Five things the election results mean for small businesses and entrepreneurs
By J.D. Harrison,
President Obama’s reelection buys him another four years at the helm of the economic recovery, where he will continue to contend with a sharply divided Congress.
During the campaign, the president repeatedly vowed to tailor his second-term policies to the needs of small business owners and entrepreneurs, promising to improve their access to capital, limit their tax burden and alleviate their regulatory headaches in order to encourage job creation and business expansion.
But will it acutally happen?
Political analysis will continue to pour in over the next few months and the full impact of tonight’s result won’t be realized for years. But here’s an early glimpse of what small and young businesses can expect from a spilit Congress and Obama’s second term in the White House.
1. Obamacare full-steam ahead: Romney won’t have the chance to extend waivers to the states, nor will he be able to lead a charge to fully repeal the health care reform law. The president’s victory quashes the legislation’s biggest remaining threat, and though regulators must still determine exactly how to implement the changes, the law will take full effect as scheduled in the president’s second term in office. Changes will include an employer mandate for businesses with 50 or more employees and a tax credit for business owners’ contributions toward their employees’ health costs.
2. A fierce battle over top-end taxes: President Obama has refused to extend the Bush-era tax cuts for high-income earners, setting up an important battle with Republican lawmakers, who maintained control of the House. Lifting those top rates would likely increase the tax burden on roughly 700,000 small businesses, representing about 3 percent of the total. Faced with gridlock on the Hill, the administration has suggested it may propose another bargain like the one that fell apart with House Speaker John Boehner in 2011. The deal would include Democratic concessions on entitlement program spending in exchange for Republicans’ approval to raise taxes on the wealthiest Americans.
3. Changes coming to corporate and investment rates: The corporate rate will likely fall, but not as much as it would have under a Romney administration. Obama has proposed lowering the rate from 35 percent to 28 percent, whereas the fallen challenger had hoped to chop it down to 25 percent. Obama has also said he will push for breaks for manufacturers, however, he wants to raise the rates on income derived from investments, which critics say discourages the wealthy from pouring capital into young and growing businesses.
4. Regulations remain intact: The president has acknowledged that excessive red tape is contributing to the slow economic recovery, and earlier this year, he issued an executive order requiring agencies to review all regulations and filter out the ones impeding job growth. Still, Obama’s victory denies Romney the opportunity to launch a full-blown assault on the president’s regulatory agenda. Romney had pledged to roll back all Obama-era rules, starting with the repeal of the Dodd-Frank Wall Street reform law and changes to the Sarbanes-Oxley financial reporting law. Those and many other regulations will now survive unscathed.
5. Stimulus, spending still on the table: Republicans’ continued control of the House will likely force the president to make spending concessions at more than one point in the coming years, but it will be nothing compared to the sweeping cuts Romney had proposed. That could be good news for small contractors who rely on federal spending as a main stream of revenue, though Republicans will argue it will widen the deficit and continue to hinder the broader economic recovery.
Political pundits have also raised the notion that Obama’s reelection serves as an endorsement for the federal government’s recent handling of the economy, which has featured several rounds of economic stimulus by the Federal Reserve. Romney had fervently opposed stimulus spending; thus, Obama’s win may give the central bank added incentive to take action in the years ahead should the recovery continue to slog along.
How will the election results impact your business? Please share your reactions in the comments below.