Six key issues impacting U.S. businesses and how the Biden Administration might address them.
After what has been a turbulent year for many business owners, many are wondering how the new administration will affect them. While the many laws and regulations that businesses must abide by are established by either Congress, federal regulators, or state and local lawmakers, the president can issue executive orders to enact regulations or establish a national agenda that can have significant impact in all corners of the business world. President Biden has announced a number of Executive Orders already, and the White House plans to issue at least 50 such directives in total during his first month in the Oval Office.
So, how might the Biden Administration affect businesses? Here’s a look at six key issues and how the incoming administration might address them.
Pandemic Control
President Biden’s most pressing priority as he assumes office is getting the COVID-19 pandemic under better control. Beyond greatly expanding U.S. testing and contact-tracing capacity, Biden has said his administration would issue mandatory federal workplace safety rules that protect workers against exposure to the virus. Simultaneously, the president must also oversee the efficient distribution and implementation of the vaccine for COVID-19 across the country in order to restart the economy.
Executive orders signed by President Biden on his first day in office direct federal government employees and contractors to follow Centers for Disease Control (CDC) guidelines with respect to wearing masks, social distancing, and other best practices while at work or on Federal land, as well as encouraging widespread mask-wearing across the country. He also issued an executive order mandating masks during interstate travel such as on planes, trains and buses. The hope is that those preventive measures can eliminate the need for lockdowns that force businesses to close or curtail services, though President Biden has indicated support for local lockdowns as necessary in hotspot areas.
When it comes to a vaccine rollout, President Biden centralized the leadership of the effort by issuing another Executive Order which established the role of Coordinator of the COVID-19 Response and Counselor to the President. This order establishes this role as the hub of the Federal Government’s efforts to combat COVID-19 and other potential diseases.
Trade
Trade policy is one area where the president often doesn’t require Congress’s approval. President Trump’s administration took a tough stance on trade, imposing billions of dollars in tariffs on global imports — most significantly on those from China, where three-quarters of the goods the U.S. buys are now subject to tariffs. While these tariffs were meant to boost U.S. manufacturing while reducing China’s global influence, they have also increased costs for U.S. businesses that rely on Chinese imports, whether clothing, raw materials, or electronics.
How much will President Biden differ on trade policy? When it comes to negotiations and tariffs, his tone is expected to be more collaborative. He has signaled that his administration will review the current tariffs — potentially lifting or renegotiating some — but he’s unlikely to completely reverse the trade war against China due to widespread American sentiment that the U.S. needs to level the playing field. Likewise, he has indicated he wants to work closely with U.S. allies in Asia and Europe to set global trade rules and continue to counter China’s influence.
Manufacturing
President Biden says he will issue and support policies that favor U.S.-manufactured goods over those made abroad. For example, he wants to provide tax incentives to companies that “reshore” their manufacturing. Likewise, he has proposed a 10% advanceable tax credit for business investments that create U.S. manufacturing jobs or update domestic manufacturing facilities.
Similar to President Trump, President Biden also supports “Buy American” rules for the federal government and has issued an executive order expanding those requirements and has pledged a “historic procurement investment” of $400 billion for the federal government to purchase domestically manufactured goods. Many economists expect him to be reluctant to rejoin trade agreements that may have resulted in job loss among blue collar workers. President Trump issued an executive order in August 2020 requiring U.S. agencies to buy medical supplies and medications from domestic manufacturers amid the COVID-19 crisis — an order the new administration is expected to maintain.
Taxes
President Biden campaigned on several sweeping changes to the U.S. tax code, including raising taxes on corporations and high-income households, reducing the federal estate tax exclusion, increasing tax rates on capital gains and dividends for high earners, and eliminating the step-up basis that allows heirs to inherit assets valued as of the date of death. Perhaps most notably, he has recommended increasing the corporate tax rate to 28% from the current 21%. For individuals, he has said he would raise the top rate to 39.6% from 37%, create new limits on deductions, and impose the Social Security payroll tax on wages above $400,000. High-income filers who got a break on pass-through income as part of the 2017 tax bill may lose that benefit. Such tax reforms require congressional legislation, and with narrow Democrat majorities in both the House and Senate, the belief is tax increases would be used as revenue-generating line items in a larger spending package focused on infrastructure and possibly healthcare. Such a package would not be expected to emerge until the second half of 2021.
Health Care
The Trump Administration has dismantled several parts of the Affordable Care Act (ACA), the federal health care law that mandates that all Americans carry health insurance, including the penalty for not having insurance. The fate of the law is currently in the hands of the Supreme Court, which is expected to decide whether to strike down the ACA or parts of it — namely, the individual mandate — by next spring at the earliest. That said, the Biden Administration looks to expand the ACA and is expected to reverse many of the Trump Administration’s changes.
While some ACA reforms would require congressional approval, others could be accomplished through executive authority. For example, the Biden Administration could extend the open enrollment period and ensure the current rules are better enforced. President Biden also wants to expand the public option for insurance coverage by creating a Medicare-like option for everyone — which his website says would “bring relief to businesses struggling to afford coverage for their employees.”
Environment
President Trump pulled the U.S. out of the Paris Climate Agreement, while the Environmental Protection Agency dismantled more than 80 major environmental regulations under his administration.
President Biden, on the other hand, has made countering climate change a key priority. He’s signed an executive order to rejoin the Paris Climate Agreement and promised to invest $2 trillion in efforts to mitigate climate change and create jobs. The plan calls for greatly increasing the use of clean energy in vehicles, buildings and electricity production, and sets a goal of the U.S. reaching net-zero carbon emissions by 2050. On his first day in office, he revoked the permit for the Keystone XL Pipeline. He has also announced several executive orders he plans to issue in the early days of his presidency, including conserving 30% of U.S. land and water by 2030, requiring that public companies disclose their carbon emissions, and increasing fuel-economy standards.
Businesses across all sectors could be affected by his climate change plans, from facing stricter environmental regulations to having opportunities to benefit from a large investment in clean energy technologies and buildings. And some industries will be particularly impacted — either for better or worse. The power generation industry, for example, would need to shift away from coal and other fossil fuels and rely more on renewable energy sources, such as solar or wind. Oil and gas companies could lose customers. The auto industry will face new pressures to increase vehicle fuel efficiency and speed the production of electric vehicles. Companies that help boost building efficiency, such as high-efficiency window makers, could see big opportunities under the plan.
Joe Biden enters office as weary business leaders are struggling to recover from a year of unprecedented pressures. While the most ambitious elements of his agenda will depend on congressional support, the next four years will no doubt bring change — change that could deliver both more opportunities and more hurdles for U.S. businesses.
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