The new Congress will do nothing for small business – and that’s fine by us
(This post originally appeared on The Guardian)
“One good thing about a divided Congress,” my father – a small business owner – used to say many years ago, “is that Washington can leave us alone.”
Even today, a great many of my clients agree with my dad’s sentiment. My father passed away almost 14 years ago. But if he was still around he would certainly love the 116th Congress where Democrats control the House and Republicans control the Senate. That’s because, at least for small businesses, this Congress could possibly shape up to be the best Congress ever.
Why? Because a lot has already happened over the past two years that has benefited the business environment. But despite some members of the House making noise, we can rest assured that not much is going to happen over the next two years. For business owners, that’s a good thing.
For example, just this week the new Democratic chairman of the House budget committee, John Yarmuth, announced that he will be seeking a 33% rise in the corporate income tax rate in order to fund the government’s deficits. That’s not going to happen. The Republican party – and many of my small business clients – considers their 2017 tax reform legislation, as well as the rollback of many other regulations, to be among its most significant accomplishments and lowering the corporate tax rate to 21% was one of the core parts of that bill. There’s no way that the Republican-controlled Senate, or the president, is going to change that or allow any legislation affecting business and the economy passed by the 115th Congress to be overturned. It’s their platform for the 2020 elections.
Some Democratic leaders have been pushing changes that will “shore up” the Affordable Care Act. Meanwhile, the Trump administration has signed multiple executive orders making it easier for employers to purchase healthcare and, starting this year, the above-mentioned tax reform legislation released all individuals from the previous mandate of having to buy health insurance. The Republicans tried and failed twice to repeal the ACA and the president has repeatedly stated his desire to kill the legislation entirely. Insurance rate increases are in the single digits for now and we can deal with that. It’s impossible to imagine any significant changes to the healthcare law while this Congress is in session so we can budget these costs – which are among our highest – with some degree of confidence over the next two years.
Some Democrats are voicing their opposition to the president’s recent USMCA (United States-Mexico-Canada, or Nafta 2.0) trade deal and that could create headaches because the agreement still requires congressional approval. Any potential deal with China would require the same. But I don’t think that’s likely because as tempting as it is to blame the president for any shortcomings in these deals it would be unlikely for Democrats to want to take responsibility for any negative economic impact on trade caused by their squabbling. The president owns these deals and the sooner agreements are ratified the better for the overall economy.
Congress may also try to take away a few dollars from defense or even cut into the president’s plan for the wall. But these moves would probably have a minimal impact on small business. What could have a more significant impact would be an agreement on infrastructure spending – a likelihood as it’s one of the few initiatives that has bipartisan agreement. An infrastructure bill would create opportunities for the hundreds of thousands of small businesses that benefit from the construction industry.
That’s not to say there won’t be other bills regarding labor rules, the environment and the deficit that could affect small businesses. But for the most part, that’s it. No other big deals on the horizon. No major legislation is predicted for this session.
Instead, small business owners like myself are preparing for two years of subpoenas, hearings, investigations and possible impeachment proceedings (which will go nowhere) while both parties position themselves for the more consequential 2020 presidential election. All of this is a certainty. That’s good news for small businesses because we don’t like uncertainty.
So go ahead Congress, continue the gridlock and keep your fights in DC. Out here in the trenches we’ll continue doing what we’re doing without having to worry about any significant legislation that could disrupt our plans over the next few years. This is shaping up to be the best Congress ever. My dad would love it.