President Barack Obama’s re-election to a second term takes away some of the uncertainty that small business owners have been carrying around. The question now is whether he can satisfy those who say he hasn’t done enough to help them expand and create jobs.
During Obama’s first term, the president pointed to steps he took to help small companies, such as proposing the Small Business Jobs Act of 2010 that cut taxes for small companies and made it easier for them to obtain federally guaranteed loans. These steps have helped some small businesses start their recovery from the recession.
“We’ve been seeing steady albeit modest growth in the economy since the president took office and we are cautiously optimistic,” says John Arensmeyer, CEO of Small Business Majority, an organization that lobbies on behalf of small companies.
Even so, many small business owners are critical of the president’s performance. They are anxious about taxes and the bulging federal deficit. Many opposed the health care overhaul and complain that they are being squeezed by excess regulations.
So now that Obama has won four more years, what can small business owners can expect from Obama on taxes, health care, the economy and regulation? The Associated Press interviewed small business experts and advocates to find out.
No president has a complete say over how much anyone, including small business owners, will pay in taxes. Expect the divided Congress to battle over Obama’s request to raise the top tax rate on many business owners to 39.6 percent during 2013. That’s the highest personal tax rate, and it affects some small businesses because their owners report their business taxes on their personal returns. Republicans in the House, will oppose that tax increase, and the result may be a stalemate.
Obama’s re-election means the health care overhaul will continue to be implemented, but small businesses still have to wait to find out how much it will eat into their profits.
Key provisions of the law go into effect in 2014, including the requirement that businesses with 50 or more employees provide affordable health insurance for their workers. What employers don’t know yet is how much that insurance will cost. That won’t be determined until states set up exchanges where individuals and companies can buy coverage.
THE ECONOMY AND THE FEDERAL BUDGET
Obama may not be able to do much to get the economy growing much faster than it is now.
The federal deficit is part of the problem. Obama has to curtail spending — but federal government spending is equal to nearly a quarter of income produced by U.S. citizens. Cut government spending, including federal contracts, and small businesses lose revenue and may cut jobs.
Many have put hiring plans on hold because of uncertainty about the fiscal cliff.
But if the deficit isn’t dealt with soon, taxes will have to rise in the coming years. That would leave small business owners with less money to invest in their companies.
Look for Obama to continue a mixed record on regulation — creating more rules that small businesses will need to follow, but also being vigilant that regulations won’t be too burdensome.
Small business owners who are unhappy with regulations created during Obama’s first term are likely to find ways to get around them — particularly when it comes to health care. But owners will be happy with the Obama administration’s regulations that are designed to help them — lending and counseling programs at the Small Business Administration will continue to be a priority.
Joyce M. Rosenberg is a small business columnist and reporter for The Associated Press.