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Washington Watch - March 7, 2013

Thursday, March 07, 2013

Sequestration: Impact Unknown

As of Mar. 1, 2013, the automatic budget cuts to the federal government known as sequestration kicked in. The cuts are split 50/50 between defense and domestic discretionary spending, and amount to $110 billion annually. Of course the question on everyone’s mind is: “How will the automatic cuts impact me, my family, and my business?”

Efforts to address the cuts thoughtfully and systematically while still in a timely manner are complicated by the unknown immediate and long-term effects of sequestration on America’s self-employed. And of course, politics plays the main role in determining if sequestration stays or goes.

On top of the automatic spending cuts already in effect, Congress is busy writing a six-month stopgap spending bill that takes the government through Sept. 30, 2013, the end of the 2013 fiscal year. The budget bill could shift and direct the sequestration cuts, however, in a plan released by the House Republicans on Mar. 4, 2013, proposes shifting the money from accounts in an attempt to mitigate the impact of the automatic cuts, not eliminate the cuts themselves.

The immediate effects of sequestration are being felt by the U.S. Department of Defense. The DOD is congressionally mandated to absorb 50 percent of the total cuts, amounting to nearly $55 million dollars this year. As federal agencies address the mandatory cuts, it is possible for individuals and businesses to see some disruption of services, although the extent of any service disruptions are largely unknown.

Work from Home? No more for Yahoo! Employees

Last week Yahoo! CEO Melissa Meyer announced that Yahoo! would eliminate their telecommuting program saying, “Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.” This of course flies in the face of the reality for the nearly 22 million self-employed Americans who have a home-based business.

One of the many reasons the self-employed decide to build a home-based business is for the flexibility opportunities. In fact, many NASE Members cite the fact that in building and maintaining their businesses they actually work well over 40 hours a week, are always connected to customers and clients, and increased productivity.

While the Yahoo! business model and that of a small business differ, understanding the changing dynamics of the American workforce is equally important to both large and small businesses. It’s possible that Yahoo!’s policy will actually be a boon for the self-employed community, forcing current Yahoo! employees to jump into the self-employed arena and create the flexibility they want and need, while also gaining more control over how and where they work.

Congressional Hearings Tackle Health Care Reform Impact

This week, the House Small Business and Ways and Means Committees will host separate hearings on the impact of health care reform.

The House Small Business Committee will host a hearing on Mar. 6, 2013, on the law’s implementation and impact on small businesses. Three small businesses will be represented on the panel.

The NASE will be submitting a statement for the record. Check next week’s Washington Watch for the full text of our letter.

The House Ways and Means Committee held a hearing on Mar. 5, 2013, focused on the tax provisions included in the health care reform law.

The hearing comes on the heels of announcement that from Department of Health and Human Services that in 2014, Americans purchasing health insurance on their own or as an employee of a small business will be required to pay a “user fee” of 3.5 percent of the monthly premium to help cover the costs of the federal exchange program.

Already the NASE has engaged with the House Ways and Means Committee Small Business working group to provide research and data on how to address these types of taxes on the self-employed. We look forward to working with the Committee and the working group in the weeks to come.

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