SUPERMARKET SWEEP 2000-10-09 (2)

JIM OSTROFF

WASHINGTON (FNS) -- The 2000 presidential election promises to be the closest race for commander-in-chief since John F. Kennedy edged out Richard M. Nixon for the job in 1960. But it's fair to say that if the general electorate thought more like food industry leaders, Texas Gov. George W. Bush would be the next Oval Office occupant. No contest.

No, it's not as if executives with the nation's leading food advocacy groups embrace every one of Bush's positions, or even are aware of all his policy stands. But the very thought of Gore becoming the 43rd president is distressing to the point they mince no words in conveying their angst.

"If Gore is elected he will play the class warfare card he plays at every turn, which means you won't get broadbased tax reform, but narrow, favored friends tax relief," said John Block, president, Food Distributors International.

Equally forthright, Thomas Zaucha, the National Grocers Association's president, averred, "If Al Gore wins, there's a lot of IOUs to labor he has to pay back." This is a disturbing thought to Zaucha, who predicted that should Gore become president, "first out of the box you'll see a very major effort on the part of organized labor to realize some real gains as a result of their endorsement" of Gore, such as a ban on striker replacements and a federal minimum wage increase.

Trade associations, of course, cannot formally endorse political candidates. Their tax status prohibits this, although they can and do provide financial support to candidates via Political Action Committees. But it is clear that Block, Zaucha -- and other industry leaders who, though more reserved in their rhetoric -- strongly favor Bush.

Ironically, like Ronald Reagan before him, Bush's relative lack of experience on the national scene has given him an advantage with much of business: They like most of what he says and take it on faith he will deliver.

They especially like what he says about the federal estate tax. Bush has said in no uncertain terms that he would seek a repeal of this levy. Congress, of course, did just this, but it was unable to muster enough votes to override President Clinton's veto in September.

The food industry, for whom repeal is mother's milk, has vowed to try again next year, with a new president and Congress, and doesn't relish the thought of Gore in the White House. "Gore has said he might favor increasing some of the exemptions used to calculate the estate tax, but this would do next to nothing for our industry," said John Motley, the Food Marketing Institute's senior vice president, government and public affairs.

"Even a small independent with one store has to spend perhaps up to $12 million to build a modern supermarket, virtually all of which is tied up in bricks, mortar, trucking and inventory," Motley said. "The operators are cash poor, yet if the owner dies," the survivors would have to pay the top, 60% estate tax rate, virtually requiring the store to be sold to raise the taxes due.

The NGA's Zaucha views Bush's support for this tax's repeal as crucial to the "survival of family business and entrepreneurship in this country." Block, who served as Ronald Reagan's first agriculture secretary, adds that more than half of FDI's member companies could be affected adversely by the status quo.

"Not only are so many small, family-owned food service companies, but the independent retailer is the lifeblood of the wholesale industry," he said. "If they have to sell only to Safeway, that's a real concern to us."

As with the estate tax issue, industry leaders see a clear presidential choice on the critical, labor and regulatory fronts. Whether or not a President Gore would be a handmaiden for organized labor cannot be known. As Clinton's Number Two he worked tirelessly to win NAFTA's passage over the staunch objections of unions.

Then again, Gore has assiduously courted labor's support and by August, had locked up the endorsement of every major American union. Labor, in turn, has vowed publicly to spend millions of dollars to see Gore elected.

Zaucha, who maintains this will give labor leverage to call in many IOUs, predicted this will translate into a Gore administration "Labor Department that tries to make the National Labor Relations Board even more pro-labor than it is today, and ban striker replacements, which will eliminate the balance in collective bargaining."

Gore's stance on striker replacements particularly sticks in the craw of retailers and wholesalers, the NGA president said. "There are enormous changes taking place in the industry today, such as outsourcing and we certainly have seen strikes occurring over this issue."

The perceived pro-labor bias of Gore will also likely result in onerous new regulations, industry leaders contend. "It comes down to philosophy," Block said. "Bush favors a government that does less, while Gore is for government activism. If Gore is elected, there will be a regulatory assault simultaneously from different angles, though it's impossible to predict exactly what we'll see."

The betting, though, is that Gore would move full-speed ahead with a pending Clinton proposal to require virtually every employer to constantly review workplace practices to eliminate repetitive motion injuries that may occur in the front end, at the loading dock and in offices. The Occupational Safety and Health Administration has proposed rules to enforce this ergonomic standard, but the GOP-controlled Congress in essence blocked the measure through September 2001.

"There is no evidence that Gore has repudiated the ergonomic standard and so if he is elected, we would expect more of the same," said Mary Sophos, the Grocery Manufacturers of America's senior vice president, government affairs. "This concerns us," Sophos said, "because there is not sufficient basis for some of the specific requirements; there's an underestimation of the costs it would entail and an overestimation of benefits."

