American companies have had plenty of time to think about what the presidency of Joe Biden will mean for them, thanks in part to multiple polls that predicted a landslide victory that did not materialize. But the results of the elections, and the persistent uncertainty about which party will dominate the Senate, serves as an entrant for the paralysis and for what awaits us later.
The money business dodged the great blue wave, but a purple tidal wave (Democratic blue + Republican red) could still splash the masters of the universe. Before the elections, the worst possible scenario for banks like JPMorgan, Goldman Sachs or Citigroup was for the Democrats to take control of both houses. That would have provided a clear platform for ideas such as the division of large banks into smaller ones proposed by Senator Bernie Sanders, the appointment of Elizabeth Warren as Secretary of the Treasury, or proposals to restrict share buybacks and impose taxes on financial operations. .
These possibilities are fading as unlikely. Although President Biden could put people he trusts in front of financial regulators, they will most likely have to be liked by moderates, even if Democrats win control of the Senate. There are executives in the financial sector who could apply for these positions.
The other sensitive issue is taxes. Biden proposes raising corporate tax from 21% to 28%, which would affect financial institutions and most companies in general. But his idea of raising tax rates for top earners and capital gains would hit the financial sector hard, with all the wealth it accumulates. That too seems to have to be lowered substantially.
For big tech companies, what’s coming now is more a matter of people than politics. Google, which belongs to Alphabet, Amazon.com, Apple and Facebook are being investigated by the Department of Justice or the Federal Trade Commission. The big variable will be who the Biden administration will choose to lead the proceedings, and to what extent the resulting aggression goes.
The technology sector occupies the unenviable place of the one with enemies left and right. But the fact that one party or another controls the Senate by a very narrow margin will benefit the big companies. It makes it difficult to pass antitrust laws that make it easier to break up companies into smaller units or that prohibit the purchase of rival companies. The one area that could see significant progress are proposals to strengthen privacy.
On infrastructure, Biden has promised a $ 2 trillion program focused on clean energy, high-paying jobs, and fairness in where and how investments are made. Trump has lowered the red tape that could strangle private sector infrastructure projects, something hopeful for companies that invest in this, such as Brookfield Asset Management and Blackstone. Tax breaks and other incentives could be conducive to investment. But there is the danger that this will place a heavy burden on the federal budget.
Analysis from Wharton indicates that higher federal spending on infrastructure may allow states and municipalities to spend less, but those projects boost productivity, and therefore wages and GDP. If they want to mobilize large reserves of money in anticipation of their opportunity, states and municipalities may have to become more friends with the private sector. If done well, investing in infrastructure pays off.
Public transportation has had a rough year as Americans have avoided buses and trains, but it was one of the winners on Election Night. Voters across the country approved ballot measures to fund better transportation. Biden is also a strong advocate for Amtrak trains, which he used almost daily between Delaware and Washington for 36 years.
Does the boost to public transport hurt private transport? Not necessarily. Leading automakers like Ford Motor or General Motors would have continued to shift toward electric vehicles regardless of who was elected president. The Biden administration could mean tougher emissions rules, but there will be less concern about divergences between regulations in the great liberal state of California and the rest of the country.
It doesn’t matter whether the US government is red, blue or purple: its energy is going to be greener. A change in management is not going to change course, although it will affect speed. The price reductions in green energy production are relentless, and they are driven more by technology than political action.
Even without the backing of the Senate, Biden will be able to exert his influence. Where Trump withdrew the United States from the Paris Agreement, Biden could rejoin it. Companies already moving away from polluting fuels, from NextEra Energy to wind turbine maker General Electric, are on the right political path. And for those sticking to fossil fuels, like Exxon Mobil, the future is already written.