A Republican takeover of Congress would reshape the fiscal and regulatory landscape for numerous companies that have been grappling with Democrats’ efforts to raise taxes and tighten rules for nearly two years.
Next week’s midterm elections are expected to usher in a new era of divided government, with polls showing Democrats losing control of the House and even the Senate.That would mean the end of the presidency
For business, the biggest impact of the Republican rise will be an end to one-party economic policy. Democrats will no longer be able to use partisan budget tactics to push through tax increases, changes to Medicare drug policy and spending on pandemic relief that many economists say will help drive inflation.
Yet even in a divided administration, there could be room for compromise on border security and legal immigration to address labor shortages plaguing U.S. industry, as well as a possible deal to simplify permitting and leasing of energy projects. However, Republican lawmakers have vowed to investigate Biden’s administration, deny his appointees to key positions and fight over a U.S. debt ceiling that could roil markets — politically charged moves that could disrupt any bipartisan trade.
With one week to go until Election Day, here’s what’s at stake for businesses:
Republican Congress to stop sales tax increase
Democrats raised the corporate tax rate to 25 percent and imposed the world’s lowest profit tax in a Senate vote. If the Republicans take over the House as expected, the risk of a resurgence disappears, along with the possibility of a windfall tax on oil companies. The mid-term results could also influence negotiations to update the R&D tax break in December.
Republicans say a majority will push to extend the expiration of the 2017 tax cuts signed by former President Donald Trump
former top Senate Republican aide
US debt limit woes return next year, 2011 Redux risk Tax cuts for the rich? in this economy?GOP playbook faces questions
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Energy production could get boost, climate measures cut
If Republicans gain a majority, they plan to push to expand domestic energy production and will try to capitalize on voter frustration with high oil prices to keep a Biden administration going.House Energy and Commerce Committee will seek to boost hydrogen projects, simplify permitting and development of nuclear power plants, and expedite approvals for LNG export facilities, Rep.
These measures, if implemented, would benefit companies such as nuclear operators
Republicans have vowed to closely monitor hundreds of billions of dollars in lending powers to the Energy Department under Biden’s Inflation Reduction Act.At the same time, automakers want to spend an extra $7 billion on electric vehicle charging stations
Executive Vice President of the American Chamber of Commerce
Financial regulations may be delayed or hindered
Trading companies include
Meanwhile, one of the biggest goals for companies is the SEC’s plan to require companies to disclose their greenhouse gas emissions and, in some cases, those of their suppliers and customers. The rule, proposed in March, has drawn ire from industries ranging from oil to agriculture. Exxon Mobil,
The SEC is also looking to increase regulation of the cryptocurrency industry.
Private equity firms and hedge funds may also benefit from the slowdown in SEC rulemaking. Gensler’s proposal to force them to disclose more about their fees and impose new restrictions has all drawn the ire of the industry.
Antitrust bill opposed by tech companies unlikely to pass
Silicon Valley may be immune to sweeping legislation targeting tech companies’ anticompetitive behavior in a Republican Congress, such as
House Republican leader
Instead, Republican lawmakers plan to focus on ending what they see as scrutiny of conservative voices on social media platforms, including removing Section 230 liability protections, giving users an avenue to appeal when content is removed, and asking tech companies to improve transparency. None of these content-focused proposals are likely to become law due to the lack of support in the Senate and the high likelihood of a Biden veto.
Stricter rules for hospitals, insurance companies
Hospitals, insurers and pharmacy benefit managers face the prospect of tough new regulations pushed by a Republican Congress that Democrats and a Biden administration are likely to support. Republican lawmakers have pledged to tighten requirements for hospitals to post prices online and reduce drug costs by targeting drug industry middlemen known as pharmacy benefit managers. Party leaders have sought to back away from promises to repeal the Affordable Care Act, also known as Obamacare, or restrict abortion rights, focusing instead on rising health care costs for Americans.
Many Democrats remain frustrated by the limited nature of Medicare’s drug price negotiation provisions in the Reducing Inflation Act, with only 10 drugs under negotiation by 2026. Expanding that power under Republican control is impossible.
Five-Year, $428 Billion Farm Bill Update
The next Congress will need to pass another five-year farm bill to manage direct farm subsidies, crop insurance, food stamps and protection programs. The 2018 Farm Bill authorized spending of $428 billion over five years, with about three-quarters in food aid and a quarter in agricultural support.
Renewing the farm bill, which is the backbone of domestic agribusiness, could be more difficult under Republican control. Some conservatives want to see farm subsidies cut, despite widespread bipartisan support for maintaining spending. A bigger problem could arise with previous GOP nutrition plans for eligibility requirements and protection programs.Food stamps help boost grocery sales at retail chains like Walmart
Since 2018, direct payments from the federal government have been a significant contributor to farm profits, accounting for 18% to 48% of annual net U.S. farm income, according to the U.S. Department of Agriculture.Additional income for farmers helps boost sales for suppliers of seeds, pesticides, fertilizers and equipment, such as
Arms makers could see growth in contracts
Republican-led Congress presents opportunities and dangers for America’s largest defense contractor, including
Republicans have complained that the Biden administration is underfunding weapons systems, and the party will face pressure to ensure the military budget keeps pace with inflation.Texas State Representative
However, the defense industry is also at risk of falling into Republican brinkmanship on spending to force Biden to cut social programs and strengthen border security. The protracted spending battle could force lawmakers to rely more on temporary bills to fund governments that won’t allow new contracts. Oversight of the Pentagon’s expedited contracting process for awarding Ukrainian arms contracts is likely to come under more scrutiny in the Republican-controlled Congress.
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