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3 Ways a GOP Victory in November Won't Matter

Republicans might barely win the Senate in 2014. But gridlock will continue, even as immigration and tax reform remain doable.
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It's still very early, but that's not stopping many pundits from making their 2014 midterm election predictions. All 435 House seats are up for grabs and 35 seats in the Senate are in play. Most experts agree that the Republicans will maintain a majority in the House.

The big battle is in the Senate race. It's tight. In fact, one report this week put the chances at "80 percent" that the Republicans would win back the Senate from the Democrats this year.

So what does this mean for you? If the Republicans do win the Senate and control both houses of Congress, would this have a big effect on your business?

In short, no.

The federal government won't be able to do much for the next two years. (Though, the two exceptions could be immigration and tax reform. I have more on that below.)

Here are three reasons why gridlock will continue:

1. Republicans still won't have much power.

Any Republican victory would be a slim one. Even some of the most optimistic projections from the right put the Republicans only a few votes ahead of a majority in both houses. That would let them control the agenda and appoint committee chairs. Sure, to pass a bill you need a 51 percent majority in both the House and the Senate. (Though it's more like 60 percent in the Senate with the filibuster.) Yet to override a Presidential veto, you need a two-thirds majority in both.

No one predicts that the Republicans will have anywhere near that kind of majority, nor does it seem very likely that they would be able to persuade members of the opposing party to join them in overriding a presidential veto during these partisan times. Filibustering aside (and I admit that the ability to filibuster is a powerful tactic), the Republicans would have more but not much more political power, because there's a Democratic President sitting in the White House. That's particularly true for this President and this Congress, who famously don't get along.

2. Obamacare could be saddled.

The controlling party would be a pain in the neck for Mr. Obama.

Take the Affordable Care Act. Barring any major event, such as the website continuing to crash or Nancy Pelosi losing her health insurance, the law will not be repealed. As noted above, the Republicans do not have the two-thirds majority needed to override a presidential veto and the President is not going to sign a repeal of this law. Repeat: He is not. It's got his name on it, for God's sake! However, the Republicans could take away funding for certain key aspects of the law. They could introduce bill after bill that pecks away at some of the act's main provisions. And, if public opinion significantly turns, or the business community shouts loud enough about the upcoming mandate requirement, it's very possible that amendments and adjustments will happen to it.

As a business owner, that means you have to pay extra-close attention to these developments, because it affects the kind of insurance you're providing your people, your options, and what you're paying.

3. And the President's power will be limited, too.

Health care aside, the President's main initiatives will mostly grind to a halt. With a Republican-controlled Congress, his hopes of getting more funding for education, infrastructure, energy, and other pet programs will be reduced to very little. If you're in those industries, you're out of luck. Unless the President moves more to the center, like President Clinton did when he was faced with the same political environment, you'll not see much action. Instead, you'll probably see him plead and complain and ultimately get on a plane and get cheered by the few countries left in the world who actually like us, which is what lame-duck Presidents like to do.

Of course, I could be wrong...

OK, the government might actually do something. As the great 19th-century German statesman Otto von Bismarck said: "Politics is the art of the possible."

Believe it or not, a Republican-controlled Congress will have some common ground with the President. It's in everyone's best interest to show the voting public that they at least can get something done. And that something will probably be two things: immigration and tax reform.

Despite their differences, both parties have agreement on most of the main points of immigration reform and recognize the need to do something. In fact, the latest version of the bill was drafted by a Senate bipartisan committee. (The committee is notoriously called the Gang of 8, but don't get scared, because they're mostly just politicians in suits and not really gang members.) Some kind of immigration reform might actually get to Obama's desk. So if your business is a startup with immigrant founders, does work with green-card holders who are seeking education here, or hires noncitizens, this may impact you. Keep an eye out for opportunities and perils.

There has already been surprisingly a lot going on with tax reform. Did you know that the House Ways and Means Committee in the 112th Session met 20 times on tax reform alone and has established 11 separate Ways and Means tax-reform working groups? And you thought members of Congress were just slacking. Leaders from both sides of the table are agreeing on some of tax reform, and right now they're targeting the big corporations that use loopholes to avoid taxation or funnel money overseas where taxes are lower. Many business owners I know correlate "tax reform" to "tax increases." The fact is: They're right.

Whatever happens, smart business owners should pay close attention. Man, where's Ross Perot when you really need him?

IMAGE: Getty Images
Last updated: Apr 3, 2014

GENE MARKS | Columnist | Owner, Marks Group

Gene Marks is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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