For small businesses, the days of uncertainty are over. At least for the next two years. The inauguration this week proved that. The president's speech laid out his objectives. It was partisan. It was passionate. It summed up his beliefs and his agenda. And from what I can tell, his time will be spent on many social issues like women and gay rights, global warming, gun control and immigration. These things have their economic impact, the economy is not in such a dire situation as when he first became president. He talked about tax reform and cutting deficits, but there appeared to be no sweeping economic changes on the horizon.
And for small businesses like mine that's a good thing. It makes things more certain.
The president has triumphed over his opponents, won a second term with a clear electoral college majority, and enjoys a very comfortable (52 percent) approval rating. His party fully controls the Senate. Republicans retain their control over the House of Representatives but are suffering from significant internal divisions. It's clear that the president and House leader Boehner aren't crazy about each other. We've watched the two of them attempt to negotiate various debt ceiling and budget crisis over the past four years with little to show. Annual deficits continue to surpass a trillion dollars and our national debt has climbed over $16 trillion. Just this past week, Boehner proposed yet another extension of the debt ceiling for a few months so that the government could continue to borrow while they search for answers.
Both politicians and economists are divided about how to handle all this. Deficit hawks, like Rep. Paul Ryan, warn us that the more we go into debt, the deeper our problems become. They are concerned we may be facing the same problems that countries in Europe are now facing: rivers of red ink, followed by high unemployment, skyrocketing interest and inflation and economic stagnation because a government can't pay its bills. Others, led by economist Paul Krugman, believe that we can afford more stimulus and more government spending and that large debts and deficits are not as harmful to the economy as others may believe.
And what does this mean for my small business? Turmoil? Recession? Crisis? Catastrophe? Actually... no. At least for at least the next two years, small businesses like mine can expect... certainty!
That's because, when it comes to the economy, we know for certain what the government will be doing over the next two years. And that's not very much. Despite what many hope, the president's second term will likely be no different from his first. He will continue to plead that Washington "overcomes their political differences" but will then, as before, blame his opponents when his initiatives fail. We know that there will be no "grand bargain" on the deficit. We know that it's unlikely there will be any major reforms of our tax system during this time. Instead, and barring any foreign policy crisis, it's certain that the president will be spending most of his time trying to address climate change, gun control and other items on his social agenda. His outreach to small businesses and manufacturers will continue because this is good and it makes for good reading.
We know that health care reform legislation will move forward. We know that more significant changes to our Medicare, Medicaid, social security and other federal insurance programs, so badly needed because they consume more than 40 percent of our Federal budget (and are projected to increase substantially over the next few decades) will not be coming anytime soon. The president is a strong believer in a strong entitlement system. "The commitments we make to each other -- through Medicare, and Medicaid, and Social Security -- these things do not sap our initiative; they strengthen us," he said in his inauguration speech.
Agree or disagree, it's obvious that no one will be able to accomplish much by way of reform. Our government is too divided. Our leaders do not have the majorities to make these changes. And, if anything, they have proven that they can't lead or govern very well. They are not very good at negotiating or compromising or getting along. These same players are returning to Washington for term number two. Many on the right will disagree with him. But he's not going to bankrupt the country. At least not for the next two years! So we can be certain of more of the same.
At least until the next congressional election in 2014. If the Democrats take control of both the House and Senate then the president may have the majorities needed to push through the programs he talked about at this week's inauguration. If not then he won't. Even if the Republicans win majorities they will be powerless to enact any legislation as long as the president opposes.
Which brings me back to my small business. How does this all affect me?
In the next two years, not much at all. If anything, it helps. Because for the past four years most of the business people I know have been frozen by the prospect of "uncertainty." Will there be big tax changes? Will there be big spending cuts? Will there be big changes to health care? Will my industry suffer from excessive regulations? We've now learned, for certain, that there will be very little of this over the next two years.
Sure, politics and the media being what they may, we'll read about another small tax increase here or there on the wealthy or some token cuts being made to those evil defense contractors. Some industries will complain of new regulations being forced upon them. Our politicians will make brave attempts to show the voters that they're trying to reduce our deficits. But none of this will be earth shattering.
And meanwhile, the housing industry slowly but steadily recovers, the auto industry and retail shops ring up ever increasing sales, interest rates and inflation may increase a little but are still at historically low levels, unemployment will quietly inch down. There are no bubbles growing in tech or real estate. GDP will continue to grow, even at a slow 2 to 3 percent. It's not great. And none of this is as fast as we'd like to see it. But this is what will happen. I can be certain of this.
And I can run my business over the next two years knowing this. I won't take any great risks. But I can quietly work to grow my company. Maybe add another person or two if possible. But I'll try to contract out as much as I can to keep my overhead low and conserve cash. Like most small business owners, I'll be playing my hand conservatively but I won't be operating out of fear. Because this I know for sure: If I keep my head down, work hard and do my best to ignore the noise coming out of Washington, I'll probably be OK. For now.
But then again, isn't that what most business owners do anyway?
A version of this blog appeared on Inc.com.
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