Business owners have reason to cheer the blue wave in Congress. Why? It's sure to mean legislative gridlock, which spells predictability for companies.
As expected, in Tuesday's midterm elections, Democratic lawmakers retook the majority in the U.S. House of Representatives. However, the Senate was left virtually untouched. That division is sure to leave Donald Trump's legislative agenda more subdued.
Not only was Trump poised to propose a second round of tax cuts, he was largely expected to try once again to unravel the Affordable Care Act, the landmark health law passed by Barack Obama in 2012. That law, among other things, established health-insurance exchanges and barred insurance companies from withholding coverage from those with preexisting conditions.
While these proposals may still get a hearing in Congress, the likelihood of them passing is negligible. Indeed, without control of both the House and Senate, "there will be total gridlock and no legislation on anything," says Robert Litan, an economist and non-resident senior fellow at the Washington, D.C.-based Brookings Institute.
Even so, the next two years under Trump will be eventful. Here are five major things to expect in the second half of Donald Trump's presidency:
1. The USMCA, a.k.a. the New NAFTA, could become law.
The president is expected to sign the United States-Mexico-Canada Agreement, or USMCA--the free trade agreement poised to replace the 24-year-old North America Free Trade Agreement--before December 1. That is Mexican President Enrique Peña Nieto's last day in office.
While the current Congress is still in session until January, the USMCA isn't due to appear before lawmakers until the next legislative session begins. With Canada's last-minute adoption of the pact, the effort may well receive bipartisan support, making ratification all the more likely. That's good for entrepreneurs, who in general favor free trade agreements. "They don't like that their costs are going up," says Litan, referring to tariffs.
2. The regulatory rollback is likely to continue.
Nixing regulations will remain a key priority in the Trump administration. Nearly 150 environmental, agricultural, health, labor, and financial rules--from rolling back net neutrality to nullifying the arbitration rule, which prevented some financial companies from adding mandatory arbitration clauses to consumer agreements--have been rescinded since October 2017, according to the Brookings Institute's deregulatory tracker. And considering that the president doesn't need congressional approval to unravel additional rules from federal agencies, the trend will likely continue.
Expect change with respect to the types of cases that House committees choose to investigate, says Heidi erosion of unions under the Trump presidency.Shierholz, a senior economist and director of policy at the Economic Policy Institute, a Washington, D.C.-based nonpartisan think tank. "There have been a huge number of hearings against collective bargaining," she says, highlighting the
Business owners will of course applaud as Trump continues to cut red tape. Among other likely moves is the proposed repeal of the joint-employer standard. That was an Obama-era rule that suggested franchises and franchisees would be similarly liable for managing employees--and could get sued as a result of infractions. That provision is currently in a comment period for the next 30 or so days.
3. The federal minimum wage could creep up.
Some movement is likely on the federal minimum wage, Shierholz says. It currently stands at $7.25 per hour. It has been nine years since the last increase, in line with the longer stretches before a change has been made. A version of the Raise the Wage Act might be introduced in the House in the upcoming term, Shierholz predicts. That bill, first introduced by Senators Bernie Sanders (I., Vt.) and Patty Murray (D., Wash.) in 2017, would raise the minimum wage to $15 by 2024. Whether Trump would favor a wage hike is hard to tell. In public statements, he has said both that he favors a higher minimum and that Americans earn too much.
Business owners who employ low-wage workers are bound to take an interest in changes like these. While raising wages to $11 or $12 an hour is not expected to have an impact on unemployment, evidence suggests that going beyond those figures might, says Litan. "It's an incentive to adopt labor-saving technology," he adds. And even though you might already see fast-food eateries using iPads for ordering or robotic line chefs, if wages go beyond the $11 to $12 point, labor-saving tech adoption is expected to be far more dramatic.
4. The judiciary may play a larger role in business.
With two U.S. Supreme Court picks under his belt, Trump has effectively shifted the priorities of the High Court to the right. That's bound to be good for businesses, says Ari Ginsberg, a professor of entrepreneurship and management at New York University's Stern School of Business, who follows the judiciary's impact on startups. "Conservative justices have been good for business, and if there's another conservative justice, that will only increase the likelihood of pro-business decisions next term," he told Inc. in June, after Justice Anthony Kennedy announced his retirement and before Justice Brett Kavanaugh was confirmed.
In particular, if the Supreme Court takes up cases related to patents and privacy, you can expect a pro-business bent. You're also likely to see more labor-related cases that favor employers, suggests Shierholz. She highlighted, as an example, Epic Systems Corp. v. Lewis, in which the U.S. Supreme Court in May held that individual arbitration agreements are enforceable.
5. Smaller immigration measures could get a hearing.
While Trump's anti-immigration stance is abundantly clear, he could use the issue in negotiating with Congressional Democrats, says Dean Baker, a senior economist at the nonpartisan Center for Economic and Policy Research in Washington, D.C. For example, it's unclear if Trump would support new legislation regarding DACA, or the Deferred Action for Childhood Arrivals program, which was terminated in September. DACA defers the deportation of "Dreamers," those who moved to the U.S. as children. The hundreds of thousands of people who know no home other than the U.S. have been in limbo. "The only way you'll see [movement on] that is with some sort of tradeoff," Baker says, for instance, Democrats may be inclined to agree to increase border security or consent to tax cuts.