Barack Obama



The Obama effect


by Bruce Ackland


While the international community celebrates Barack Obama’s US election victory, the dealer community remains cautious for the future
In US election terms it was a landslide. Barack Obama’s victory over John McCain was rarely in doubt on election night even though a couple of the major US TV networks were slow declaring the election over as a contest. This was no doubt still due to the finger-burning of the infamous 2000 election.


However, this time round there was no legal action, no recounts, no Supreme Court rulings and no controversy. Funny to think that in the immediate aftermath of September’s Republican national convention, McCain had actually drawn up level with Obama in most polls and even ahead in one or two,
but the economic behemoth standing over this election was simply too big to slay even with a bona fide war hero leading the ranks. Worldwide reaction to Obama’s victory was extraordinary – something more akin to a royal coronation or a second coming than the selection of a new President.


Pin-up President


No question that the new pin-up President certainly looks the part for change in more ways than one but can he possibly live up to the hype and what will it ultimately mean, if anything, for small businessmen and women and most pertinently, OP dealers.


In terms of words, the two candidates certainly tried wooing small business but many remain cynical about what will actually materialise.


Mike Gentile, CEO of dealer group, was not too impressed with the election promises or lack of them. He says: "McCain and Obama were big on style and low on substance. Time will tell regarding investment tax credits, estate taxes, income brackets, etc. Small business needs to have incentives to grow and access to responsible capital. I have not seen or heard a decisive plan from the President Elect."


Jim Preston, CEO of dealer group consortium BPGI, is also wary of popping champagne corks just yet.
He says: "Most of the economic focus during the campaign was focused on the credit crunch, Wall Street bailouts, the auto industry and tax cuts for the middle class. Most small business people I spoke to felt they were part of the ‘left over’ campaign rhetoric rather than a true target for economic regeneration."
Dave Guernsey, CEO of large dealer Guernsey Office Products, adds: "In terms of whether small business will be better off under Obama I would say not as regards capital formation and tax impacts. But, the Democrats are generally more sensitive with small business.


"The very small, the minorities and the start ups will get special consideration. Nobody – except Clinton or Reagan – made a better case for supporting small business owners than Obama."


Guernsey is also concerned about the role that unions could play under a Obama administration and the subsequent effect that could have on small business in particular around the HR 800 Employee Free Choice Act. This establishes an efficient system to enable employees to form, join, or assist labour organisations, to provide for mandatory injunctions for unfair labour practices during organising efforts, and for other purposes.


He explains: "The HR800 issue and the union agenda in general is a huge problem for small business. Obama owes the unions and we’ll be on the short end of the stick."
Preston also sees pro-union legislation as a key issue for dealers along with healthcare reform and the burden placed on employers, tax reform and succession duties and access to government supplies contracts.


Promises, promises


Obama’s election promise to keep taxes at current levels for Americans with income of $250,000 or less is also a key concern.
Preston explains: "The growing section of the independent dealer community is the mid- to large-sized dealer who will be negatively impacted. They are growing organically and purchasing small to mid-sized dealers. They need capital and incentives to grow. Tax increases will not be viewed as a positive."
Guernsey adds: "Most good OP dealers will be on the short end of this stick as well."


It’s worth noting that six weeks before the US election, a national poll conducted by SurePayroll and featuring the responses of 1,000-plus small business owners showed that McCain had the backing of 64% of those owners with Obama way back on 34%.


The full extent of the global economic meltdown was not known quite yet at that time and it was in the halcyon days of McCain being placed neck-and-neck with Obama in polling among the general electorate. Nevertheless it still demonstrates that the general world hysteria over the Obama election does not penetrate all four corners of the small business world.


Of course, the whole issue circling all business is the devastating economic crisis gripping the US as well as the rest of the globe. Will the change of administration improve the chances of seeing through the crisis sooner rather than later?


"The President of the United States is Commander in Chief not the Economist in Chief," says Gentile.
"The issues that face us did not come upon us overnight. Issues such as Wall Street greed and speculation and the prolonged supply and dependence on cheap money. Therefore, I believe the free market needs to be the vehicle to bring us back to reality in the markets."


Preston says: "The new administration brings optimism that had been lost under the current one. The economic policies will not vary greatly in the short term – maybe an automotive bail out and some tax relief for the middle class – but those initiatives will not turn the economy around in the short term."


Guernsey adds: "The upside will be a more patient electorate as the Obama team gets some time to get their hands around this mess. They will also have the benefit of a Congress that wants to work with them. Lastly, they’ll know more than the Bush folks did – as more time goes by more is known about the depth and breadth of the problem and what is or is not working."


So while a general feeling of improved optimism sweeps through the US, there is nevertheless a feeling among the small business and dealer community that the impact of the Obama administration on them could be a mixed bag at best.


Indeed, Guernsey says that most of the dealers he has talked to have seen the Obama administration as a potential "train wreck coming" and that support for McCain had been strong within the dealer community.
So has a ‘better the devil you know’ mindset perpetuated within the dealer community, are they actually going to miss the Bush administration?


"The outgoing Bush administration will be viewed as neutral to slightly friendly for small business," says Preston. "However, we tend to be left with ‘our final thoughts’ which will be 9/11, Katrina, War in Iraq, 2008 bad economy, bailout of billionaires on Wall Street – rather than the general economic prosperity that occurred between 2002 and 2007."


Guernsey adds: "Bush gets the blame for almost everything these days. But, some may feel as I do that congressional oversight and the job done by the regulators left much to be desired. In fact, it could be said that Congress acted as enablers for this entire mess. Nevertheless, Bush and the Republicans failed to aggressively push for the corrections they rather timidly pointed to before."