November 8, 2006
Democrats Win: What’s Next for Retail?
Commentary by George Anderson
The Democrats are back in the House and this time they will be controlling it. And, with some voting (and recounting) still to do, it may just be the Dems take back majority control of the Senate, as well.
Yesterday’s election is being seen by many as a strong rebuke of President Bush and the Republicans on a number of issues, including the war in Iraq and the perception that power has corrupted the GOP.
Now that the dust has mostly settled, it is time to have a look at just what a Democratic majority in Congress will mean for the broad retailing and food industries. Contrary to the polarizing rhetoric of the partisan politics, it may turn out that Democrats, while not in lockstep with retail leaders, are not as far out there on key issues affecting the industry as suggested by some.
Here are a number of key issues Democrats have promised to focus on in the new Congress.
- The minimum wage — The Democrats have come out solidly behind a raise in the national minimum wage. While many, especially foodservice and small independent retailers, are
solidly against any change, others such as Wal-Mart have come out in favor. The traditional argument that an increase in the minimum wage will lead to job losses is less effective
in the current environment. The reality is many companies are finding they must raise starting wages to attract employees in a market where there are often more jobs than candidates. - Healthcare — A number of retail industry leaders support a national healthcare policy. Steve Burd, chairman, CEO and president of Safeway, once told the San Francisco Chronicle, “You’re looking at the only food retailing chief executive officer that has ever gone to Congress and lobbied for some kind of national health care. We have de facto universal coverage in this country. It doesn’t really cost $1,500 a day to stay in a hospital. It’s just that the uninsured get cared for, and we all pay for it.”
- Environmental policy — Here the Democrats seem to be more in step with the American public than Mr. Bush and his party. The Democrats have been strong advocates of supporting (re: tax credits and funding for research) alternative energy sources and taking steps to reduce the effects of greenhouse gases and global warming.
- Immigration — Here is one area where the Democrats appear as though they may be friendlier to the President’s policy than even his own party. With the aforementioned job crunch, especially in low-end positions, businesses such as food service have advocated guest worker programs and other solutions rather than the wholesale deportation of illegal immigrants.
The party has also said it will address the so-called “doughnut hole” in the Medicare system that has put many (the Democrats say upwards of seven million) in the position of having to pay the entire cost of their drug coverage when they can not afford to.
It has also pledged to fix Medicare Part D. While the program received industry support, albeit tepid in a number of instances, initially, many knew that changes would be needed.
As a point of contrast, James Inhofe, the Republican chair of the Senate Committee of the Environment and Public Works, has called the threat of global warming “the greatest hoax ever perpetrated on the American people.”
It would be foolish to suggest that the Democrats will be the party of the retailers just as it would have been equally foolish to suggest the Republican Party always promoted policies that were to the benefit of the industry.
There will be a number of sources of conflict between the retailing and related industries with Democrats. For one, the new Congressional majority is not likely to repeal the estate or so-called death tax. The Democrats are also likely to seek adjustments in tax policy that senior executives, if not their companies, will find fault with. As to what happens, time, as they say, will tell.
Discussion Question: What would a Democratic majority in Congress mean for the retailing, foodservice and related industries?
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The major obvious impacts will be felt in a proposed rise in the minimum wage and some national healthcare proposal. What will really be interesting though longer term is whether or not the Democrats will attempt to address the issue of the debt which is spiraling out of control. The irony, for someone my age, is that it now seems to fall to the Democrats to balance the budget after a period of Republican don’t tax but spend big largess. Re-establishing fiscal order while still bogged down in Iraq is likely to have huge tax implications down the road.
I seem to remember a booming point in our not too distant economic past, where jobs were plentiful and the market was strong, PLUS – there was not only no debt, but in fact a huge surplus. Democratic leadership has done this job of clean up in the past; it will just have to roll up its sleeves one more time and get the job done again. Lest we forget fiscal responsibility is a good thing. But this time we’ll all need to cough up a bit to “stop the bleeding,” not only in Iraq, but here at home. Sure, the living wage will hurt; so will filling the fiscal bomb crater dug by the current administration. This is the real worry. But, in 2008, if the public still feels as empowered as they do today, the Dems may even finish the job. Meanwhile, we would be wise to take the time to plan now for what is sure to be another fiscal responsibility time. I hear the piper – time to pay.
