New Report: 3% Cut in Social Security Would Take $267.9 Million Out of CO Economy
Importance of Social Security and Medicare to Colorado’s Small Businesses Revealed
** Download the “Business is (Baby) Booming” report here. **
Colorado—While corporate CEOs are pressuring Congress to cut Social Security and Medicare as part of a so-called “Grand Bargain” to reduce the debt, Colorado small business owners say that cuts to Social Security and Medicare would be devastating to small businesses across the state.
A new report released today by the Main Street Alliance and Social Security Works, Business is (Baby) Booming, analyzes the important role Social Security and Medicare play in Colorado’s economy, both strengthening the retirement security of small business owners themselves, and fueling consumer demand on Main Street.
Analyzing the U.S. Census Bureau’s first-ever public use microdata sample from a nationwide survey of business owners , the report found that over one-third (36%) of Colorado’s small business owners are over age 55, at or approaching retirement age.
Small business owners are significantly less likely to hold retirement assets than private sector wage and salary workers, and the recession has weakened retirement security for many small businesses, including more than half of business owners for whom a majority of their nest egg is tied to their business.
“Workers and their employers alike want people to have the ability to retire with dignity and independence after a lifetime of work,” said Nancy Altman, founding co-director of Social Security Works. “The Main Street Alliance recognizes, as all Americans should, that our Social Security system is the most efficient, fair and secure method or providing retirement security for workers and their families. Social Security works, not just for beneficiaries and their families, but for all employers, as well.”
In addition to undermining the retirement security of small business owners themselves, cuts to Social Security and Medicare would hurt small businesses at the cash register by weakening the economy and depressing consumer demand, according to the report.
Even a 3-percent cut in Social Security benefits would take $267.9 million out of Colorado’s economy. A similar cut to Medicare, meanwhile, would cost Colorado’s economy $157.6 million.
In Colorado’s rural communities, Social Security and Medicare are even more important to the small business customer base:
- One out of 6 (16.7 percent) rural Coloradans receive Social Security, compared with 1 out of 8 (13.3 percent) Coloradans in non-rural communities.
- 5.5 percent ($1.4 billion) of total personal income in Colorado’s 47 rural counties came from Social Security, vs. 4 percent ($7.5 billion) in the state’s 17 non-rural counties.
“Without the guarantee of Social Security and Medicare, I would be out of business,” said Mary Black, a national steering committee member of the Main Street Alliance and owner of a packing and shipping business in Baton Rouge, Louisiana. In 2010, Black’s 71-year-old husband was hospitalized for more than a month due to pneumonia, and they counted on Medicare to cover more than $130,000 in medical expenses.
“Cutting Social Security and Medicare would wreck the retirement security of small business owners like me, and would also take money out of the economy and out of our customers’ pockets,” Black continued. “What small business owners need most right now is more customers, not cutbacks.”
Instead of cutting Social Security and Medicare, small business owners say Congress should close tax loopholes and crack down on offshore tax abuse that allows the wealthy and corporations to avoid more than $100 billion in U.S. taxes per year by sheltering their income in offshore tax havens.
“When the wealthy and large corporations avoid their tax responsibility by using offshore tax havens, it robs the country of the resources we need to rebuild the economy, create jobs, and support small businesses and our customers,” said Black. “To support small businesses, Congress should cut offshore tax loopholes, not Social Security and Medicare.”