The Nov. 7 election swept the Democrats in power in the U.S. House of Representatives and, it appears, in the U.S. Senate. The business community has historically viewed Democrats with some trepidation regarding their business policies. However, Jim Wise, Managing Partner with PACE-Capstone Companies, which has represented NACM before the federal government for the last 15 years, believes the business community should not fear the Democrats when they lead the 110th Congress next year. In fact, Wise contends there may be some areas of mutual agreement on some important issues of concern to the business community.
"I don’t think anybody can rush to judgment on an assumption of the relationship between the business community and the Democratically-controlled Congress," Wise said. He pointed to the fact that the margins in the House and especially Senate are so thin that Democrats will have to work with Republicans to get bills passed. Democrats will also have to work with President Bush who can veto any bills he dislikes with little chance of Democrats overriding his veto without broader bi-partisan support.
Wise noted that the 110th Congress is still several weeks away and that it is difficult to try to predict what will happen legislatively, but he still offered some conjecture on a few issues. On immigration reform, which didn’t make it through both houses in the 109th Congress, Wise believes there is some agreement to approach on what the President proposed and Democrats in the Congress favored. He believes that some type of amnesty or limited amnesty could make it in an immigration reform bill in the next Congress. Wise added that this would be in conjunction with providing stiff penalties for those businesses that, in the future, hire illegal aliens. Also, Wise pointed to the possibility of some type of Visa program for immigrants who possess skills that are in short supply in the U.S. "The Democrats and the President are more in tune and it is a position the business community would endorse."
On the issue of prescription drug pricing, Wise believes the Democrats’ pledge to allow the bargaining power of the federal government to bring down prices, through the Medicare program, could be appealing to businesses. He noted that many businesses are finding it harder to pay for health benefits for their employees and prescription drugs are often an expensive component of those plans. Anything that can bring down drug costs would be welcome by many businesses.
On the estate tax, Wise points to possible compromises that would be acceptable to Democrats, many Republicans and the business community. He noted that the current system of estate taxation is very complicated with various timetables of when certain exemptions and tax rates expire. "It’s very convoluted." He believes it’s possible the Democrats could offer an acceptable compromise bill in Congress that would provide for a raise in the minimum wage in conjunction with an exemption from taxation, of perhaps in the 4-6 million range, on the value of estates. Wise noted that this would be especially welcome to many beneficiaries of estates created by the assets of small businesses.
On the subject of the Sarbanes-Oxley Act of 2002 (SOX), Wise believes that Democrats might be in favor of some relief from the burdens of complying with the regulations required by section 404 of the act. He pointed out that many small- to medium-sized enterprises (SMEs) have maintained that these requirements are too expensive and burdensome. U.S. Rep. Barney Frank (D-MA) is likely to take over chairmanship of the House Financial Services Committee, Wise noted, which would have jurisdiction over changes in SOX. Wise thinks Frank would be more amendable to some changes in SOX, even if it is only on the regulatory level at the Securities and Exchange Commission. He said Frank might be in favor of some relaxing of section 404 requirements for SMEs in exchange for other requirements such as greater transparency in the election of corporate officers. Wise pointed out that changes in SOX were not likely under the authority of the current chairman of the House Financial Services Committee, Michael Oxley (R-OH), who is the cosponsor of the law. "I think there is an opening here (for changes to SOX requirements for SMEs), that folks might not have had previously," Wise said.
Source: NACM and Jim Wise of PACE-Capstone Companies