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The Journal ≤


Wednesday, November 7, 2012 — Page B7

A New Choice

AP photo

People ride atop a vehicle waving a Puerto Rican flag during elections in San Juan, Puerto Rico, Tuesday, Nov. 6, 2012. Puerto Ricans are electing a governor as the U.S. island territory does not get a vote in the U.S. presidential election. But they are also casting ballots in a referendum that asks voters if they want to change the relationship to the United States. A second question gives voters three alternatives: become the 51st U.S. state, independence, or sovereign free association, a designation that would give more autonomy.

Puerto Rico votes on US ties and chooses governor


SAN JUAN, Puerto Rico — Puerto Ricans faced a fundamental question on Election Day: Should they change their ties with the United States? Citizens in the U.S. island territory cannot vote in the U.S. presidential election, but many were excited to participate in a referendum on whether to push the territory toward statehood, greater autonomy or independence. Car horns blared and party flags waved after polling sta-

tions closed following what election officials said was a high voter turnout. During the day, many voters carried umbrellas against the blistering tropical sun as temperatures neared 90 degrees Fahrenheit (31 degrees Celsius). The two-part referendum first asked voters if they wanted to change Puerto Rico’s 114-year relationship with the United States. A second question gave voters three alternatives if they wanted a change: become a U.S. state, gain independence, or have a “sovereign free

association,” a designation that would give more autonomy for the territory of 4 million people. With 243 of 1,643 precincts reporting late Tuesday, 75,188 voters, or 53 percent, said they did not want to continue under the current political status. Fortyseven percent, or 67,304 voters, supported the status quo. On the second question, 65 percent favored statehood, followed by 31 percent for sovereign free association and 4 percent for independence. “Puerto Rico has to be a state. There is no other

option,” said 25-year-old Jerome Lefebre, who picked up his grandfather before driving to the polls. “We’re doing OK, but we could do better. We would receive more benefits, a lot more financial help.” But 42-year-old Ramon Lopez de Azua said he favored the current system, which grants U.S. citizenship but prevents Puerto Ricans from voting for president unless they live in the United States, and gives those on the island only limited representation in Congress. “Puerto Rico’s problem is

not its political status,” he said. “I think that the United States is the best country in the world, but I am Puerto Rican first.” Both President Barack Obama and rival Mitt Romney said they supported the referendum, with Obama pledging to respect the will of the people if there was a clear majority. Any change would require approval by the U.S. Congress. Puerto Rico held non-binding referendums in 1967, 1993 and 1998, with statehood never garnering a clear majority and independence

never obtaining more than 5 percent of the vote. The island also was electing legislators and a governor, with Gov. Luis Fortuno of the pro-statehood New Progressive Party seeking a second term. Fortuno, a Republican, was challenged by Alejandro Garcia Padilla, whose Popular Democratic Party favors the status quo. With 817 of 1,643 precincts reporting late Tuesday, Garcia had 427,604 votes, or 48 percent, while Fortuno had 422,506 votes, or 47 percent.

Small businesses look ahead to Obama’s 2nd term

EW YORK (AP) — President Barack Obama’s re-election to a second term takes away some of the uncertainty that small business owners have been carrying around. The question now is whether he can satisfy those who say he hasn’t done enough to help them expand and create jobs. During Obama’s first term, the president pointed to steps he took to help small companies, such as proposing the Small Business Jobs Act of 2010 that cut taxes for small companies and made it easier for them to obtain federally guaranteed loans. These steps have helped some small businesses start their recovery from the recession. “We’ve been seeing steady albeit modest growth in the economy since the president took office and we are cautiously optimistic,” says John Arensmeyer, CEO of Small Business Majority, an organization that lobbies on behalf of small companies. Even so, many small business owners are critical of the president’s performance. They are anxious about taxes and the bulging federal deficit. Many opposed the health care overhaul and complain that they are being squeezed by excess regulations. So now that Obama has

