistics) increased by 278,000. Staying under the 50 full-time employee limit keeps small business owners out of trouble.