As a professional cynic, I must concur with my colleagues who predict that major domestic policy change will be about as glacial under a Democrat-controlled Congress as it was under the prior Republican-controlled session.
Issues like health care, minimum wage, and immigration policy are forever subject to political infighting and bickering funded by special interests. Not mentioned above, but also in dire need of reform is education policy. I say we need four outcomes:
1) A national risk pool for health care (not a national insurance plan) that ensures no one may be turned down for private coverage.
2) A combined minimum/living wage law that keeps working people above the poverty line.
3) A humane but firm immigration policy that rejects veiled prejudice and fear politics in favor of clarity, consistent enforcement, and a safe legal path for immigrants to enter the country for legitimate purposes, including to find legal work.
4) Reexamination of the present failing federal education policy to restore professionalism in the classroom and reject the systematic debasement of teachers, which threatens our entire public education system.
There’s more (energy policy, environment, Iraq, terror), but I’m out of room. Do I believe a Democratic controlled House will make all these changes prior to the next election? Let’s just say I’m not holding my breath….
The sentiments expressed reflect what is probably an accurate assessment of “not much.”
The most delicate issue of great importance to retail will of course be the economy. The knock on the current economy is that it is “all happening at the top” — a curious concern in so much as the money that flows “to the top” has to come from somewhere, presumably further down the economic chain. That seems to be the case as spending, home ownership and 401K investment all continue to grow. But most of economic activity is driven by consumption, and much of that money flow involves retailers.
But in today’s world the delta in our economy is largely driven by sentiment, particularly the marginal spending that makes the difference in “good” or “bad” economies. And sentiment is driven by news, and the news is driven by politics. So, the biggest question for retailers will be this — is the news the new Congressional leaders make going to add fuel to the middle of the economy — or put out the fire “at the top”?
The Republicans had the right idea back in the 90’s but got comfortable with their power and were clocked for it. But nothing positive will come from a deadlocked political system. In the short span they have until the presidential election in two years, so I doubt much will change except for possibly a minimum wage increase. THIS is the only issue of real concern with retailers and they should prepare for it accordingly. Balancing the budget, taxes and the war will stay status quo, although several tax breaks will be abandoned so essentially we will get negative affects of some taxes. By the way, it’s naive to believe the old tax and spend Democrats would be any better with the budget than the new fat budget spending Republicans.
The Democrats didn’t have any plans and won’t have any now, so now it’s a battle between the two parties to make the other look bad – all at our expense.
Obviously the biggest potential programs that might impact retail would be a higher minimum wage and some sort of healthcare reform. That, of course, makes the assumption that a) the Democrats can pass the legislation and b) that a Republican President will sign it. My guess is that little will get done. The President will either threaten or exercise his veto and the Democrats probably don’t have the votes to over-ride the veto.
You have to be encouraged that while the Dems have re-gained control of the House, many of newly elected are more middle of the road. That has to be good. We need some serious discussions/actions on healthcare and Medicare.
We just can’t have their same proposal shot down,”Give-away to the rich” and “Throws the old out on the street.” Let’s at least get something on the table and have a reasonable discussion/debate about. We elect these people to make proposals and ultimately hard decisions. Now Stand and Deliver.
While the Democrats have control of the House and may have control of the Senate and while the Democrats have made a number of promises of change, they will only be able to change the direction of current policy if they have enough support to override vetos and that will require bipartisan support. A rise in minimum wages and health care changes are the two issues that will most directly affect business. While the Democrats may not get exactly what they promised, there will be some change in these areas so the need to cut costs will continue to be high on everyone’s priorities.
Yes, certainly the sky will fall (or, at least, many people will think it will) – umbrella retailers should see an increase in sales.
On the retailing side, one can expect extreme points of view to begin to slowly emanate from the new leadership in regards to taxes, healthcare, the environment, immigration, and national security.
