Republican Congressional Takeover Thwarts Biden, Offers Business a Reset

A Republican takeover of Congress would reshape the broader corporate fiscal and regulatory environment.

Next week’s midterm elections show the Democrats losing control of the House and possibly the Senate, and are expected to usher in a new era of divided government. Joe Bidenagenda.

For businesses, the biggest impact of the rise of the Republican Party is the end of one-party economic policies. Democrats can no longer use partisan budget manipulation to force tax increases, change Medicare drug policy, or pass pandemic relief spending that many economists say has fueled inflation. lose.

But even a divided government could make compromises on border security and legal immigration that could address the labor shortages plaguing U.S. industry, along with the possibility of agreements to streamline energy project permitting and leasing. But Republican lawmakers are investigating the Biden administration, refusing to put his nominees into key jobs, and risking market rattles over the US debt ceiling. vow to fight.

With one week to go before Election Day, let’s take a look at what’s at stake for your business.

Republican Congress Puts Brakes on Business Tax Increases

Democrats are within one vote in the Senate on raising the corporate tax rate to 25% and imposing a global minimum profits tax. If the Republican Party wins the House as expected, the risk of its resurgence disappears, and oil companies could be hit with a nasty profit tax. Interim results could also affect his December talks on renewing the R&D tax break.

Republicans say a majority would advocate extending the expiring provisions of the 2017 tax cuts signed by former President Donald Trump. playing cards Tax cut. Two of his provisions in that law are of particular value to businesses. A 20% deduction on qualifying income for many pass-through entities expiring in 2025 and a bonus depreciation on qualifying business purchases that will be phased out entirely in 2027.

anti-tax activist Grover Norquist Republican Congress expects to negotiate a two-year extension of these provisions with the White House by the end of 2024.

Former Senate Republican Chief of Staff Rohit KumarThe current PWC affiliate predicts that Republicans will force a tough vote on a settlement bill that would extend the Trump tax bill and pressure moderate Democrats to agree to small business bailouts. , the table will be ready for final negotiations in 2025,” he said.

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Energy production could be boosted and climate policy simplified

Republicans, if they win a majority, plan to push for more domestic energy production and are trying to use voter frustration over rising gas prices to keep the Biden administration alive. The House Energy and Commerce Committee seeks to expedite the development of hydrogen projects, streamline licensing and development of nuclear power plants, and accelerate the approval of liquefied natural gas export facilities. Bill JohnsonAn Ohio Republican serving on the commission said:

These measures, if enacted, will benefit businesses such as nuclear operators Southern Co., Ltd.small modular reactor manufacturer NuScale Power Corp.a liquefied natural gas exporter Cheniere Energy Co., Ltd.They may benefit drillers such as Halliburton oil producers such as ExxonMobil Johnson also plans to target the Biden administration’s rule to phase out some natural gas reactors, which has angered the American Gas Association. Dominion Energy Co., Ltd.When DTE Energy Co., Ltd.

Republicans have already pledged to closely monitor the hundreds of billions of dollars in loan powers Biden’s Inflation Reduction Act gave the Department of Energy. It wants to spend and is backed by companies like: general motors companyWhen ford motor company, likely to be ignored by Republican lawmakers. Biden has cut his $15 billion request for EV charger funding in half, a bipartisan infrastructure bill and his second Democratic-only bill focused on expanding his EV tax credit for consumers. Gained Republican support for climate legislation.

Executive Vice President, American Chamber of Commerce Neil Bradley Given the Senate’s legislative hurdles, he said he doesn’t think the Republicans can get the money back for renewable energy or reverse Biden’s past tax increases. We are not ringing government bells,” he said.

Financial regulation can be delayed or impeded

trading companies including Robinhood Markets Inc. Republicans are trying to block regulations planned by the Securities and Exchange Commission. Gary GenslerRepublican lawmakers can delay rulemaking by requesting information from the SEC, and can put language in annual funding bills directing the agency to delay regulation.

Meanwhile, one of the biggest goals for companies is the SEC’s plan to require companies to disclose their greenhouse gas emissions, in some cases from their suppliers and customers. The rule, proposed in March, has sparked outrage in industries ranging from oil to agriculture. exxon mobil, Meta Platforms Inc.. When Walmart Co., Ltd. Weighted.

The SEC is also considering adding regulation to the cryptocurrency industry.

Private equity firms and hedge funds could also benefit from a slowdown in SEC rulemaking. Gensler has proposed to force more disclosure about fees and introduce new limits, all of which sparked industry outrage.

