Week
of November 8 - November 12, 2004
Welcome
to the National Dialogue on Entrepreneurship, an initiative of the
Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through
NDE-news, we bring you
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The 2004 Election: What Might It Mean for the Entrepreneurial Economy?
Predictions seem pretty simple if you look at the results from last Tuesday’s election:
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President Bush is elected in a close race, but extends his 2000 margin of victory
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Republicans extend their margin in the Senate by 4 seats to 55-45
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Republicans extend their margin in the House by 4 seats to 228-207*
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Republican governors hold their current 28-22 margin in state houses
Based on these numbers, the logical prediction for the next four years is “business as usual.” The core parts of President Bush’s economic policies—tax cuts, reduced regulations, and increased individual responsibility---seem to have resonated with American voters.
President Bush has vowed to spend the political capital he earned in the election, outlining an aggressive second term agenda that emphasizes renewed tax cuts, reform of Social Security, and reduced health care costs. But these ambitious plans must face up to the reality of a burgeoning budget deficit and pressures on government spending due to homeland security costs, the continued U.S. military presence in Iraq, and other factors. At present, the Congressional Budget Office estimates that the federal budget deficit will climb to $2.3
trillion over the next decade. If the President’s tax reform plans---making permanent the dividend and income tax cuts of his first term---go through, that deficit could rise to $4.5 trillion in ten years.
While these budget pressures will place constraints on the Bush Administration’s ability to pursue new initiatives, it will look to develop an effective economic agenda with a key focus on nurturing the entrepreneurial economy. As President Bush noted in his first press conference following the election:
. . .70 percent of the new jobs in America are created by small businesses. I understand that. And I have promoted during the course of the last four years one of the most aggressive, pro-entrepreneur, small business policies . . . And so in a new term, we will make sure the tax relief continues to be robust for our small businesses. We'll push legal reform and regulatory reform because I understand the engine of growth is through the small business sector.
Expect to see action in the following areas:
Tax Cuts: The Bush economic team has clearly indicated that further tax cuts will remain a top priority, and the President has vowed to pursue fundamental tax reforms. Over the short term, expect an initial focus on making permanent the various temporary tax cuts that were enacted in 2001 and 2003. Among the measures to be considered are to permanently eliminate the estate tax, keep the top tax rate for dividends at 15%, and maintaining the top personal income tax rate at 35%.
Tort Reform: President Bush has long been an advocate of tort reform. Indeed, reform of Texas’ legal system was one of his proudest accomplishments as Governor. He has indicated that legal reform will be a top priority in his 2nd term, so expect to see efforts such as a move to place limits on non-economic damages in medical malpractice suits. We should also expect federal regulatory agencies, such as the Federal Communications Commission (FCC), to continue with a light hand in terms of regulating key industries.
Health Care: President Bush has centered his plans for health reform on two separate efforts: health savings accounts (HSAs) and association health plans (AHPs). Both HSAs and AHPs are designed to allow consumers to assume more control over health care costs and their health care decisions. While HSAs are now available, the President would like to introduce further tax incentives so that more employers use this tool to engage consumers. AHPs would offer small businesses the opportunity to pool their resources and purchase health insurance at competitive rates.
Other Initiatives: Because of tight budget conditions, domestic agencies may be unable to pursue major new initiatives without major new investments. While new investments dollars do not appear to be forthcoming, expect to see a number of mini-initiatives, particularly pilot projects or other interesting policy experiments that have low costs, but the potential for high impact.
* Note: This figure includes Bernie Sanders (I-VT) in the Democratic count. One race is still undecided.
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Congress
While President Bush will continue to push an ambitious economic agenda, he must still ensure that these plans meet the approval of Congress. With a slightly larger Republican majority in the House and Senate, the 109th Congress will certainly be open to his ideas, but approval may depend on the President’s ability to reach across the aisle. Democrats in the Senate still maintain the ability to block legislation via filibuster or other means. The 55-45 margin in the Senate also includes several moderate Republicans who oppose some Bush Administration initiatives. But while the President may have to work diligently to move his legislative program through the Senate, he should face fewer such challenges in the House of Representatives where opponents face higher hurdles in blocking such plans.
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Conference
to explore entrepreneurship, economic development - partners call for
submissions
On March 7, 2005, a one-day conference will be held to explore the “best practices” of state leaders in formulating initiatives that spur entrepreneurship and economic growth.
Selected leaders, whose practices are demonstrating market-based results,
will present their successes to their peers and will be eligible for “best practices” awards. A summary document will be prepared and made available to small business owners, Congress, academics, policymakers, and other stakeholders to highlight successful state economic development initiatives.
The
Small Business Administration's Office of Advocacy, the Kauffman
Foundation of Kansas City, the Council of State Governments and the
National Lieutenant Governors Association are interested in submissions
from state government policymakers and economic development leaders for
initiatives that have yielded more small business growth, created new
jobs, and improved the state's overall economy. The deadline for
submission is December 17, 2004.
Download
the call for papers
Download
the submission form
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All
stories © 2004 The Public Forum Institute
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