GOP Congressional Takeover Will Spur Biden, Offer Business Reset

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 Joe Bidenagenda.

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 trump card Tax cuts. Two provisions of the law are of particular value to businesses: a 20% deduction on qualifying income for many pass-through entities, which expires in 2025, and a bonus depreciation for qualifying business purchases that will be fully phased out in 2027.

anti-tax activist Grover Norquist The Republican Congress is expected to negotiate with the White House before the end of 2024 to extend the terms for two years.

former top Senate Republican aide Rohit KumarNow at PwC, he predicts a tough Republican vote on a settlement bill extending Trump’s tax code to force moderate Democrats to agree to small business relief. “This will set the stage for final negotiations in 2025,” he said.

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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. Bill Johnsonthe Ohio Republican who served on the committee, said.

These measures, if implemented, would benefit companies such as nuclear operators Southern CompanySmall Modular Reactor Manufacturer NuScale Power Companyand LNG exporters chenille energy co.. They can benefit drillers halliburton co. and oil producers such as Exxon Mobil Corporation Johnson also plans to target a Biden administration rule to phase out some of the gas furnaces that have drawn the ire of the American Gas Association, which represents utilities such as dominion energy co.and DTE Energy

Wind turbines at the San Gorgonio Pass wind farm in Palm Springs, California.

Photographer: Bing Guan/Bloomberg

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 General Motors Corporationand ford motor co., will likely be ignored by Republican lawmakers. Biden halved his demand for $15 billion in EV charger funding to win Republican support for his bipartisan infrastructure bill, as well as a second Democrat-only climate bill that focuses on consumer spending provide electric vehicle tax credits.

Executive Vice President of the American Chamber of Commerce Neil Bradley He said he doesn’t think Republicans can recoup funding for renewable energy or reverse Biden’s past tax hikes, given legislative hurdles in the Senate. “You don’t ring the bell in a divided government,” he said.

Financial regulations may be delayed or hindered

Trading companies include Robin Hood Markets Will benefit from a takeover by Republicans trying to block SEC regulations under plan Gary Gensler. Republican lawmakers can delay rulemaking by filing a request for information with the SEC and language in the annual funding bill 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 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, Meta Platform Company. and Wal-Mart There is weight.

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 Apple Inc., Amazon Inc. and Alphabet Inc. Google. The bill has bipartisan sponsors and has been approved by major committees in the House and Senate, but the tech industry has helped hold the measure back through more than $100 million in lobbying efforts.

House Republican leader Kevin McCarthy and the possible chairman of the House Judiciary Committee Jim Jordan Opposes the antitrust bill, which must be reintroduced if it does not get a vote in this Congress by the end of the year.

Republican Rep. Jim Jordan of Ohio speaks at a House Judiciary Committee hearing in Washington.

Photographer: Michael Reynolds/EPA

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.

A CVS pharmacy in San Francisco.

Photographer: David Paul Morris/Bloomberg

Kathy McMorris RogersThe top Republican on the House Energy and Commerce Committee, who ran ads in her home state of Washington, vowed to require hospitals, insurers and doctors to disclose prices so consumers could shop around. Three pharmaceutical managers account for more than two-thirds of the total U.S. market: Express Scripts Inc., CVS Health and OptumRx Inc., HCA Healthcare Corporation, improve health and Tenet Healthcare are hospital companies that may be affected.

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. Johnson & Johnson, Merck & Co., Pfizer and Eli Lilly Having a product for which health insurance costs a lot of money.

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 Kroger By giving low-income recipients a way to buy more food.

A tree shaker removes walnuts from trees at Barton Ranch in Escalon, California. The state is the world’s largest exporter of walnuts and the second largest grower of walnuts after China.

Photographer: David Paul Morris/Bloomberg

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 mosaic company and Deere It also reduces costs for major grain buyers such as Cargill and Archer-Daniels-Midland And meat and poultry processors such as Tyson Foods. Buy animal feed.

Arms makers could see growth in contracts

Republican-led Congress presents opportunities and dangers for America’s largest defense contractor, including lockheed martin, Raytheon, General Dynamics and Boeing

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 Kay GrangerThe likely next chair of the House Appropriations Committee said in an interview that she would prioritize increasing defense spending.

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.

– with help Anna Edgerton, Alinate, Mike Thorning, Keith Lane, Alexander Ruff, Roxana Tyrone, Anthony Capaccio, Benjamin Bain and Lydia Bewd.

To contact the author of this story:
Eric Watson Washington

To contact the editor responsible for this story:
Joe Sobczyk at

John Morgan
Megan Sculley

© 2022 Bloomberg LP. All rights reserved. Used with permission.

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