Anger and Frustration: The Impact of Midterm Elections on Small Business Issues
By all predictions, the November 2010 elections are likely to be among the most heated and nastiest in United States history. Polls consistently show the highest anti-incumbent feeling on record. In one recent Washington Post/ABC News poll, just 29 percent of respondents said they would support their current congressperson in November.
Among this angry electorate are plenty of small business owners. The economy is still sputtering, potentially threatening a double-dip recession, and many entrepreneurs feel the government stimulus spending has done little to help them. In addition, according to a study by the American Small Business League, a nonpartisan advocacy group, the Obama administration has failed to stop the diversion of government contracts mandated for small companies to larger firms. “To date, the Obama administration has not endorsed any legislation, policies, or rule changes … to address widespread fraud and abuse in federal small business contracting,” reads the report.
Overall, most experts expect the Democrats to take heavy losses in the election but give the Republicans only a small chance of retaking the Senate, where they control 41 of 100 seats. They have a slightly greater chance of retaking the House, where a number of prominent Democrats have retired. One Congressional Quarterly analysis projects that the Democrats will retain slight control of both chambers. In that case, leadership positions in Congress would not change hands, but the Republicans would be empowered to alter and block more bills.
Health care legislation will be a prime target if predictions of Republican gains become a reality. In fact, Republicans in a number of key races have made repeal of the law a central theme of their campaigns. They are targeting small business owners who worry that government-mandated insurance requirements and protections for insurees will cause their costs to spike, says Karen Kerrigan, president and chief executive officer of the Small Business and Entrepreneurship Council, an advocacy and research organization based in Virginia. “The bill could certainly be changed depending on the election,” Kerrigan says. “The new Congress [could] defund health care reform through the appropriations process.”
Health care reform is a central issue in several key races. Political operatives look to the Nevada Senate election, where Republican Sharron Angle is taking on Senate Majority Leader Harry Reid. Because of his role in shepherding health care reform, Reid is probably the Republican party’s biggest target in the fall. Angle has said she wants to defund the health care legislation. However, Angle has attracted criticism for allegedly oversimplifying potential answers to health care costs, such as saying that doctors should accept barter for their services, the way family doctors of the past took chickens as payments.
The fall elections could impact other key issues as well. President Obama has vowed to double U.S. exports in the next five years, but the White House and Congress have made little progress on free trade, which is critical to small exporters. The upcoming election is only making Obama’s effort more difficult.
“Everyone is scared to sign on to a trade deal in an election year, since trade is unpopular with some segments of the population,” says Laurel Delaney of GlobeTrade, an Illinois-based consulting company that works with small exporters. “After the election, you might have Congress more willing to sign on to [trade] deals, especially if there are a few high-profile races where trade advocates don’t lose.”
The president’s specific initiatives to help small business could also be altered by the election. Obama has proposed and the House of Representatives has passed a plan to create a $30 billion fund for small banks that would encourage them to lend to entrepreneurs. (As of June 30, the Senate had not yet passed this legislation.) But if the Democrats retain a majority, the legislation -- and other future stimulus packages theoretically designed to help small business -- is more likely to pass.
If, on the other hand, the GOP gains a majority in the House, there will likely be more focus on spending cuts and deficit reduction. This is a priority even supposedly embraced by Obama’s outgoing budget director, Peter Orszag, who reportedly is quitting because the White House was not willing to focus enough on taming spending.
“I think a lot of people in the small business community think the stimulus packages didn’t work and [will] wind up costing taxpayers,” says Kerrigan. “A lot of businesspeople just don’t trust anyone in Washington anymore, and that’s going to make for a real change this election.”
Joshua Kurlantzick is the author of Charm Offensive: How China’s Soft Power Is Transforming the World.
