Near the top of the list of big national problems
routinely cited by business executives are the U.S. budget deficit and the
higher taxes they worry would be needed to cover the gap.
For that reason, Mitt Romney's tapping of Rep. Paul Ryan (R., Wis.)
to be his running mate has sparked enthusiasm among many business owners and
executives who were already leaning toward the Republican ticket.
Although Mr. Ryan is the No. 2, he is drawing outsize attention
because he comes to the race with a raft of budget proposals to his name, many
of which appear on the wish lists of America's business lobbies. The proposals
include a revamp of the corporate tax code, lower income-tax rates for high
earners and spending cuts that are more aggressive than those offered by
President Barack Obama, whose deficit-reduction plans rely more on upper-income
tax increases. Neither man would balance the budget anytime soon.
Mr. Ryan is "the kind of guy I would hire," said Brett
McMahon, president of Miller & Long DC Inc., a construction firm based in
Washington, D.C., who said putting off action on the deficit would make the
problem worse. Mr. Ryan "has at least put it to paper, and I think he is
committed to doing something constructive about it."
Mr. McMahon, a Republican, didn't support Mr. Obama in 2008, but
said he was optimistic about some of his plans. Now, he said he feels like an
enemy of the administration. "We really feel like we're the bad
guys," he said.
Gary Shapiro, president and chief executive of the Consumer
Electronics Association and a Romney supporter, said the chiefs of firms he
represents have told him last week they were enthusiastic about the
running-mate pick. "Business people believe that the biggest challenge
they face in the next five to 10 years is the health of the U.S. economy,
because we're not dealing with our deficit," he said.
Even before the Ryan pick, a shift in business sentiment toward the
GOP was in evidence. Republicans have received 56% of the donations made by
business PACs and employees, according to the nonpartisan Center for Responsive
Politics. That's a turnaround from the 2008 election, when corporate PACs and
employees gave 55% of their donations to Democratic candidates. The two parties
were tied in 2010. Business executives haven't been polled on the race since
Mr. Ryan's pick.
To be sure, Mr. Obama continues to have strong backing in a number
of industries, including Hollywood, Silicon Valley, clean energy and among
lawyers.
Toby Chaudhuri, co-founder of SocialxDesign, a Silicon Valley
strategy consulting firm with 10 employees, said Mr. Obama remains his clear
pick. The president's plan "would reduce the deficit in a balanced way,
while still investing" in education, workforce training and
infrastructure, the Democrat said. Mr. Obama's approach on business taxes is
also superior, said Mr. Chaudhuri. "The Romney-Ryan plan would make small
businesses like ours pay more in taxes, so the winners would be only the people
already at the top," he said.
Marc Benioff, chief executive of software firm Salesforce.com, is
co-chairman of Mr. Obama's re-election committee, but gives Mr. Ryan glowing
reviews. "I recently made a financial contribution to Paul Ryan and
believe he's one of the rising stars of our country," he said.
Mr. Benioff, who said he recently had dinner with Mr. Ryan, lists
his top concerns as balancing the budget and tackling the deficit—issues he
believes will be addressed "regardless of who wins" the presidency.
He said Mr. Ryan's plan to cut total government spending to 20% of the GDP
could put the U.S. into a recession now, but "as a long-term goal, that's
probably realistic."
One hesitation about Messrs. Romney and Ryan among some businesses
stems from the blanks that remain to be filled in their proposals. As much as
companies want low taxes, they also like the benefits Congress can
bestow—especially some spending programs and targeted tax breaks, many of which
are under threat from conservatives in the GOP-controlled House. Industries
such as construction and defense, in particular, are heavily dependent on
federal contracts.
Mr. Ryan's budget for fiscal 2013 promises to spend $5 trillion less
over 10 years than the budget put forth by Mr. Obama. The Ryan budget provides
spending caps, but doesn't map out precisely where the cuts would come from.
Under the normal congressional budget process, committees are charged with
developing specific spending bills later in the year.
"We do have some concerns about his seeming willingness to cut
federal spending for infrastructure, especially highway and transit
investments," said Brian Turmail, spokesman for the Associated General
Contractors of America. Nonetheless, he said, "we're encouraged by the
fact that he's the grandson of a construction-company manager."
Others noted that while Mr. Ryan's budget would cut transportation
spending, his recent votes show support for the industry. Earlier this summer,
he voted for the $120 billion transportation package passed by Congress to renew
funding for highways through October 2014, freeze the interest rate on
government-backed student loans and extend federal flood insurance.
The tax proposals in Mr. Ryan's 2013 budget would lower the top
corporate tax rate to 25% from 35%. It also would shift the U.S. to a
territorial tax system, in which companies would pay U.S. taxes on only their
domestic profits. Currently, companies generally pay taxes on their worldwide
income, which in practice means they often avoid paying U.S. taxes by leaving the
money overseas. Both measures would bring the U.S. into line with much of the
developed world.
Dorothy Coleman, vice president of tax and domestic economic policy
for the National Association of Manufacturers,, a strong backer of the GOP,
said the group considers the current, sprawling tax code to be a drag on
manufacturers and approves of Mr. Ryan's basic principles for overhauling it.
One wrinkle: Mr. Ryan hasn't spelled out yet how he would make up
the lost revenue, other than by eliminating tax breaks deemed
"distortions, loopholes and preferences." It is through those tax
breaks that industries tend to win special favors, and these benefits are
fiercely protected.
For many businesses, the persistently weak economy is as much a
concern as it is for regular voters. Bob Dobski, president of R.J. Just Inc.,
the owner and operator of 10 McDonald's restaurants in central Illinois, said
he would expect a Romney-Ryan ticket to result in increased spending at his
restaurants by giving a boost to the overall economy.
"It definitely would increase the whole positive attitude of
our consumer [with] everybody having a little more money and incentive to grow
and expand their businesses," he said.
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