Retailers can expect extreme legislation regarding the major issues. Why? Keep in mind that the House is what drives the direction, funding and initiation of legislation. The expected leadership in the ‘new’ house are nothing close to what could be described as moderates or even common sense liberals. Each represent extreme positions and extreme behavior uncharacteristic of the ‘civility’ that they now claim to have the ability to restore to Washington.
Minimum wage proposals will launch the agenda. They neither require attention or produce any real positive results. The market has taken care of them. The action proposed will not be anything like bringing the current rate into market reality – it will be far more extreme than that.
Environmental issues will be approached in the same way. There will be little regard to the impact to business or retailing. Democrats offer no real healthcare proposals yet politicize it to the extreme to where little or no action is possible.
Taxes will certainly increase. With respect to retailing, this could be the most harmful impact that can be foreseen. The ‘death tax’, small business taxes, and taxes to higher incomes will not only hurt business, it will stifle job growth in the sectors where it is growing successfully in small business.
In the end, what can we expect? As, mentioned by many, we can expect very little. Why? That’s because we have been offered very little.
Aside from the candidates, there were other issues and proposals potentially having impact to retailing that were voted on in many states. In the coming days, I am hopeful that we’ll dig a bit deeper below the surface and discuss what impact these can have on retailing as well.
Politics is politics. Once the new members of Congress are sworn in, they will start campaigning to get re-elected. This is likely to result in the same kind of inaction we’ve seen from a Republican controlled Congress for the past several years.
Given that, I do expect an increase in the federal minimum wage. However, this is only masking a greater problem which is the need for a living wage and the squeeze on the middle class which is becoming an endangered species in this country. Along those lines, we have yet to hear any meaningful discussion of healthcare reform or a social security bailout.
Neither the Democrats, nor the Republicans, have a workable plan to stem the tide of illegal immigration and the financial burden this is creating on the nation’s infrastructure; border security is a joke and every day more American jobs are being shipped overseas.
These are all issues that will continue to have a significant impact on every business. Let’s see someone do something.
The Democrats have been in power before. They had good intentions then as well, but obviously their policies failed and that’s why they lost control. All of their promises sound good but in reality there probably won’t be much change. In a few years I will be able to say the same thing about the Republicans.
Perhaps the “conventional wisdom” that the stock market loves a deadlocked government, because it makes the fewest changes, may be as good a benefit as having either party initiating widespread change. An educated, equal “opportunity” and prosperous citizenry; not burdened with long term debt, would benefit all retailers, we just haven’t seen a clear executable plan for that yet.
Nobody has a crystal ball about what the next two years will bring. If both sides put on a good show in the coming days about “reaching across the aisle,” time will tell whether it’s sincere or (more likely) posturing. To win the big prize in 2008 both Democrats and Republicans have something to gain from gridlock and being able to paint the other side as “do-nothing.”
That being said, we’re likely to see a push toward a higher minimum raise — although without any assurance that it’s veto-proof — as the biggest short-term economic impact on the retail and related service industries. Whether or not this happens in the next two years, it will probably happen sooner or later and thus should be part of a smart retailer’s business planning.
Having one side “in charge” for the past several years hasn’t effectively addressed long-term issues like Social Security and rising health care costs…do the next two years of “gridlock” really feel any different?
If the unions get what they want from the new Congress, there will be more restrictions on imports, resulting in product shortages and higher prices. This will push the inflation rate up, then a higher discount rate will be put in to control inflation, then a recession will occur. In the mean time housing prices will continue to deflate and defaults will rise.
Can you say stagflation? Do you remember the Carter years?
The American people voted for change yesterday but will they get it? No. This is because, despite great sound-bytes about “reaching across the aisle” and bi-partisanship, congress is largely held captive by special interests, lobbyists and the ever-present need to raise funds to get re-elected. The ear-mark system is a perfect example of both parties at the feeding trough (at taxpayer expense). In fact, the 2008 Presidential race kicks off today, so we can expect to see this driving a lot of the agendas in Washington.
