The Voters Have Spoken! How Will the Decisions Affect Business?
by Nancy Sims
December 13, 2010
In 2008, the voters screamed to the government that they were worried about war and the economy. They wanted change!
In 2010, the people let the government know their voices had not been heard and they were willing to change again. And they did.
This presents a distinct dilemma for those who take office in January 2011. The voters have become quite fickle. They want quick fixes and they want them now. If things aren’t better under your leadership, we’ll throw you out in 2012!
Thus, our legislators and Congress are charged to find ways to fix the economy. Unfortunately, easy solutions do not always work and they inevitably leave someone or some groups unhappy.
Let’s look at the federal impact first. A number of issues helped to garner a Republican sweep. The mantra that less government regulation will allow business to grow was key to their message. This will translate into specific policy proposals:
1. Repeal of Health Care Reforms – The Republican house will make this a priority and strive to make the legislation more business and insurance friendly. Repeal will be tougher in the Senate.
2. Tax Rate Extensions – There will be much debate about extending the Bush tax cuts and/or making them permanent.
3. Deficit – The flip side of the tax rate extensions is that the deficit continues to grow and spending cuts are critical. We will not likely see any more stimulus dollars and everyone in business should hold onto their pocketbooks. Topics such as elimination of mortgage interest deductions and extending Social Security eligibility age are high on many agendas.
Closer to home, the Texas Legislature will convene on January 11, 2011 and the Republicans are 100% in control. They hold all statewide offices, a solid majority in the Senate and two-thirds of the House. The Legislature is facing a projected budget shortfall between $18 – 25 billion. After years of living lean and trimming programs, this will present a serious challenge to Legislators. So, once again -- hold on to your pocket books. Issues to watch include:
1. Fee Expansion – If you are not already paying a fee for something, you will likely do so soon. These are the favorite revenue generators of Legislators as they are known as “hidden taxes”. Think about your car registration fee and how it increases every time you go to pay it.
2. Margins Tax – The margins tax that many businesses pay today will likely be expanded. Additional businesses may be required to pay and others may need to pay more. This is the one to watch the closest.
3. Revenue Generators – The Legislature will be looking at all options to increase revenues. Gas and cigarette taxes and much more will be on the agenda.
Bottom Line: Pay close attention to the actions of your elected representatives. As the ole’ saying goes: “No one’s life, liberty or property is safe when the Texas Legislature is in Session. Thank goodness they only meet 140 days every other year.”
This year, more than ever, the saying applies to the federal, state and local governments!
Nancy Sims oversees the firm’s many public affairs services, including government relations, civic engagement, sponsorship management, executive positioning, market research and stakeholder communications.