The U.S. election campaign season of 2016 is over. Finally. Some are mourning. Some rejoicing. Some puzzled. Some vindicated. Some angry. Some fearful. Some lacking in hope. Some filled with it. And now we begin to pick up the pieces.
As a small business owner, my mind goes to my work and livelihood as I assess how Trump’s election will impact small business. The president-elect provided few business-policy details over the course of his campaign and small business isn’t featured among Trump’s highest priorities as he takes office.
Instead, here what small-business owners can expect during Trump’s first 100 days in office, in his own words:
1. Reducing overseas competition
Of the nine priorities Trump indicated were on his list for the first 100 days, only one directly corresponds to promises he made to business: revising or exiting the NAFTA agreement.
This complex and far-reaching agreement has pros and cons. On the plus side, it quadrupled trade between Canada, Mexico and the U.S.; lowered prices; increased economic output in the trade area; created 5 million new U.S. jobs; tripled foreign investment; and reduced government spending.
On the minus side, it led to 750,000 job losses in the U.S.; suppressed wages; put Mexican farmers out of business; degraded the Mexican environment; allowed Mexican trucks, with different safety standards, access into the U.S. (now prohibited).
The last deal the U.S. exited was the Canadian-American Reciprocity Agreement in 1866, a much less complex agreement — so no one really knows what will happen as a result of pulling out of NAFTA.
President-elect Trump ran on his business acumen, putting himself before the electorate as the only person capable of energizing American business and manufacturing. Indeed, according to some polls, 51 percent of small business owners preferred him.
Other polls of small business owners indicate that 70 polls are comfortable with things continuing just as they are at the federal level and are optimistic about their local economies.
Conversely, 65 percent of them didn’t like their options in this election. Those who expressed dissatisfaction complained that the candidates were not addressing the issues important to them, like the rising cost of health care, onerous regulations and a sluggish economy.
This brings us to the next issue on Trump’s agenda that might affect small business:
2. Dismantling Obamacare
Dismantling Obamacare was at the top of Trump’s list of items he will address in the first 100 days since his initial approach has to be through canceling executive orders.
True, insurance issues are among those things that deeply concern small business owners. What can we anticipate if Trump follows through on this promise, initially by canceling executive orders and eventually in a more comprehensive way?
The Affordable Care Act (ACA) includes an employer mandate designed to force firms to provide full-time employees with comprehensive health insurance.
In a recent analysis, the National Center for Policy Analysis reported:
“The Congressional Budget Office (CBO) estimates that the required coverage for an individual will cost $5,800 a year or more in 2016 — the equivalent of an additional $3 an hour ‘minimum health wage.’ Family coverage could cost more than twice that amount.”
Employers are also required to limit the amount of premiums some employees pay as a percentage of their wage income.
It’s easy to understand why the insurance issue concerns small business owners. Clearly these regulations significantly affect hiring, employee compensation and growth. They apply, however, only to companies with more than 50 employees and nearly two-thirds of Americans with health coverage have employer-sponsored health insurance — approximately 171 million people.
As healthcare costs and insurance costs rise unchecked, and if workers can no longer depend on coverage through work, if the government subsidies that are part of the current plan disappear and we return to a situation in which millions cannot maintain insurance, how will that impact the economy, including small businesses?
Trump indicates he will “replace” the ACA with something else — but since we have no details of that, it’s difficult to anticipate what it will look like.
3. Reducing regulations
President-elect Trump has a pro-growth mindset. In view of that, he agrees with small business owners who say there are way too many regulations. Trump’s view is that over-regulation slows the economy by putting some companies out of business and discouraging new ones from forming.
Certainly many agree that we are over-regulated but many of today’s regulations came into place after 9/11 and as part of the recovery from the Great Recession, which most observers blame on lack of regulation and oversight.
Others believe that regulations are primarily aimed at giant corporations, allowing small businesses more opportunities to compete.
4. Stimulating the economy
During the past eight years, the annual trade deficit has gone down 24 percent. The economy added 9.7 million jobs. The unemployment rate dropped below the historical norm. The buying power of the average worker’s paycheck is up 4.2 percent. Inflation slowed as the economy warmed up. Corporate profits 144 percent higher, and stock prices soared to the highest level ever. The number of people living on food stamps is down and the number of people owning homes is up.
On the other hand, the growth rate of the economy has been slower than at any time since Herbert Hoover.
Trump promises to create 25 million jobs over the next decade and boost growth to 3.5 percent per year on average. Since, as CNS News reported, “the United States has gone a record ten straight years (2006-2015) without a year in which the growth in real GDP was at least 3.0 percent,” Trump’s promise is attractive at face value, but again, he has provided few details.
5. Tax reform
One promise for which Trump did provide some details, his tax reform plan, seems to offer little to small businesses. It is primarily directed to individuals, benefiting primarily the wealthy. To the extent that it deals with tax reductions for businesses, it affects big corporations and has little impact on small businesses.
The Tax Policy Center provides the following analysis of Trump’s tax plan:
“His plan would significantly reduce marginal tax rates on individuals and businesses, increase standard deduction amounts to nearly four times current levels, and curtail many tax expenditures. His proposal would cut taxes at all income levels, although the largest benefits, in dollar and percentage terms, would go to the highest-income households.
“The plan would reduce federal revenues by $9.5 trillion over its first decade before accounting for added interest costs or considering macroeconomic feedback effects. The plan would improve incentives to work, save, and invest. However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 percent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.”
When it comes to Trump’s administration, small-business owners have more questions than answers.
The lack of detail for most of Trump’s ideas makes it difficult to predict how Trump might attempt to carry out his campaign promises and what the impact will be. His plans clearly will help large corporations — but what will be the impact on small business?
Projecting on Trump’s impact is a prognosis full of uncertainty and risk — that much we do know about President-elect Trump. As a business person, risk-taking characterizes his career. Some times that resulted in success, many times not.