State of the Union proposals carry wide impact for retail industry
President Obama didn’t mention the word “retail” a single time in his State of the Union address Tuesday night. But retailers could nonetheless be widely impacted by proposals put forth in the annual speech to Congress, ranging from promises to create jobs and grow the economy to a plan to increase the federal minimum wage that is drawing headlines this morning.
Obama said the economy has added six million jobs since the recession, but “there are millions of Americans whose hard work and dedication have not yet been rewarded,” and offered initiatives in manufacturing, energy, infrastructure and housing he said would help improve employment numbers.
“Our economy is adding jobs, but too many people still can’t find full-time employment,” Obama said. “A growing economy that creates good, middle-class jobs – that must be the North Star that guides our efforts.”
NRF questioned some of Obama’s proposals but welcomed his overall theme of boosting the economy.
“We have repeatedly called on Congress and President Obama to make the economy and job creation their top priority, so we are very pleased to see these goals emphasized by the President,” NRF President and CEO Matthew Shay said after the speech. “There are many issues on the national agenda, but with our economy still struggling to recover, the most pressing need for the millions of Americans who remain out of work is a job.”
In recent weeks leading up to the State of the Union, NRF has proposed principles for tax reform that would boost the economy and job creation, urged lawmakers to make jobs their top priority, and warned that short-term fixes for the deficit should not be allowed to undermine long-term tax reform that will help create jobs.
Here are some of the key issues from last night’s speech that will affect retailers:
- Obama said, “Now is the time for bipartisan, comprehensive tax reform that encourages job creation,” and promised lower tax rates “for business and manufacturers that create jobs right here in America.” NRF has long called for Congress to eliminate tax benefits that aid only a few industries and use the revenue to lower tax rates for all businesses. But Obama said he wants to use at least some of the elimination of “loopholes and deductions” to lower the deficit – a move NRF is concerned could siphon off some of the revenue needed to lower rates.
- Showing concern for the impact the fiscal cliff debate and other last-minute bargaining on the economy has had on consumer confidence and spending, Obama promised to pass a federal budget “without the brinksmanship that stresses consumers and scares off investors.” He said the government “cannot keep conducting its business by drifting from one manufactured crisis to another.”
- Obama said he will bring home another 34,000 troops from Afghanistan over the next year. At Retail’s BIG Show in New York last month, Walmart announced a plan to offer jobs to returning veterans.
- Obama called for comprehensive immigration reform that would give illegal immigrants “a responsible pathway to earned citizenship” but only after paying taxes and penalties, learning English and “going to the back of the line” behind legal applicants for citizenship. NRF last month called the current immigration system “broken and unworkable” and called for a system that is “both agile and responsive.”
- Obama said he hopes to complete negotiations this year on the Trans-Pacific Partnership free trade agreement, which is supported by NRF, and that he hopes to launch talks on a new Transatlantic Trade and Investment Partnership with the European Union.
- In its lead Page One story, the New York Times this morning called Obama’s proposal to increase the current $7.25 hourly federal minimum wage to $9 by 2015 and index it to inflation after that “the most tangible of a raft of initiatives” to boost the middle class. Obama said the increase would help businesses because “it would mean customers with more money in their pockets.” But NRF Senior Vice President for Government Relations David French said it would be “one more factor driving up costs for employers and creating headwinds for job creation."
- Earlier in the day, Obama signed an executive order on cybersecurity that is focused on national security but would also cover “our privacy.” NRF has cautioned against cybersecurity legislation and regulations that could limit retailers’ innovation in web sites or the way retailers use consumer data to better serve their customers.
- Obama proposed a “Fix-It-First” program for infrastructure repair that could help improve transportation infrastructure relied on for efficient operation of retail supply chains. He specifically cited bridge repairs and “modern ports to move our goods.”
- Obama called for passage of the Paycheck Fairness Act. NRF is on record opposing the legislation, telling lawmakers last year it isn’t necessary because gender discrimination in wages and salaries is already prohibited under the Equal Pay Act of 1963 and that the bill would “give trial lawyers an incentive to pursue unlimited litigation” against employers.