Antitrust bill opposed by tech companies unlikely to pass

Silicon Valley is likely immune from sweeping laws aimed at anti-competitive behavior by tech companies in the Republican Congress, including: Apple., Amazon.com, Inc. When Alphabet’s Google. The bill had bipartisan sponsors and was approved by key committees in the House and Senate, but the tech industry helped slow the bill’s progress with more than $100 million in lobbying.

House Republican Leader Kevin McCarthy And possibly the chairman of the House Judiciary Committee Jim Jordan Oppose antitrust legislation that will require the antitrust legislation to be reintroduced if not voted on by the current Congress by the end of the year.

Republican lawmakers instead sought to remove section 230 liability protections, give users the means to appeal when their content was removed, and call for greater transparency from tech companies. We plan to focus on ending what is considered conservative opinion censorship on media platforms. With insufficient support in the Senate and a likely Biden veto, any of these content-focused proposals are unlikely to become law.

Tighter regulations for hospitals, insurance companies

Benefit managers at hospitals, insurance companies and pharmaceutical companies face the prospect of tough new regulations pushed by Republican Congress, with support from Democrats and the Biden administration. Republican lawmakers have pledged to tighten requirements for hospitals to post prices online and lower the cost of drugs by targeting pharmaceutical industry intermediaries known as drug price controllers. Republican leaders are moving away from promises to repeal the Affordable Care Act (also known as Obamacare) or limit abortion rights, and instead focus on rising healthcare costs for Americans. is guessing.

Cathy McMorris RogersThe Republican chief of the House Energy and Commerce Committee has vowed to run ads in his home state of Washington and ask hospitals, insurance companies and doctors to disclose prices so consumers can shop. Pharmaceutical managers account for more than two-thirds of the total US market. Express Scripts Co., Ltd., CVS Health Co., Ltd. When Optum Rx Co., Ltd., HCA Healthcare Co., Ltd., ascension health When Tenet Healthcare, Inc. Hospital companies that may be affected.

Many Democrats are frustrated that Medicare’s bargaining bargaining provisions in the Inflation Act are limited, with only 10 drugs being negotiated by 2026. Johnson & Johnson, Merck, Pfizer When Eli Lilly & Company There are products that Medicare spends a lot of money on.

$428 billion farm bill to be renewed over 5 years

The next Congress should pass a five-year farm bill that provides for direct agricultural subsidies, crop insurance, food stamps and conservation programs. The 2018 Farm Bill authorized spending of $428 billion over five years, about three-quarters for food aid and one-quarter for agriculture.

Updating the Farm Bill, a pillar of domestic agribusiness, could be more difficult under Republican control. Some conservatives want agricultural subsidies to be cut, but keeping spending on hold is widely supported by both parties.A bigger problem could arise with nutrition programs that Republicans previously targeted eligibility and conservation programs. Kroger By giving low-income beneficiaries a way to buy more food.

According to the U.S. Department of Agriculture, direct payments from the federal government are a significant contributor to agricultural profits, accounting for 18% to 48% of annual net farm income in the United States since 2018. Additional income for farmers helps boost sales for seeds, pesticides, fertilizers, and equipment providers such as: The Mosaic Company When Dear & Company It also reduces costs for major grain buyers such as: Cargill Corporation When Archer Daniels Midland Company Meat and poultry processors, such as Tyson Foods Inc., who purchase animal feed.

Weapon Makers Can See Boosts in Contracts

A Republican-led Congress presents both opportunities and dangers for America’s largest defense contractor. Lockheed Martin, Raytheon, General Dynamics Corporation When Boeing Company

Republicans have complained that the Biden administration is not funding weapons systems, and the party will be pressured to keep the military budget in line with inflation. Kay GrangerThe likely next chairman of the House Appropriations Committee said in an interview that he would prioritize increasing defense spending.

But the defense industry also risks getting caught on the brink of Republican spending to force Biden to cut social programs and boost border security. may have to rely more on interim legislation that does not allow new contracts. Oversight of the Pentagon’s contracting process to expedite a ruling on a Ukrainian arms deal is likely to come under greater scrutiny in the Republican-controlled Congress.

— with support from Anna Edgerton, Ali Nutter, Mike Dorning, Keith Lane, Alexander Ruoff, Roxana Tyrone, Anthony Capaccio, Benjamin Bain When Lydia Beoud.

To contact the author of this article:
Eric Wasson Washington State ewasson@bloomberg.net

To contact the editor responsible for this article:
Joe Sobzik at jsobczyk@bloomberg.net

John Morgan
Megan Scully

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