2020 Election and Policy Analysis
Prominent news media organization have projected former Vice President Joe Biden and Senator Kamala Harris the winners of the 2020 presidential campaign, having secured enough of the allotted popular vote to be awarded the requisite amount of electoral college votes when the college meets on December 14. While President Trump has not conceded and is pursuing legal pathways to challenge the vote as the certification process continues, the Biden-Harris team has begun the transition to form a new government.
In the US Congress, the Democrats are expected to retain control of the House of Representatives, albeit by a slimmer majority. Control of the US Senate is unclear as the caucuses are currently divided at 48-48 with Republicans expected to win two undecided races in North Carolina and Alaska, with two additional “run-off” elections for Senate seats in Georgia to be held on January 5, 2021. If Biden’s victory is formalized, the outcome of these contests will determine the Senate majority (with a Vice President Harris, serving also as president of the Senate, casting the decisive 51st vote). With Democrats in the Speaker’s chair, which Party controls the US Senate will have a significant effect on how a Biden Administration can fully pursue and execute its legislative agenda.
Regardless, the Biden-Harris team has indicated several areas for legislative and executive branch action in the coming year. This memorandum reviews sector-by-sector the expected priorities of the new administration.
Technology, Media, & Telecommunications
Businesses in the technology, media, and telecommunications sector should expect several challenges and opportunities under the new administration.
- Antitrust – The Trump Department of Justice’s lawsuit filed against Google places the incoming DOJ in a difficult spot – walking back the suit may anger activists and either strengthening or weakening it opens political appointees to second-guessing if or when the suit, which may extend for years, hits rough spots. Continued scrutiny and congressional action teased in the second half of 2020 both have immense implications for the technology sector ecosystem and beyond. Antitrust scrutiny could also affect the potential for new partnerships or acquisitions of smaller entities.
- Media Ownership Rules – The Supreme Court has agreed to review the Prometheus IV case, creating the potential to clear significant hurdles for implementing less-restrictive media ownership reforms. But underlying concerns about diverse voices persist and negative attention around a Supreme Court victory could create a policy backlash in the new Washington dynamic.
- Broadband Deployment – The pandemic has heightened concern about the digital divide. For most Americans, access to high-speed internet is now not just critical for streaming and gaming but also education opportunities, continued employment, and even health care. As exciting new technologies like 5G wireless progress, expect more questions about lack of broadband access, which federal agencies should run connectivity programs, how to deploy subsidies, and even reforms for Universal Service Fund fees that fund efforts to connect the underserved.
- Net Neutrality – Expect another knock-down, drag-out fight over rules of the road for the internet. While an effort to restore more rigorous Title II regulations putting broadband providers on the precipice of price regulation (but not quite there) seems likely, tech companies that have long championed stringent net neutrality rules now have other challenges and the resurrection of this issue may spur inconvenient conversations for them this time around. For example, net neutrality proposals may boost calls for platform neutrality, which could push some tech companies closer to public utility-style regulation.
- Platform Liability Protection Reforms – With voices on both the left and right wanting more accountability from technology companies, well-heeled trial lawyers look especially well-positioned to benefit from any changes to liability protections granted through Section 230 of the Communications Decency Act. While the discussion over Section 230 has been politically polarized, some proposals have bipartisan support and powerful cheering sections. Certainly, for very different reasons, there is a broad, bipartisan majority in both houses of Congress that wants to see changes happen. What is very different from this debate five years ago is the growth of the “Internet of Things;” while Congress has focused on the big social media companies and search engines as behaving irresponsibly because they are shielded from liability, companies like Etsy, eBay, Airbnb, and others which accept user-generated listings of products and commodities for sale would also see their business models threatened if they – rather than their users/listers – were exposed to liability for faulty products or services posted on the platforms.
- Privacy – Legislative efforts to enact a federal privacy statute have had an underreported level of bipartisanship even as disagreements over preemption of state laws and private right of action have blocked the agreement. Prop 24 in California, which further tightens California’s complicated CCPA law, and pressure from other states enacting privacy statutes should renew a push for a federal law.
- Tech Labor – Passage of Prop 22, a measure championed by rideshare tech companies that classifies drivers as contractors and not employees, is now being hailed as a model for a federal legislative push. From warehouse workers at eCommerce businesses to delivery services, expect significant activity on labor rules for workers in the new tech economy.
- Immigration – As a priority, we expect immigration and guest worker policies to be high on the agenda. Making cases for economic needs, worker fairness, and ensuring new policies do not hurt current American workers will be key to shaping new initiatives of importance to the technology sector.
