The picture at Bill Skuby's clothing store in Spring Lake, N.J., shows the president in a loincloth with a bone in his nose and a caption reading "Obama Care, coming soon to a clinic near you." The "C" is formed from the Communist hammer and sickle symbol.
Skuby, 66, said he put the photo in the store window last week.
"A lot of people feel the way I do, but are afraid to say it," he said, adding that reaction has been "70 percent positive."
The storefront has become a forum for a free speech debate, the news website NJ.com said Wednesday.
"That window represents the worst of the worst in our society," said local resident Suzanne Herrmann. "People can express their views, but to express them with bones through their nose is not right."
"He (Skuby) has a First Amendment right to do what he wants, but from a business perspective, I would not do what he did" said George D'Amico, president of the Spring Lake Chamber of Commerce.
"This does not incite violence, and it's in time for Halloween. If we lose the right to free speech, America wouldn't be America," said Karen Cameron of the display.
Skuby fends off suggestions of racism by pointing out he has 17-year-old biracial grandchild.
"I'm not racist, and as long as my grandchild doesn't think I'm a racist, I'm perfectly fine with all of this," he said.