By KRISTINA PETERSON and MELANIE TROTTMAN
Near the top of the list of big national problems routinely cited by business executives are the U.S. budget deficit and the higher taxes they worry would be needed to cover the gap.
For that reason, Mitt Romney’s tapping of Rep. Paul Ryan (R., Wis.) to be his running mate has sparked enthusiasm among many business owners and executives who were already leaning toward the Republican ticket.
Although Mr. Ryan is the No. 2, he is drawing outsize attention because he comes to the race with a raft of budget proposals to his name, many of which appear on the wish lists of America’s business lobbies. The proposals include a revamp of the corporate tax code, lower income-tax rates for high earners and spending cuts that are more aggressive than those offered by President Barack Obama, whose deficit-reduction plans rely more on upper-income tax increases. Neither man would balance the budget anytime soon.
Mr. Ryan is “the kind of guy I would hire,” said Brett McMahon, president of Miller & Long DC Inc., a construction firm based in Washington, D.C., who said putting off action on the deficit would make the problem worse. Mr. Ryan “has at least put it to paper, and I think he is committed to doing something constructive about it.”
Mr. McMahon, a Republican, didn’t support Mr. Obama in 2008, but said he was optimistic about some of his plans. Now, he said he feels like an enemy of the administration. “We really feel like we’re the bad guys,” he said.
Gary Shapiro, president and chief executive of the Consumer Electronics Association and a Romney supporter, said the chiefs of firms he represents have told him last week they were enthusiastic about the running-mate pick. “Business people believe that the biggest challenge they face in the next five to 10 years is the health of the U.S. economy, because we’re not dealing with our deficit,” he said.
Even before the Ryan pick, a shift in business sentiment toward the GOP was in evidence. Republicans have received 56% of the donations made by business PACs and employees, according to the nonpartisan Center for Responsive Politics. That’s a turnaround from the 2008 election, when corporate PACs and employees gave 55% of their donations to Democratic candidates. The two parties were tied in 2010. Business executives haven’t been polled on the race since Mr. Ryan’s pick.
To be sure, Mr. Obama continues to have strong backing in a number of industries, including Hollywood, Silicon Valley, clean energy and among lawyers.
Toby Chaudhuri, co-founder of SocialxDesign, a Silicon Valley strategy consulting firm with 10 employees, said Mr. Obama remains his clear pick. The president’s plan “would reduce the deficit in a balanced way, while still investing” in education, workforce training and infrastructure, the Democrat said. Mr. Obama’s approach on business taxes is also superior, said Mr. Chaudhuri. “The Romney-Ryan plan would make small businesses like ours pay more in taxes, so the winners would be only the people already at the top,” he said.
Marc Benioff, chief executive of software firm Salesforce.com, is co-chairman of Mr. Obama’s re-election committee, but gives Mr. Ryan glowing reviews. “I recently made a financial contribution to Paul Ryan and believe he’s one of the rising stars of our country,” he said.
Mr. Benioff, who said he recently had dinner with Mr. Ryan, lists his top concerns as balancing the budget and tackling the deficit—issues he believes will be addressed “regardless of who wins” the presidency. He said Mr. Ryan’s plan to cut total government spending to 20% of the GDP could put the U.S. into a recession now, but “as a long-term goal, that’s probably realistic.”
One hesitation about Messrs. Romney and Ryan among some businesses stems from the blanks that remain to be filled in their proposals. As much as companies want low taxes, they also like the benefits Congress can bestow—especially some spending programs and targeted tax breaks, many of which are under threat from conservatives in the GOP-controlled House. Industries such as construction and defense, in particular, are heavily dependent on federal contracts.
Mr. Ryan’s budget for fiscal 2013 promises to spend $5 trillion less over 10 years than the budget put forth by Mr. Obama. The Ryan budget provides spending caps, but doesn’t map out precisely where the cuts would come from. Under the normal congressional budget process, committees are charged with developing specific spending bills later in the year.
“We do have some concerns about his seeming willingness to cut federal spending for infrastructure, especially highway and transit investments,” said Brian Turmail, spokesman for the Associated General Contractors of America. Nonetheless, he said, “we’re encouraged by the fact that he’s the grandson of a construction-company manager.”
Others noted that while Mr. Ryan’s budget would cut transportation spending, his recent votes show support for the industry. Earlier this summer, he voted for the $120 billion transportation package passed by Congress to renew funding for highways through October 2014, freeze the interest rate on government-backed student loans and extend federal flood insurance.
The tax proposals in Mr. Ryan’s 2013 budget would lower the top corporate tax rate to 25% from 35%. It also would shift the U.S. to a territorial tax system, in which companies would pay U.S. taxes on only their domestic profits. Currently, companies generally pay taxes on their worldwide income, which in practice means they often avoid paying U.S. taxes by leaving the money overseas. Both measures would bring the U.S. into line with much of the developed world.
Dorothy Coleman, vice president of tax and domestic economic policy for the National Association of Manufacturers,, a strong backer of the GOP, said the group considers the current, sprawling tax code to be a drag on manufacturers and approves of Mr. Ryan’s basic principles for overhauling it.
One wrinkle: Mr. Ryan hasn’t spelled out yet how he would make up the lost revenue, other than by eliminating tax breaks deemed “distortions, loopholes and preferences.” It is through those tax breaks that industries tend to win special favors, and these benefits are fiercely protected.
For many businesses, the persistently weak economy is as much a concern as it is for regular voters. Bob Dobski, president of R.J. Just Inc., the owner and operator of 10 McDonald’s restaurants in central Illinois, said he would expect a Romney-Ryan ticket to result in increased spending at his restaurants by giving a boost to the overall economy.
“It definitely would increase the whole positive attitude of our consumer [with] everybody having a little more money and incentive to grow and expand their businesses,” he said.
this Op-ed appeared on the WSJ on Monday . Sarah Portlock and Victoria McGrane contributed tothis article.