- Pandemic Oversight – The new administration may be eager to work with allies in Congress to shine a light on perceived abuses and mismanagement of government efforts related to the current pandemic. Interactions between company and government officials may come under scrutiny. Executives at companies that benefited directly or indirectly from government funds or decisions, and particularly companies that have prospered through the pandemic, may get starring roles.
Industrials & Infrastructure
A Biden Administration poses both challenges and opportunities for industrial companies. In his first 100 days in office, Biden will likely focus on working with Congress to contain COVID-19 by passing additional stimulus, increasing investments in rapid testing, and setting national standards for reopening. Beyond issuing more direct stimulus payments, boosting unemployment benefits, and establishing a renewable fund for state and local governments, COVID-19 legislation would also likely include additional relief to sectors that have been hit particularly hard by the pandemic, including airlines and aviation. This would likely take the form of grants and forgivable loans. However, it is important to note that the acceptance of federal support will come with intense scrutiny and oversight. For example, shortly after the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, House Speaker Nancy Pelosi established the Select Subcommittee on the Coronavirus Crisis which is tasked with ensuring recovery funds are “wisely and efficiently spent.”
In addition to containing COVID-19, Biden is expected to recommit the US to international agreements and organizations (e.g., Paris Climate Agreement, Iran Nuclear Deal, World Health Organization), and sign a series of executive orders on emissions reductions, labor protections, and supply chain security. Examples include restoring federal workers’ rights to unionize, launching a 100-day supply chain review, reinstating and advancing more stringent fuel economy standards, creating efficiency standards for appliances and buildings, requiring climate change disclosures from publicly traded companies, and “greening” the federal government’s facilities and vehicles. While some of these executive orders could significantly increase the cost of compliance for corporations, others could align well with commitments that industrial companies have already made. As a result, corporate leaders should consider positioning themselves as a solutions partner on important societal goals.
One area where a Biden Administration can make a significant impact without having to work with Congress is oversight and investigation. We believe Biden will focus on investigating companies for environmental pollution, protecting worker organizing and collective bargaining, and discouraging anticompetitive behavior. For example, Biden has pledged to establish an Environmental and Climate Justice Division within the Department of Justice and overhaul the Environmental Protection Agency’s External Civil Rights Compliance Office. Specifically, he will direct the Attorney General to implement Senator Cory Booker’s Environmental Justice Act of 2019 via executive order. These actions will result in an increase in criminal investigations, class action and public nuisance lawsuits, stricter regulation of chemicals, and increased environmental activism.
In terms of protecting worker organizing and collective bargaining, Biden has vowed to appoint members to the National Labor Relations Board (NLRB) who will protect worker organizing and collective bargaining and provide the NLRB and Department of Labor with the resources they need to increase the number of labor investigations. In addition, Biden will restore President Obama’s Fair Pay and Safe Workplaces executive order requiring employers’ compliance with labor and employment laws to be taken into account in the federal contracting process, as well as President Obama’s “persuader rule” requiring employers to report information communicated to employees and also the activities of third-party consultants. With respect to discouraging anticompetitive behavior, Biden has repeatedly cited consolidation in the agriculture sector as a problem and said he would strengthen enforcement of the Sherman and Clayton Antitrust Acts and the Packers and Stockyards Act.
Biden will need to work with Congress to implement policies at the core of his agenda. If Republicans maintain a majority in the Senate, it will be difficult for a Biden Administration to pass big-ticket items – particularly with a growing national deficit. In his first year, Biden will seek to implement a $1.3 trillion plan to build modern sustainable infrastructure. This includes $50 billion in his first year to repair existing, roads, highways, and bridges; $10 billion over 10 years for transit projects that serve high-poverty areas with limited transit options; and twice the amount of funding for the Department of Transportation’s BUILD and INFRA grant programs, clean drinking water and water infrastructure, and the Federal Aviation Administration’s Airport Improvement Program. In addition, Biden will seek to build a national high-speed rail network, while also making historic investments in electric vehicles, including restoring full EV tax credits, providing $5 billion in funding for the Department of Energy for battery and energy storage technology, and constructing a national charging system of 500,000 public charging outlets by 2030. To make certain his infrastructure plan is supporting domestic union jobs, Biden will ensure federal contracts only go to companies who sign neutrality agreements committing not to run anti-union campaigns and pay their workers at least $15 per hour. In addition, Biden will require federally funded projects to source materials in the US, while also tightening content requirements for Made in America procurement rules and closing waivers to Buy American rules by increasing transparency.