FMI's Motley said, "The money that business has spent on the ergonomics issue to reduce [on the job] injuries has been ignored by OSHA." He added the industry is concerned that "Gore specifically has endorsed OSHA's ergonomic plan." Many labor unions continue to push strongly for this workplace regulation.

Zaucha, who maintains it "would have a devastating cost effect at the retail and distribution levels" said he is confident that "if Bush becomes president this onerous [proposed] regulation will be stopped cold."

Motley is not as certain of this outcome, but is sure that "if Bush is elected the ergonomics rule will be reviewed and if it is issued, it would be constructed in a fairer way."

Elsewhere on the regulatory front, Block and others said Bush is the clear choice, considering that a President Gore likely would forge ahead with proposals to limit the number of hours truck drivers can be on the road, and cut diesel fuel's sulfur content. Both of these proposals could greatly increase operating costs, they contend.

There is a general consensus among food industry leaders that both Bush and Gore favor a "science-based approach" to improving food safety as well as on the thorny issue of genetically altered crops and foods. But when the talk turns to health care, the mere mention of Gore is enough to raise the dander of at least some of these executives.

Gore's determination to enact a Patient's Bill of Rights, if elected, raises "great fears throughout the business community," Motley said, since this plan " would expose employers to suits by plaintiffs' lawyers across the country." By contrast, he said that "Bush has taken a more moderate approach in Texas" that requires adjudication of patient complaints against health care providers by special panels before consumers can sue.

There also is great concern, Motley said, about Gore's plan to require health care organizations to cover the costs of specific treatments. "The unions for years have wanted to mandate that things like mental health care [be covered by insurance], which is very expensive, and this, coupled with increased exposure to lawsuits, will increase our costs of health care coverage greatly."

Zaucha said, "The bottom line" is that should Gore win, retailers and wholesalers "will continue to see significant cost increases for these programs, whether they are self-funded [by companies], or part of a group" that offers health care insurance.

International trade is another issue with strong importance for the food industry. Virtually every section in today's supermarkets are stocked with imported products, whether these be produce, meats, seafood, condiments or crackers. The industry itself is multinational, including food manufacturers who export the world over.

Industry leaders, consequently, are more than a bit troubled by disputes with Europe over bananas and beef that have prompted the U.S. to effectively ban more than $300 million worth of food products from the European Union. The EU, in turn, has threatened to retaliate against $4 billion worth of American goods, with foods most likely leading the hit list. The EU also is moving to ban the importation of any genetically modified food.

Many are troubled, too, that the World Trade Organization meeting in Seattle last December collapsed amidst animosity by developing nations and massive street riots, because many had expected the gathering would take the first steps toward a new round of talks aimed at lowering world trade barriers.

All of these development are particularly unsettling to the GMA. The next president, Sophos said, should have "clear goals for liberalizing trade and will need to overcome obstacles, especially after Seattle." To date, though, Sophos said that Gore has supported Clinton's trade policies, which she calls "an area of concern."

Gore's statements, that he, like Clinton, wants to see new trade pacts contain labor and environmental safeguards "may cause Gore to demonstrate less of a commitment to liberalized trade than we would expect from Bush," she said.

Zaucha and Block, as many leaders within the agriculture sector, say that Bush has the same zeal as Gore for expanded world trade, but would not condition new trade pacts on labor and environment side deals.

Meanwhile, executives in the food industry, as other sectors, are pleased that neither presidential candidate has called for new taxes -- perhaps an easy promise, considering the federal budget is forecast to be awash in black ink for many years. That's not to say there are no differences between them on taxes. Here again, Bush's position is viewed as preferable to Gore's.

The GMA has not taken a position on tax policies it would like the new president to pursue, but Sophos made it clear that Bush's stance is preferable, noting he "has said he will cut taxes in a variety of areas, and clearly, that's not the direction Gore is going." Leaders of advocacy groups representing supermarkets, wholesalers, cooperatives, non-food retailers and the business community in general, favor Bush's broad-based tax cuts, contending this will put more money in consumers pockets. This money, they stress, belong to consumers in the first place anyhow, before Uncle Sam took his bite.

Bush has said he would use $1.6 trillion of the projected federal budget surplus over a 10-year period to cut taxes, provide new income tax credits, create tax-favored education savings accounts, permit taxpayers to earmark a portion of their Social Security withholding tax for private investments and, of course, eliminate the estate tax.

Gore would use about $450 billion of the surplus to extend Social Security's solvency, create several new retirement savings accounts and expand education tax credits.

Yet, as concerned as some industry leaders such as Block are about Gore's agenda, they recognize that their biggest fears may not come to pass, even if he takes up residence at 1600 Pennsylvania Avenue on Jan. 20th. "A great deal depends on Congress," Block said. "If the Republicans retain a majority it will not be easy for Gore to get everything he wants and he may not get this either if the Democrats regain control."

Polling data indicate the GOP likely will retain its Senate majority, but it's still considered a toss up as to which party will control the House.