Small business owners were glued to their televisions last week as election ballots were tallied. In the end, 51 Democrats had seats in the House, compared to Republicans 49 seats. The House currently has 230 Democrats and 197 Republicans, with eight elections still determined ties.

Based on a pre-elections survey done by Wells Fargo and Gallup, approximately 75% of business owners believed the congressional takeover by Democrats would have a direct effect on small businesses nationwide. Various issues are expected to come into play.

Trade Promotion Authority
President Bush has ambitiously been seeking renewal of the Trade Promotion Authority, which will lapse in June. Created in 1974, TPA allows the president to negotiate trade agreements. Congress can approve or squash the agreements, but cannot amend them, which protects the agreements from gruelingly being picked to pieces once they were made with the U.S.’s trading partners. The shift in power is expected to slow the President’s progress on getting a renewal approved prior to the lapse, if at all.

Taxes
Estate Tax/Death Tax have been a long time reformation agenda for small businesses. It is a taxation of 30-50% on assets that are transferred from one generation to the next upon death. In other words, if dad dies, and leaves son a business and property worth $20 million, it will be taxed up to $10 million. If an asset is left to a spouse or a charitable organization, the tax usually does not apply.

A repeal of the tax was on the table, but it is expected to fall to the wayside. There may be a bipartisan approach, but it is not expected to be anything immediate, as the estate tax is not currently a congressional priority.

Healthcare
As far as healthcare, small businesses have been pushing for some sort of reform that will allow them to provide affordable health insurance to their employees. One such hope was association health plans, which would allow small businesses to band together on one insurance policy, even across state lines. The idea is highly supported by Republicans, not as favored by Democrats. It is expected that some option will be extended to small businesses, although association plans will probably not be utilized.

Minimum Wage
The national minimum wage has been $5.15 per hour since 1997. Based upon calculations, someone working a full-time job at this rate would make just over $10,000 a year, which is the national poverty line. In last week’s elections, six states approved raising the state minimum wage. There are now 29 states, plus Washington D.C., whose minimum wage is higher than the federal.

Raising the national minimum wage is a top priority for Democrats coming into a new congressional year. There is speculation that an increase in minimum wage would harm small businesses and increase the unemployment rate. However, a study by the Center for American Progress found that employment in small businesses grew in states where the minimum wage has already increased. Inflation is another concern for critics, but, truth be told, the pressures and struggles for small business under an increase would be marginal.

Iraq
The war in Iraq was the number one issue on voters’ minds, according to exit polls. Though it may not be directly connected to small business, it deserves mentioning. The Democratic takeover of Congress and a new Defense Secretary, combined with the people’s dislike of the way the war is being handled, will likely lead to a change in approach and policy.

Democrats want the Iraqi government to take more responsibility for its development and the war on terror in their country. The plan for doing so is to start pulling our troops out of Iraq and handing over the reigns. There have been requests of President Bush to convene an international conference on Iraq. Other suggestions presented may be regional dialogues with our adversaries in Iran and Syria for assistance or developing three sectarian states of the country.

The replacement of Donald Rumsfeld has led most to believe that President Bush is more open to these suggestions. In his address to the country regarding Rumsfeld’s resignation, Bush stated, “Secretary Rumsfeld and I agree that sometimes it’s necessary to have a fresh perspective.”

Changes are inevitably upon the horizon. Whether those changes are positive or negative depends entirely upon perspective. I would like to close with a statement made by Todd Stottlemyer, CEO of the National Federation of Independent Business (NFIB):

“Small-business issues transcend party lines and we want to work with lawmakers from both sides of the aisle to create an environment where businesses can flourish and grow and strengthen the American economy. That’s what NFIB is all about, promoting and protecting the right of our members to own, operate and grow their businesses. The key is providing a climate within which to do that.”

Sources/Related Readings:
• NFIB: Midterm Election Results In
• Business Week: Small Biz OK With New Congress
• Inc.com: What Does a Democratic Takeover of Congress Mean for Your Company?
• San Francisco Chronicle: Changes From Election May Weaken Bush’s Trade Agenda
• Reuters Election 2006: Economic Impact of Likely Minimum Wage Rise Unclear
• International Herald Tribune: Elections, Rumsfeld Exit Open Door to Change

Tags: Small business owners, Democrats, Republicans, congressional takeover, Trade Promotion Authority, Estate Tax, Death Tax, healthcare, association health plans, minimum wage, war in Iraq, NFIB

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3 Responses to “How Changes in Congress Could Affect Small Business”

1. Anonymous says:
   

   I think the credit check need to be addressed by business owners. When they hire there is no need to check a persons credit they are applying for a job and need that job to help pay the bills. What’s next, you can’t eat unless you have credit? You can’t drive your car because no credit. There needs to be some kind of regulation on businesses concerning the hiring process. Just resume and whether the person fits the job.

   We are only hurting ourselves when we deny jobs because of race,credit etc. The back lash will be no spending and lot’s of homelessness and stealing and yes robbery like you never seen. We are worried about the wrong things. We should be focusing on crime, employment, college tuition for all, helping the poor and churches. Growing America. White America must learn to share the wealth as well as the rest of the colors. All of the colors of America is here and we must learn to get along with each other and to share and quit picking and discriminating each other.

   Congress come together and be the example. Children are watching and are suffering because of your stupid decisions. Make decisions that would have good impact on all people not just a few.

   America is crying and hurting and we better listen are there will not be any peace. This is what happens when selfishness steps into a person. Greed is something that needs to stop. Employers need to be inspected on a daily basis and their license need to be taken away for sending the jobs over seas and cutting jobs for stupid reasons. What a mess.

   Posted May 18th, 2007 @ 1:05 pm
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2. Brandon says:
   

   I think the congress needs to wake up. The business owners need to be punished when they fire. Maybe charge a $5000.00 fine for firing people. Are maybe make them give $5000.00 to the person when they fire. I think that there needs to be a law in place regarding firing because this is causing high unemployment rates and making many people go into deep debt in many cases because of false hope. Good luck to you who are laid off. I hope you find a decent job soon.
   Business owners open your hearts. This could be you one day.

   I also think we are wasting time on the war. There are other things to think about such as our schools and education without loans and gimmicks.
   The war is so unnecessary.

   Posted May 18th, 2007 @ 1:18 pm
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3. Chris Brunner says:
   

   I disagree with you that the war is a waste of time. Don’t get me wrong, I hate conflict and especially one on a world-wide scale. There are a small group of people that want to kill people not of their religion in the name of their God. This is unacceptable to me. We must choose battles wisely just as our adversaries are carefully choosing theirs. This won’t be easy, just as every major conflict in the past has not been easy. We cannot sit back and let religious strife ruin this planet and the human race living on it.

   I agree that something needs to be done about American corporations sending jobs overseas, however, I disagree that businesses should be fined for firing people. There are many situations when employee termination is warranted.

   Jobs being sent overseas comes down to profit and the bottom line, namely by board of directors for shareholders who expect the most amount of profit possible even if it means sacrificing jobs at home. Unfortunately shifting jobs overseas where labor is cheaper is a negative by-product of succeeding within Capitalism and the stock market at a multi-million/billion/trillion dollar level.

   Posted May 18th, 2007 @ 1:54 pm
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