Other important issues:
- Trade: Biden is likely to take a different approach on trade as compared to President Trump. For example, Biden will likely institute a more multilateral approach to curbing China’s trade practices, working in close concert with Europe. He has also said that any new, prospective trade deals will focus on environment, labor, transparency, cyber theft, and data privacy. While Biden is a critic of President Trump’s approach to China, it is not likely that he will immediately remove all Section 301 tariffs on Chinese imports. However, a short-term reversal of Section 232 tariffs on aluminum is more likely, given the boon it could provide to manufacturing.
- Defense Spending: While federal spending under a Biden Administration could increase significantly, it is not likely to translate into the Department of Defense budgets. Progressive lawmakers within the Democratic Party are calling for major defense cuts, but moderate Democrats and a Biden Administration will likely work to keep the budget flat at current levels. Importantly, Biden and his surrogates have said there will be a shift in defense spending from legacy programs to newer technologies and warfare capabilities to modernize the military.
Financial Services
As a U.S. Senator representing Delaware, Biden was routinely an advocate for the financial services industry, specifically credit card issuers. When he was selected as Barack Obama’s running mate, his prior advocacy for the credit card industry received scrutiny. As a candidate, Biden adopted more progressive policies, even forming a ‘Unity Task Force’ with Senator Bernie Sanders, which issued broad, progressive policy recommendations in order to solidify the party’s support. While Biden’s campaign received significant support from the financial services industry – more than from any other industry – a Biden Administration’s impact on the sector also will likely be driven more by the appointments he makes at regulatory agencies than his personal policy stances. In his First 100 Days, Biden’s financial services priorities will likely include strengthening the housing market through rental assistance, targeting financial fraud through a new task force, and reinvigorating the Financial Stability Oversight Council and the Consumer Financial Protection Bureau and establishing a public credit reporting agency.
On financial regulation, federal banking regulators will continue to focus on modernizing the Community Reinvestment Act, which the Biden campaign has highlighted. The Consumer Financial Protection Bureau will be reinvigorated and likely be more aggressive in both enforcement actions and rulemaking. Target areas for the CFPB are likely to focus on overdraft fees, payday lenders, installment lenders, artificial intelligence underwriting, open banking, student lending, mortgage servicing and open banking. It is also likely that the Administration will use housing policy as a tool to bridge the economic divide, focusing on the affordability of housing and policies that support the household formation and expanding the credit box, including first-time home buying tax credits and sustainable rentals.
Big banks are not likely to be a priority in a Biden Administration as they are better prepared during this economic downturn and a large Dodd Frank Act-style reform legislation is unlikely. However, reputational risks remain for large banks and financial firms as a progressive wave could continue to threaten a financial transaction tax, postal banking, and Glass Steagall 2.0. Mergers among regional banks, insurance firms and other have seen a resurgence and will likely continue into a new administration. Nonbank financials will likely receive more scrutiny. The private equity industry has faced increased skepticism from both Republicans and Democrats and could see greater regulations.
Healthcare & Life Sciences
President-Elect Joe Biden’s win provides the incoming Administration and Congressional Democrats with the opportunity to advance a health policy agenda that is focused most immediately on developing a federal response to the COVID-19 pandemic, and longer-term on more systemic changes intended to bring down costs and expand coverage. In his first 100 days, Biden will likely pursue additional stimulus funding as part of his COVID-19 response, reverse a number of Trump’s administrative actions on healthcare, and lay out a vision to expand healthcare coverage by strengthening the Affordable Care Act, creating a public option and lowering the age of Medicare eligibility. He also could seek to advance legislation to reduce prescription drug prices, for example by permitting importation of cheaper drugs from Canada, allowing Medicare to negotiate drug prices or instituting some form of reference pricing, though Senate Republicans are unlikely to agree to drastic measures. On tax policy, Biden has expressed support for increasing the corporate tax rate to 28 percent, which could have a significant impact on companies in the healthcare and life sciences industries.
Absent a Democratic takeover of the Senate, President-Elect Biden and Congressional Democrats will be severely limited in their ability to passing sweeping healthcare legislation in a divided government. Democrats will largely be left to make changes around the margins through targeted legislative changes, regulatory reforms and executive orders.
President-Elect Biden may, however, face the prospect of having to replace all or part of the ACA should it be overturned by the Supreme Court, as early as June of next year. If the law is overturned, Biden will likely hear calls to move forward with Medicare-for-All from progressive Democrats, although it is far more likely that he will seek a pragmatic approach given the need for cooperation and negotiation with Republicans in Congress.