My prediction is for no dramatic changes for the retail/business community, which is fine since the economy is doing pretty well. There will be a little Democratic window-dressing on the minimum wage. But I will be surprised to see any progress on the big issues – health care, prescription drugs, social security, immigration, education, the budget deficit and th environment. We deserve much better from our elected representatives.
The Retail Industry Leaders Association (RILA) released the following statement attributed to Sandy Kennedy, the president of the group.
“RILA congratulates the newly elected Members of Congress and welcomes them to Washington. We look forward to working closely with them on the key issues facing our customers and the retail industry as a whole.
“RILA continues to work tirelessly across party lines to promote economic freedom, consumer choice and overall industry excellence.
“Many of the millions of Americans who voted in this election cycle are employed by the retail industry and shop in our stores everyday. We continue to keep them and their interests top-of-mind as we work with legislators here in D.C., and in states and localities across the nation.”
Number one issue that elected Democrats: Iraq. The President got a wake-up call. Let’s see if he can engineer a withdrawal. No way the Democrats would resist that. Rumsfeld’s been sacrificed. It’s in the President’s best political interest to get out of Iraq ASAP. The Iraq war hurts America every day. American retailers do best when America does well.
The retail industry has always been close to the people. They buy its products, they work there. The issue of this election is corruption by wealthy special interests. People are fed up with it. Iraq and artificially high oil prices are just symptoms. Having a clean government run by the people, driven by ideals, not fear is good for business. Everyone’s. The same goes for PR. Web 2.0 is here and the old bully pulpit media game is coming to an end. Folks are out. It’s people speaking now.
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The major obvious impacts will be felt in a proposed rise in the minimum wage and some national healthcare proposal. What will really be interesting though longer term is whether or not the Democrats will attempt to address the issue of the debt which is spiraling out of control. The irony, for someone my age, is that it now seems to fall to the Democrats to balance the budget after a period of Republican don’t tax but spend big largess. Re-establishing fiscal order while still bogged down in Iraq is likely to have huge tax implications down the road.
I seem to remember a booming point in our not too distant economic past, where jobs were plentiful and the market was strong, PLUS – there was not only no debt, but in fact a huge surplus. Democratic leadership has done this job of clean up in the past; it will just have to roll up its sleeves one more time and get the job done again. Lest we forget fiscal responsibility is a good thing. But this time we’ll all need to cough up a bit to “stop the bleeding,” not only in Iraq, but here at home. Sure, the living wage will hurt; so will filling the fiscal bomb crater dug by the current administration. This is the real worry. But, in 2008, if the public still feels as empowered as they do today, the Dems may even finish the job. Meanwhile, we would be wise to take the time to plan now for what is sure to be another fiscal responsibility time. I hear the piper – time to pay.
As a professional cynic, I must concur with my colleagues who predict that major domestic policy change will be about as glacial under a Democrat-controlled Congress as it was under the prior Republican-controlled session.
Issues like health care, minimum wage, and immigration policy are forever subject to political infighting and bickering funded by special interests. Not mentioned above, but also in dire need of reform is education policy. I say we need four outcomes:
1) A national risk pool for health care (not a national insurance plan) that ensures no one may be turned down for private coverage.
2) A combined minimum/living wage law that keeps working people above the poverty line.
3) A humane but firm immigration policy that rejects veiled prejudice and fear politics in favor of clarity, consistent enforcement, and a safe legal path for immigrants to enter the country for legitimate purposes, including to find legal work.
4) Reexamination of the present failing federal education policy to restore professionalism in the classroom and reject the systematic debasement of teachers, which threatens our entire public education system.
There’s more (energy policy, environment, Iraq, terror), but I’m out of room. Do I believe a Democratic controlled House will make all these changes prior to the next election? Let’s just say I’m not holding my breath….
The sentiments expressed reflect what is probably an accurate assessment of “not much.”
The most delicate issue of great importance to retail will of course be the economy. The knock on the current economy is that it is “all happening at the top” — a curious concern in so much as the money that flows “to the top” has to come from somewhere, presumably further down the economic chain. That seems to be the case as spending, home ownership and 401K investment all continue to grow. But most of economic activity is driven by consumption, and much of that money flow involves retailers.
