Higher employer benefit plan costs will, in turn, mean lower profits for those employers who continue to offer any benefits at all to employees.
Those employers, in turn, are likely to have a cascading series of responses to this profit pressure. The first response will involve increased prices for the firm's products and services, if the competitive environment allows the firm to raise prices at all. If this happens across the economy, the result will be inflationary.
Staff reductions and a slowing of new job creation will likely come next. Were this to happen across the economy, the result would be continued high unemployment well into the foreseeable future.
The third cascading response will involve reduced or delayed investments in company infrastructure and new technologies. This, combined with inflated prices, will render American companies less competitive in global markets.
The fourth response will be to move a company's operations offshore entirely. America pays a heavy price when that happens as jobs are taken out of the economy completely. Unemployment goes up and tax revenues go down. But if that's what it takes for employers to turn a profit, then that is what they will do.
If those adverse effects become amplified, the result is likely to be a period of stagflation and then another recession. Those are among the potential economic effects of the failure of this Congress to pass health care reform.
Politically, if health reform fails, Senator Jim DeMint will be proven right: it will be Obama's Waterloo. He and we will have emboldened and empowered the right-wing minority in the Congress. Nothing more of substance, such as financial services reform, will happen during the Obama Administration. Conservative voters will demand the ouster the Democratic majority in the House and Senate, and turned-off Progressives, by staying home on Election Day, will let that happen.
In short, if health care reform fails, the result will not be a return to the status quo. It will be much worse. The banks and the insurance companies will have won the big prize and they will pay themselves handsomely for their victory. Meanwhile, Democrats in disarray will slink off stage left, blaming everyone but themselves for the outcome.
This is an important and historic time. Health care reform must pass, both for what it offers the country and for what it helps the country avoid. This bill deserves our support.
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