won four more years, what can small business owners can expect from Obama on taxes, health care, the economy and regulation? The Associated Press interviewed small business experts and advocates to find out. TAXES No president has a complete say over how much anyone, including small business owners, will pay in taxes. Expect the divided Congress to battle over Obama’s request to raise the top tax rate on many business owners to 39.6 percent during 2013. That’s the highest personal tax rate, and it affects some small businesses because their owners report their business taxes on their personal returns. Republicans in the House, many who were aligned with Republican nominee Mitt Romney, will oppose that tax increase, and the result may be a stalemate. “I don’t think anything’s going to change,” says Peter Cohan, a lecturer in entrepreneurial strategy at Babson College in Wellesley, Mass. But Obama has made a point of proposing tax cuts that will benefit many small companies. He’s calling for the corporate tax rate to drop to 28 percent from its current 35 percent. Manufacturers


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would pay no more than 25 percent. He’s also backing more liberal tax deductions for small businesses that invest in new equipment. “Congress will be more willing to work with the president on these small businesstargeted tax policies,” Arensmeyer says. Recent history shows that Arensmeyer may be right. Earlier this year, there was bipartisan support in Congress for the Jumpstart Our Small Business Startups Act. It was designed to help small companies get financing more easily.

HEALTH CARE Obama’s re-election means the health care overhaul will continue to be implemented, but small businesses still have to wait to find out how much it will eat into their profits. Key provisions of the law go into effect in 2014, including the requirement that businesses with 50 or more employees provide affordable health insurance for their workers. What employers don’t know yet is how much that insurance will cost. That won’t be determined until states set up exchanges where individuals and companies can buy coverage. Republican presidential candidate Mitt Romney promised to make changes to the

law. Now that the overhaul has survived the re-election of Obama and a fight that advanced earlier this year to the U.S. Supreme Court, another big legal challenge is unlikely, says Risa LavizzoMourey, president of the Robert Wood Johnson Foundation.

of Bush administration tax cuts that takes effect with the new year. But if the deficit isn’t dealt with soon, taxes will have to rise in the coming years. That would leave small business owners with less money to invest in their companies. “That is ultimately going to be a huge problem. As govTHE ECONOMY AND ernment grows and the size of THE FEDERAL BUDGET the deficit grows, that when Obama may not be able to you’ll see a drag on economic do much to get the economy growth,” Primo says. growing much faster than it is now. REGULATION “I think both candidates Look for Obama to continwere way overselling what ue a mixed record on regulathey can do to create jobs and tion — creating more rules help the economy,” says that small businesses will David Primo, an associate need to follow, but also being professor of political science vigilant that regulations won’t and business administration at be too burdensome. the University of Rochester in “On the plus side, Obama New York. has signed a handful of execuThe federal deficit is part of tive orders directing agencies the problem. Obama has to to review and ease, where curtail spending — but feder- possible, regulations that have al government spending is an undue burden on small equal to nearly a quarter of business,” says Molly Brogan, income produced by U.S. citi- a spokeswoman for the zens. Cut government spend- National Small Business ing, including federal con- Association, a group that lobtracts, and small businesses bies on behalf of small comlose revenue and may cut panies. But she also says govjobs. Many have put hiring ernment agencies keep creatplans on hold because of ing regulations that many uncertainty about what’s small businesses find probknown as the fiscal cliff — lematic, for example, proposthe combination of severe als from the Equal Employbudget cuts and the expiration ment Opportunity Commis-

sion that prohibit employers from requiring that workers have a high school diploma or conducting background checks. “I don’t think there’s going to be a massive amount of difference for small businesses,” says Catherine Rudder, a public policy professor at George Mason University in Fairfax, Va. “Obama in his policies is quite moderate and quite willing to compromise.” Small business owners who are unhappy with regulations created during Obama’s first term are likely to find ways to get around them — particularly when it comes to health care. Some owners reluctant to buy health insurance for employees will make sure their companies don’t have the equivalent of 50 full-time workers — the threshold at which they’d have to provide coverage under the health care law. But owners will be happy with the Obama administration’s regulations that are designed to help them — lending and counseling programs at the Small Business Administration will continue to be a priority. “They can expect continued policies to foster small business,” says Caroline Daniels, a lecturer in entrepreneurship at Babson College.

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