J.D. Harrison (c) 2014, The Washington Post.
WASHINGTON — Just like that, Washington’s political landscape has shifted again.
Republicans expanded their majority in the House of Representatives and captured enough seats in the Senate to seize control of Congress, splitting political power between the Capitol and the White House. And while it remains to be seen whether single-party control of the Capitol will diminish or deepen the gridlock in Washington, it has changed the outlook for some of the legislative items that tend to matter most to employers and entrepreneurs.
Here’s a look at some of the election’s most important ramifications for small businesses.
What it does mean:
— Tax overhaul back in business: This one has been lingering just out of reach since the start of Obama’s presidency, but it may have a real shot to reach his desk now that one party controls both chambers of Congress. Rep. Paul Ryan, R-Wis., and Rep. Orrin Hatch, R-Utah, who are likely to head finance committees in each chamber, have both said that crafting a workable, comprehensive tax reform proposal would be a top priority moving forward. At a recent campaign stop, Ryan said he expects to have legislation ready sometime next year.
“We have to reform this tax code, because we’re taxing American businesses at much higher rates than our foreign competitors,” Ryan said.
It’s worth noting that a Republican-authored tax plan may sit better with many small business owners than the alternatives pitched so far by the White House, as Ryan and others have insisted on an overhaul that includes lower individual rates and lower corporate rates (the Obama administration has pushed for corporate-only reform). Small business groups have noted that most small companies are set up as pass-through entities, so their owners pay taxes as part of their individual taxes and would therefore see no benefit from legislation that merely lowers the corporate rate.
— Immigration reform revived: Republican leaders have long said, and former presidential candidate Mitt Romney reiterated earlier this week, that the party would move immigration reform toward the top of its priority list if it took control of the Senate. And even with the president expected to circumvent lawmakers with executive action on some of the most immediate immigration-related challenges, it appears the GOP will start crafting its own broader reform package.
While the devil will be in the details, and while it remains unclear just how broad an overhaul Republicans are interested in pursuing, there will be many small employers and entrepreneurs pleased to hear that overhauling the immigration system is at least back on the table. Some seasonal and tourism companies, for example, have complained that they are having more troubling finding low-skill labor to help them operate during peak seasons. Some have pushed for new rules that would make it easier to hire short-term foreign workers, but those changes have been waylaid in the absence of a sweeping immigration reform agreement.
Meanwhile, the founders of new and fast-growing technology ventures have warned of a shortage in highly skilled job candidates in fields like science and engineering, urging lawmakers to expand the number of available visas. Others have stumped for an immigration deal that includes new visas for foreign-born entrepreneurs, who proponents say would create much-needed jobs in the United States.
— New leadership on the small business panel: The House Small Business Committee was already preparing for a leadership change, as Chairman Sam Graves, R-Mo., plans to step down at the end of the year in keeping with self-imposed term limits. Now, the Senate Small Business and Entrepreneurship Committee will see a change at the top, too, as the chairmanship passes from Democrats to Republicans.
Sen. Maria Cantwell, D-Wash., will be forced to hand over the gavel less than one year after she stepped into the position. Sen. James Risch, R-Idaho, currently the highest-ranking Republican on the committee, is likely to take over as chairman. Risch has pushed for more scrutiny over the small-business implications of federal regulations and has penned bills meant to help small firms raise more capital.
What it doesn’t mean:
— Down goes Obamacare: While that has been the ultimate goal for some Republican lawmakers, the chances of a full repeal remains unlikely. Some political analysts have said they expect to see a repeal bill now finally reach president’s desk — if for no other reason than to allow Senate Republicans the chance to finally cast a formal vote in favor of a repeal — it would be swiftly vetoed by Obama. Republicans did not pick up enough seats to override a presidential veto.
However, that’s not to say that the outcomes Tuesday will not have a significant impact on the law. Republicans are likely to start pushing through proposals that would chip away at the statute, and they have put a bull’s-eye on some of the most controversial provisions for small businesses — that is, rules requiring companies to provide health plans or pay a penalty, as well as language that define “full-time” worker status as at least 30 hours per week.
In addition, they are expected to come after a tax on medical devices and another on high-end insurance plans, both of which some experts say have contributed to rising insurance rates. If so, it will be up to the president to determine which if any provisions of his signature law he is willing with part with.
— All Obama’s plans derailed: In many cases, Republican control on the Senate will put a clamp on the president’s agenda for his final two years, but there are a few exceptions.
His attempts to strike two massive trade deals — one across the Atlantic and another across the Pacific — have been thwarted by members of his own party, namely Senate Majority Leader Harry Reid, Nev. With Republicans at the helm, Obama may actually find it easier to close those deals, which could a boon for companies that bring in materials or goods from abroad as well as those that are interested in selling to customers overseas.
Secondly, and perhaps counterintuitively, an effort to raise the federal minimum wage could get a boost — or at least not take a hit — under the new Republican-led Congress. On the campaign trail, a number of GOP candidates expressed support for a higher wage floor (an increasingly popular position among voters in both parties), and some analysts warn that skirting the issue would come back to haunt Republicans in the 2016 presidential election.
It’s an issue that has split small business owners down the middle, as some have warned that forcing higher pay would hit their bottom lines and force them to cut back on hiring. Others believe that higher wages would put more money into the their customers’ pockets, resulting in more spending and higher sales.