Obama Wins, VARs Fear Job Cuts11:50 PM EST Tue. Nov. 06, 2012
President Barack Obama won re-election Tuesday in a hard-fought contest that highlighted the stark political divide running through the country.
Solution providers fear that Obama's victory is going to lead to more pressure on businesses, with job cuts likely in the wake of increased tax rates.
"Businesses are going to cut jobs," said Bruce Geier, CEO of Technology Integration Group (TIG), a $341 million national solution provider ranked at No. 69 on CRN's 2012 Solution Provider 500."There is not even a question about it. Obama is hell-bent on raising taxes."
Obama defeated Republican presidential candidate Mitt Romney by winning the Electoral College vote with victories in key battleground states such as Ohio, Pennsylvania and Wisconsin. As of press time, Obama and Romney were tied in the popular vote at 49 percent each, according to several news outlets.
Solution providers that supported President Obama credited his landmark health care legislation as one of the keys to his re-election.
"One of the biggest changes [with Obama] I was excited about was health-care reform," said Obama supporter Christopher Hertz, CEO of New Signature, a fast-growing, cloud computing solution provider based in Washington, D.C. "That was a huge cost driver in our business until the passage of health-care reform. We had the statutory maximum increase in health-care costs every year until this year. The fact that Obama and Congress passed health-care reform, regardless of whether it is perfect or not, is a huge benefit to businesses."
Hertz seems to be in the minority of solution providers as an Obama fan: Most solution providers were hoping for a Romney win, according a recent survey by CRN.
Sixty percent of 1,004 solution providers surveyed by CRN ahead of the election said they planned to cast their vote for Romney, compared to 40 percent for President Obama.
Sixty-five percent of respondents said that four more years of Obama's leadership will lead to higher tax rates for businesses leading to job cuts.
"You think CEOs are going to take less money?" asked Geier. "They are not. You think they are going to risk their bonuses? It just ain't going to happen. They are going to cut jobs. No one is going to say, 'OK, I'm going to pay my fair share and take less money.' "
NEXT: Channel Fears Rising Health-Care Costs Under Obama Presidency
"What we have seen from our customer base is they see the real threat of layoffs with the re-election of President Obama," Geier said. "We have the same fear. We are going to implement a hiring freeze and wait and see what happens. If the Bush tax cuts don't go through, you are going to see layoffs. We are going into a real holding pattern until we see what happens with our customer base. Customers are going to cut back. They are all afraid right now."
Geier sees the U.S. business climate deteriorating with four more years of Obama. "It's very bad for business," he said. "Romney is pro-business. And Obama is anti-business. I see higher health-care costs. What is going to happen to small businesses that have to pay for health care and can't afford it?" Sixty-seven percent of solution providers surveyed by CRN said the Obama victory will lead to higher health-care costs for businesses.
Businesses are especially frustrated by the health-care reform law championed by Obama, said Joe Balsarotti, president of Software To Go, a St. Peters, Mo.-based solution provider preparing to celebrate its 30th year in business. "Nothing is free," he said, noting that most of the major changes in the legislation were set to go into effect in 2014. "Someone has to pay for it."
Balsarotti said he has six small-business customers planning to close up shop with Obama's re-election. "They have had it," he said. "They are way past retirement age and they are planning to wind down the business and retire now. It's not worth it for them to go through four more years of Obama.
"These are people who have built up businesses that employ people and have worked in them for 30, 40 or 50 years," Balsarotti added. "They see higher taxes and health-care costs and are sick of business being demonized. It starts with Obama and makes its way through government agencies like OSHA [Occupational Safety and Health Administration] and EPA [Environmental Protection Agency]."
Tim Shea, founder and CEO of Alpha NetSolutions, a 10-year-old managed services/cloud computing provider with $1.2 million in annual sales, said he feels the concerns of small business have not been addressed by either Obama or Romney. "The small-business owner and the middle class tend to be overlooked by everybody," he said. "The Democrats are looking out for the little guys and the Republicans are looking out for the big guys. No one is looking out for those of us in the middle, which is most of us.
"I hear people talking about the really poor and the really wealthy," he said. "I don't hear anybody talking about the rest of us who are paying taxes and can't take advantage of tax loopholes. I don't see anyone doing anything for small businesses. We are the unheard masses in the middle, too busy working and trying to make ends meet and we don't have lobbyists in Washington working for us."
PUBLISHED NOV. 6, 2012