But in today’s world the delta in our economy is largely driven by sentiment, particularly the marginal spending that makes the difference in “good” or “bad” economies. And sentiment is driven by news, and the news is driven by politics. So, the biggest question for retailers will be this — is the news the new Congressional leaders make going to add fuel to the middle of the economy — or put out the fire “at the top”?
The Republicans had the right idea back in the 90’s but got comfortable with their power and were clocked for it. But nothing positive will come from a deadlocked political system. In the short span they have until the presidential election in two years, so I doubt much will change except for possibly a minimum wage increase. THIS is the only issue of real concern with retailers and they should prepare for it accordingly. Balancing the budget, taxes and the war will stay status quo, although several tax breaks will be abandoned so essentially we will get negative affects of some taxes. By the way, it’s naive to believe the old tax and spend Democrats would be any better with the budget than the new fat budget spending Republicans.
The Democrats didn’t have any plans and won’t have any now, so now it’s a battle between the two parties to make the other look bad – all at our expense.
Obviously the biggest potential programs that might impact retail would be a higher minimum wage and some sort of healthcare reform. That, of course, makes the assumption that a) the Democrats can pass the legislation and b) that a Republican President will sign it. My guess is that little will get done. The President will either threaten or exercise his veto and the Democrats probably don’t have the votes to over-ride the veto.
You have to be encouraged that while the Dems have re-gained control of the House, many of newly elected are more middle of the road. That has to be good. We need some serious discussions/actions on healthcare and Medicare.
We just can’t have their same proposal shot down,”Give-away to the rich” and “Throws the old out on the street.” Let’s at least get something on the table and have a reasonable discussion/debate about. We elect these people to make proposals and ultimately hard decisions. Now Stand and Deliver.
While the Democrats have control of the House and may have control of the Senate and while the Democrats have made a number of promises of change, they will only be able to change the direction of current policy if they have enough support to override vetos and that will require bipartisan support. A rise in minimum wages and health care changes are the two issues that will most directly affect business. While the Democrats may not get exactly what they promised, there will be some change in these areas so the need to cut costs will continue to be high on everyone’s priorities.
Yes, certainly the sky will fall (or, at least, many people will think it will) – umbrella retailers should see an increase in sales.
On the retailing side, one can expect extreme points of view to begin to slowly emanate from the new leadership in regards to taxes, healthcare, the environment, immigration, and national security.
Retailers can expect extreme legislation regarding the major issues. Why? Keep in mind that the House is what drives the direction, funding and initiation of legislation. The expected leadership in the ‘new’ house are nothing close to what could be described as moderates or even common sense liberals. Each represent extreme positions and extreme behavior uncharacteristic of the ‘civility’ that they now claim to have the ability to restore to Washington.
Minimum wage proposals will launch the agenda. They neither require attention or produce any real positive results. The market has taken care of them. The action proposed will not be anything like bringing the current rate into market reality – it will be far more extreme than that.
Environmental issues will be approached in the same way. There will be little regard to the impact to business or retailing. Democrats offer no real healthcare proposals yet politicize it to the extreme to where little or no action is possible.
Taxes will certainly increase. With respect to retailing, this could be the most harmful impact that can be foreseen. The ‘death tax’, small business taxes, and taxes to higher incomes will not only hurt business, it will stifle job growth in the sectors where it is growing successfully in small business.
In the end, what can we expect? As, mentioned by many, we can expect very little. Why? That’s because we have been offered very little.
Aside from the candidates, there were other issues and proposals potentially having impact to retailing that were voted on in many states. In the coming days, I am hopeful that we’ll dig a bit deeper below the surface and discuss what impact these can have on retailing as well.
Politics is politics. Once the new members of Congress are sworn in, they will start campaigning to get re-elected. This is likely to result in the same kind of inaction we’ve seen from a Republican controlled Congress for the past several years.
