Commentary - The 2002 elections and the small business agenda

Friday, December 13, 2002

By Karen Kerrigan

Small Business Survival Committee

Washington, D.C. - Now that Republicans control Congress and the White House, business interests are beginning to develop their wish lists for the 108th congressional session. What can America's small business and entrepreneurial sector expect from Washington next year?

Inside-the-beltway expectations are tempered by a fairly reserved White House and the reality that Republicans hold a slim majority in the Senate. Still, the business community remains optimistic that advances will be made on key measures that have gained momentum over the past two years.

Sweeping initiatives (e.g., tax system overhaul, comprehensive regulatory reform and grand changes to Social Security) are not expected to advance. Incremental reforms in a number of areas that address immediate economic challenges will dominate much of the work on Capitol Hill.

President Bush and his team will lay the groundwork for future action on "big picture" issues, presumably for action in his second term if re-elected.

Legislation to address high health insurance costs, the bumpy economic recovery and other challenges that undermine certainty are more or less "left over" issues from the recently completed session. The president's team remains busy crafting a tax package to help spur the economy back to robust levels of growth. Tax reform advocates are expecting a blend of measures aimed at helping business and individual taxpayers.

"I anticipate that the Bush tax plan will be made permanent, and comprehensive expensing reforms proposed and passed to help spur business investment," says Grover Norquist, president of Americans for Tax Reform.

Mr. Norquist, an adviser and ally to Bush, also predicts positive changes to saving plans such as Individual Retirement Accounts and 401(k) plans. He is working to increase amounts that can be contributed, as well as lifting income restrictions and liberalizing the types of things that individuals can use their money without being penalized for early withdrawal.

Making the tax cut permanent would add a level of certainty for business owners (and individuals) who need to plan but find it difficult to do so because of quirky Senate rules, which gut the tax cut a year after it is fully implemented.

Marginal tax rate reduction (nearly 90 percent of businesses file taxes as individuals) and death tax elimination are only two components of the tax package enacted last year that would pop back to life in 2011 unless Congress acts to make tax relief permanent.

Eternally on the agenda of the business community, regulatory reform will get renewed life next year. Federal regulatory agencies will be held more fully accountable for the impact new regulations have on small businesses thanks to President Bush's late-summer executive order. The Office of Advocacy at the Small Business Administration also released a guide that provides federal agencies with a blueprint for assessing the impact of regulations on small business.

Neutral political observers comment that voters have given Republicans a chance to lead. Like all voters, small businesses are ready for a greater degree of certainty on the economic and national security front. Let's see what the GOP does with this opportunity.

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