Energy & Natural Resources
When it comes to energy and environmental policy, a Biden administration will likely, primarily rely on executive orders and rulemakings from federal agencies such as the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Interior. As many other observers have noted, a GOP-controlled Senate – which may be the reality for at least the first two years of Mr. Biden’s presidency – is unlikely to take on controversial legislation. Energy policies often make for tough politics, and divides a Senate Democratic Caucus that includes red and purple state legislators from energy states, as any sort of new cost could be framed as causing higher energy bills – or even worse, a new national “energy tax.”
Recall that when President Barack Obama had a House of Representatives and Senate controlled by Democrats, cap and trade legislation only narrowly passed the House, and then-Majority Leader Harry Reid (D-Nev.) refused to even bring it up for a vote in the Senate given Republican unwillingness to help Democrats reach a 60-vote threshold. Moreover, moderate Democrats are increasingly speaking out against proposals authored by progressive members of their caucus (i.e. fracking bans, Green New Deal). Given that dynamic, even if Democrats end up winning both Senate seats in the Georgia runoffs and secure control of both the House and the Senate, it should not be seen as a slam dunk that Congress would pass a bold climate bill.
High on the priority list for President-Elect Biden will be rejoining the Paris Climate Accord “on day one,” an action that does not create any legally enforceable emissions limits but was endorsed by major corporation during the Obama years and signals the direction of the United States with respect to energy policy. At a major meeting of the Conferences of the Parties in Glasgow, Scotland early in 2021, a Biden Administration would signal its desire to see the United States and other parties to the Paris Agreement “up their ambition” as economies build back post-COVID.
Rather than try and pass an economy-wide cap on emissions, during the campaign, Mr. Biden aimed to weave climate goals throughout his “build back better” economic recovery plans, much as the Obama Administration did during the Great Recession. Biden pledged a $2 trillion plan to address climate change focused heavily on promoting green infrastructure and maximizing federal leverage to spur changes in state and local behavior, although getting his full plan through Congress appears unlikely. However, legislation focused on upgrading national infrastructure and support for low-carbon energy technologies could provide at least an incremental possibility: Republican U.S. Senators from Florida, Oklahoma, Kansas, Iowa, North Dakota, South Dakota – all states with well-established and highly popular renewable energy industries – all face re-election in 2022, and they may be motivated to demonstrate their continued support for jobs in those industries. In addition to advancing renewable energy sources such as wind and solar, there could be an opportunity for other energy solutions to deliver benefits across economic and environmental priorities – enhanced energy efficiency, reduced emissions from the transport sector and hydrogen, which is increasingly being viewed as a key part of our future energy portfolio.
The Biden administration will also be reversing several of President Trump’s regulatory rollbacks, including limits on methane emissions from oil and gas development and emissions from power plants. To connect this framework with post-COVID economic recovery, Mr. Biden has pledged to create (or at least support) upwards of 250,000 union jobs in the energy sector with a plan to plug abandoned oil and gas wells. Mr. Biden’s team has pledged to make the nation’s power sector carbon-free by 2035 and make the U.S. economy carbon neutral by 2050. Biden will be looking to Congress to evaluate a Clean Energy Standard (as opposed to cap and trade or a carbon tax) with enforceable metrics. But without support from Congress, laying the groundwork to achieve those ambitious goals will require an outsized role for the U.S. EPA and other regulatory agencies, ending up in the hands of the courts once again. Biden’s team has entertained the possibility of designating a very senior Climate Czar to galvanize domestic and international efforts beyond what the agencies – left uncoordinated – might achieve.
Mr. Biden also promised a new approach to pipelines and other infrastructure, one that includes greater consideration of climate change and other environmental impacts. This will likely include a greater emphasis on the Federal Energy Regulatory Commission (FERC), which has faced increasing pressure in recent years to stop or delay natural gas pipeline approvals based on climate concerns. In addition, expect that states will continue trying to use the Clean Water Act to block energy infrastructure, a path the Trump administration sought to streamline. Mr. Biden has also promised to end leasing for oil and gas on federal lands. Although there are certain statutory requirements within the U.S. Department of Interior that may prevent a blanket ban, the proposal should be seen as a clear directional shift away from expanded leasing. Beyond the usual energy and environmental agencies, the Biden administration will likely look to strengthen the National Environmental Policy Act and the Endangered Species Act, both of which can make progress on energy infrastructure challenges.
Another area where a Biden administration could impact the energy sector is international trade. While the Biden administration is not expected to lift all tariffs that President Trump imposed, Mr. Biden’s team has signaled an interest in restoring trading relationships with key allies. However, the Biden team has also suggested it may use trade deals to address climate change, including the use of carbon tariffs on imported goods and pushing for commitments to reduce emissions in future trade deals.
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