PhillyDeals: Washington freeze spooks private-sector spending

Members of Congress and staff at the Capitol in January. A routine spending vote is pending, with one complication.
Members of Congress and staff at the Capitol in January. A routine spending vote is pending, with one complication. (CHARLES DHARAPAK / Associated Press)
Posted: November 29, 2011

Congress needs another spending resolution by next week or the government will stall. Usually, that means a routine vote on borrowing more money. But this time, there is an extra complication:

The 2010 2 percent federal payroll-tax cut, unemployment compensation extension, and capital-spending tax breaks all end Dec. 31, if Congress doesn't act to renew each, as veteran Philadelphia stock-watcher James F. Meyer reminded clients of Boenning & Scattergood Inc. in a note Monday.

But first, "conservatives in Congress want offsetting tax cuts, [while] the left wing wants higher taxes on the wealthy," he noted. It's the high-stakes partisan fight that doomed the supercommittee that was supposed to trade tough spending cuts for higher tax revenue.

Beyond this struggle in December is "next year's battle regarding the demise or extension of the Bush tax cuts," Meyer wrote, referencing cuts made by President George W. Bush.

The way Meyer sees it, either side's medicine could help. But the failure to do anything at all is poisonous. Failure to renew the payroll-tax cut, in particular, will cut working Americans' incomes and further slow next year's growth expectations.

Companies and investors have piles of cash, but they see little hope of boosting profit. So they're not hiring or building much. Government is laying off workers and canceling orders, instead of expanding to compensate for the weak private sector. Unreformed, the debt and the deficit keep rising.

How will this end? If Congress stays divided, Meyer predicts, "2013 will witness the largest tax increase in U.S. history," after the 2012 presidential election.

Entrepreneurial doc

Dr. Mitesh Patel, a University of Pennsylvania medical resident, has been collecting business partners throughout his school career.

One result is Docphin Inc., an online medical-research platform the Patel group is promoting as "Bloomberg for doctors," a medical analog of the financial-data service. Docphin seeks to aggregate, organize, rank, and make searchable those massive medical-research articles physicians are supposed to absorb as they are published. Patel's group will be among the companies presenting Thursday night at Philly Tech MeetUp, an emerging-companies show at the University City Science Center.

Patel's cofounder is former Glaxo and Novartis marketing strategist Sachin Nanavati, his old college classmate. On a visit to Patel's Philadelphia apartment, Nanavati was overwhelmed by the piles of medical journals Patel reads to keep up. Nanavati told me, "There's got to be a better way."

So Patel called his ex-classmate in medical school, Dr. Derek Juang, now in California, who worked his way through college designing websites.

"Yes, we can write an algorithm," Patel recalls Juang saying. They recruited software developer Jon Wear, a Penn graduate student, as director of IT. They recruited doctors to try their test site, and went live this month.

How good is Docphin? "I like the breadth of the site, its coverage of multiple specialties," Don Johnston, group publisher of AHC Media, the news and health-care division of Thompson Media Group L.L.C., told me when I asked him to take a look.

But they face stiff competition, Johnston added. "Physicians can be a very tough market. They have a lot of options to stay current in their fields."

"The user interface for the product is clean and well- organized," said Harold Hambrose, boss at Philadelphia online design firm Electronic Ink, which counts medical systems among its national clients.

He said the service might best win a profitable following if it proved easily applicable for distributable publishing (for example, laying out quick citations in users' own writings), and if article selection improves intelligently as Docphin adjusts to user demands. Plus, Hambrose added, "this type of product almost demands a mobile-user interface."

No argument from Patel: "Research is coming out faster and faster," and speed "is a critical part of our value proposition."


Contact columnist Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.

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