Given that, I do expect an increase in the federal minimum wage. However, this is only masking a greater problem which is the need for a living wage and the squeeze on the middle class which is becoming an endangered species in this country. Along those lines, we have yet to hear any meaningful discussion of healthcare reform or a social security bailout.
Neither the Democrats, nor the Republicans, have a workable plan to stem the tide of illegal immigration and the financial burden this is creating on the nation’s infrastructure; border security is a joke and every day more American jobs are being shipped overseas.
These are all issues that will continue to have a significant impact on every business. Let’s see someone do something.
The Democrats have been in power before. They had good intentions then as well, but obviously their policies failed and that’s why they lost control. All of their promises sound good but in reality there probably won’t be much change. In a few years I will be able to say the same thing about the Republicans.
Perhaps the “conventional wisdom” that the stock market loves a deadlocked government, because it makes the fewest changes, may be as good a benefit as having either party initiating widespread change. An educated, equal “opportunity” and prosperous citizenry; not burdened with long term debt, would benefit all retailers, we just haven’t seen a clear executable plan for that yet.
Nobody has a crystal ball about what the next two years will bring. If both sides put on a good show in the coming days about “reaching across the aisle,” time will tell whether it’s sincere or (more likely) posturing. To win the big prize in 2008 both Democrats and Republicans have something to gain from gridlock and being able to paint the other side as “do-nothing.”
That being said, we’re likely to see a push toward a higher minimum raise — although without any assurance that it’s veto-proof — as the biggest short-term economic impact on the retail and related service industries. Whether or not this happens in the next two years, it will probably happen sooner or later and thus should be part of a smart retailer’s business planning.
Having one side “in charge” for the past several years hasn’t effectively addressed long-term issues like Social Security and rising health care costs…do the next two years of “gridlock” really feel any different?
If the unions get what they want from the new Congress, there will be more restrictions on imports, resulting in product shortages and higher prices. This will push the inflation rate up, then a higher discount rate will be put in to control inflation, then a recession will occur. In the mean time housing prices will continue to deflate and defaults will rise.
Can you say stagflation? Do you remember the Carter years?
The American people voted for change yesterday but will they get it? No. This is because, despite great sound-bytes about “reaching across the aisle” and bi-partisanship, congress is largely held captive by special interests, lobbyists and the ever-present need to raise funds to get re-elected. The ear-mark system is a perfect example of both parties at the feeding trough (at taxpayer expense). In fact, the 2008 Presidential race kicks off today, so we can expect to see this driving a lot of the agendas in Washington.
My prediction is for no dramatic changes for the retail/business community, which is fine since the economy is doing pretty well. There will be a little Democratic window-dressing on the minimum wage. But I will be surprised to see any progress on the big issues – health care, prescription drugs, social security, immigration, education, the budget deficit and th environment. We deserve much better from our elected representatives.
The Retail Industry Leaders Association (RILA) released the following statement attributed to Sandy Kennedy, the president of the group.
“RILA congratulates the newly elected Members of Congress and welcomes them to Washington. We look forward to working closely with them on the key issues facing our customers and the retail industry as a whole.
“RILA continues to work tirelessly across party lines to promote economic freedom, consumer choice and overall industry excellence.
“Many of the millions of Americans who voted in this election cycle are employed by the retail industry and shop in our stores everyday. We continue to keep them and their interests top-of-mind as we work with legislators here in D.C., and in states and localities across the nation.”
Number one issue that elected Democrats: Iraq. The President got a wake-up call. Let’s see if he can engineer a withdrawal. No way the Democrats would resist that. Rumsfeld’s been sacrificed. It’s in the President’s best political interest to get out of Iraq ASAP. The Iraq war hurts America every day. American retailers do best when America does well.
The retail industry has always been close to the people. They buy its products, they work there. The issue of this election is corruption by wealthy special interests. People are fed up with it. Iraq and artificially high oil prices are just symptoms. Having a clean government run by the people, driven by ideals, not fear is good for business. Everyone’s. The same goes for PR. Web 2.0 is here and the old bully pulpit media game is coming to an end. Folks are out. It’s people speaking now.