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Week 4: Political Theories and Institutions

Identify key policies that affect business in the Democratic and Republican ... in conjunction with the 2004 National Automobile Dealers Assn. convention here. ...

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Week 4: Political Theories and Institutions

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    Slide 1:Week 4: Political Theories and Institutions

    BA 107

    Slide 2:Section Outline, 9-24-04

    Administrative Matters Email list Grading for Section Participation Review Conditions fostering the rise of big business in late 19th century America Rise of big government in response to the rise of big business

    Slide 3:Todays Agenda

    Identify key policies that affect business in the Democratic and Republican Party Platforms Identify common grounds in both platforms Identify primary differences in the two platforms Implications for business How these policies affect a companys bottom line But also consider non-market issues, such as legitimacy and effect on stakeholders For both perspectives, maybe advantageous to divide into long-term, medium-term, and short-term effects

    Slide 4:What are the key policies that affect business?

    Democratic Party Platform

    Slide 5:Democratic Party Platform

    Job Creation Tax Reform Close tax loopholes for big corporations; tax cuts for small and medium-sized businesses New investment corporations to extend capital to SMB Uphold trade agreements protection of international workers rights and environmental standards Invest in technology Enhance transportation system Promote Small business (double funding to use technology to grow) Reduce health care costs to companies

    Slide 6:Democratic Party Platform

    Protecting the Middle Class Cutting taxes for the middle class More federal assistance (economic downturn; retirement benefits) Raise minimum wage Tax incentives for home ownership Fiscal discipline (pay as you go) End corporate welfare

    Slide 7:Democratic Party Platform

    Protecting the Environment Clean air, water Reject false choice between healthy economy and healthy environment Tax credits for private sector investments in clean, renewable sources of energy Improving fuel standards (Cf. Republican market-based approach)

    Slide 8:GM Is Getting Sick of High Health-Care Costs

    LAS VEGAS National health-care coverage should be an issue in this year's presidential campaign, says Gary Cowger, president of General Motors Corp.'s North American operations. We need to start a discussion on it now, he tells a J.D. Power & Associates' International Automotive Roundtable held in conjunction with the 2004 National Automobile Dealers Assn. convention here. Cowger says GM, the nation's largest purchaser of health-care insurance, is suffering from the burden of spending $4.5 billion annually covering 1.2 million workers, retirees and their spouses. --keepmedia.com

    Slide 9:Democratic Party Platform

    American businesses pay more than competitors for health care, reducing competitiveness Bush policies favor HMO, drug companies How to cut health care costs? Lift burden on families, businesses, and the self-employed by picking up tab for highest-cost medical cases. Use technological know-how to reduce administrative costs Cut prescription costs Invest in science to combat disease Expanded coverage for all but where will money come from?

    Slide 10:What are the policies that affect business?

    Republican Party Platform

    Slide 11:Republican Party Platform

    Economic Growth Lower taxes panacea GDP would have been lower had it not been for tax cuts Tax Reform make tax cuts permanent Simplify tax code Reindex Alternative Minimum Tax Fiscal Discipline

    Slide 12:Republican Party Platform

    Fiscal Discipline How to justify largest deficit in US history?2000 downturn, terrorism, war on terror at fault. Also, view deficit in terms of relative size to GDP. Well within historical ranges. Fiscal discipline in right direction Proposed methods Pay-as-you-go Cap on discretionary spending Line item veto Sunset commission Management agenda Corporate Accountability Making CEO, CFO vouch for truth and fairness of disclosures Independent Board to oversee accounting New tools to root out corporate fraud Enhanced penalties against corporate misfeasor

    Slide 13:Republican Party Platform

    Reform Litigation System Frivolous law suits driving up costs of doing business in America by forcing companies to pay excessive legal expenses to fight off or settle baseless lawsuits Meaningful Tort Reform Medical Tort Liability Reform OB/GYNs unable to practice because of high costs

    Slide 14:Republican Party Platform

    Health Care Shifting costs to federal government will not solve problem, will just increase taxes. Aid small businesses in offering health care to employees; empower self-employed through access to affordable coverage; putting patients and doctors in charge of medical decisions (this will increase cost), reducing law suits and punitive damages (will not discourage malpractice); AHPs (small businesses pool together to offer health insurance) No government-run universal health care

    Slide 15:Republican Party Platform

    Protecting Rights of Workers Right-to-Work laws: protect workers who do not wish to join unions (Issue framing) Workplace safety, overtime protection, protection of pensions Environment Market-based approach

    Slide 16:Remarkable Similarity

    Private sector, not government, as engine of growth. Governments role is to create environment that will promote private sector investment, foster competition, and strengthen the foundations of an innovative economy -- Democratic Party Platform Small businesses are the most potent force of economic growth and job creation in America --Republican Party Platform To varying degrees, both parties have accepted the role of government intervention in the market place

    Slide 17:What are the Primary Differences between the Democrats and the Republicans?

    Slide 18:Primary Differences

    Republicans Tax cut as primary tool More likely to adopt market, or quasi-market approaches Tort reform Democrats Greater willingness to tax Apparent favor for SMB over larger corporations Greater emphasis on protecting the little guys Greater emphasis on protecting the environment Greater willingness to intervene when markets fail

    Slide 19:How to reconcile

    The apparent aberrations of some industries, voting against their interest The enigma that pro-business Republican presidents tend to perform worst economically than Democratic presidents

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