Around Thanksgiving I caught up with Corey Boles, US analyst for political consultancy Eurasia, and we talked turkey about what family businesses might expect from inside the Beltway this year.
With November's midterms delivering Republicans the Senate and the largest GOP House majority since the Hoover administration, Boles told me business-owning families should be watching Washington closely.
Top of many people's minds is healthcare. But while it's plausible we could see an attempt by the GOP to tinker around the edges of Obamacare, Boles says it's now so ingrained that the system should stay largely intact.
“Behind closed doors Republicans know repeal is impossible, but it's still a bumpy ride ahead for Obamacare,” Boles told me.
The biggest threat to healthcare will not come from Congress but from the US Supreme Court when it rules on King v. Burwell.
“Due to poor penmanship by lawmakers, next spring the court will rule on whether the users of federally-run exchanges can receive the same tax credits as state-run scheme customers,” says Boles, explaining that the letter of the law provided only for state-run schemes, but the spirit of the law intended tax breaks for everyone.
It's impossible to tell how the US Supreme Court will lean in King. It was mostly conservative states that did not set up state exchanges and therefore rely on the federal system. The court probably realises that by striking down the law they would effectively be making poor people in Red states subsidise poor people in Blue states.
Immigration is also a hot button issue, according to Boles: “Obama is limited in what he can do with executive orders [rules of law that bypass Congress]. Republicans will make a hue and cry but there will be little movement on this issue for years.”
For many business-owning families, the costs and coverage of commercial property insurance might be an important area to watch and Boles thinks the Terrorism Risk Insurance Act of 2002 is in for a refurbishment. The act was borne out of concern that large real estate holdings (sports stadiums and skyscrapers) were effectively underinsured against terrorism. It requires the federal government to pay out if underwriters can't meet their commitments. Republicans are looking to severely scale back the act, and this push could get headway in 2015. Owners of stadiums and skyscrapers beware.
And, of course, tax reform could gain momentum in 2015. Boles says Republicans like Paul Ryan are likely to start the conversation, although it's unclear where the crucial battleground will be: individual or commercial tax. There is partisan uncertainty around what individual tax reform would mean, and corporate-only reform itself is problematic. Most American companies file based on individual ownership, making corporate tax reform hard to piece out. “How do you make reforms that affect wealthy business owners differently to wealthy people who don't own businesses?”
Any tax reform is more likely to be a three-year process, says Boles: “The last significant reform – in 1986 – took four years. And unlike today, that was with a president [Ronald Reagan] and speaker of the house [Tip O'Neill] who were both similarly invested.”
On the big issues in American politics, 2015 might mark yet another year of fierce arguments yet little movement. But be wary of possible insurance and tax changes that could dramatically change the business environment.