US Election | Economic and Tech Outlook
By Anthony Ginsberg
Big Tech Overview
Current predictions indicate the
Democrats may not only win the White House, but enjoy a clean sweep in Congress
(both the House and the Senate). Democrats are known for a more activist
Federal Government stance – with a focus on inequality, assisting minorities
and climate change.
Along with Amazon, Alphabet's Google and
Microsoft are now among the top five contributors to Joe Biden's candidate
campaign committee in the 2020 cycle. This points to more leniency for
Big Tech under a Biden administration. It will certainly be less volatile
and more rules based.
Under a President Biden, corporate tax
rates are expected to go back to 28% (currently 21%). Capital Gains Taxes
will jump too – mirroring a planned hike in income tax for earners above
$400,000. Biden’s goal is to raise $3-$4 trillion in taxes over a decade
for education, health care and other social programs. The minimum hourly wage
will likely rise to $15.
Businesses expect far more regulation
and red tape to be enacted under Biden. This includes rejoining the Paris
Climate Acord and embracing green tech and empowering the EPA to be more
activist (Environmental Protection Agency – US Government agency).
Both Democrats and Republicans have found a mutual target:
big tech companies. While they propose different policies, neither party is
expected to be Silicon Valley’s savior. Biden and Obama era policies are
seen as more moderate – unlikely to break up Big Tech. It is unlikely
Biden will target specific Chinese companies. Powerful technology companies are
expected to face increased scrutiny no matter who wins the November 3rd election. Trump would maintain regulatory scrutiny of Big Tech companies
– including allegations of
anti-conservative bias, antitrust
investigations of internet giants such as Alphabet Inc.’s Google and Facebook Inc., and actions against
Chinese-owned apps such
as TikTok and WeChat. Biden has also been critical of Big Tech’s market
power. Since large Cloud players mostly service businesses, it is likely
their activities will remain mostly untouched by any anti-trust lawsuit.
Given Big Tech’s support of Biden, it is
less likely he will pursue antitrust complaints against Google and others. It’s
likely Biden would settle any antitrust cases brought by the Trump
administration on lenient terms. Biden has expressed concerns about the
potential impact of tech innovations, such as self-driving vehicles, on the
middle class. He proposes providing extra government aid to help workers who
have been dislocated by tech. Biden has come out against further
subsidies for oil companies.
He is also in favour of green energy and
future cars that use clean energy (battery/EV vehicles). It is possible
subsidies could be introduced to buy EV vehicles and taxes imposed on
non-hybrid EV cars. However this could be a huge cost to US taxpayers and
threaten existing auto jobs. Biden has also been outspoken about using
government regulation to force “gig economy” businesses to pay benefits to
their independent contractors, by reclassifying them as employees. (Uber
etc). It’s likely to add additional costs to certain gig workers and Big
Trump could legislate to scale back
protections social-media companies enjoy – currently giving them broad legal
immunity for content posted. Trump’s focus on social media bias would
likely leave Apple and Amazon untouched. China technology issues
will remain – though Biden is less likely to target specific players – and
follow a more rules based approach.
Obama era public health insurance will
be extended to move closer to a UK/EU style NHS program. Government will
play a far bigger role in the US healthcare system – increasing spending and
insuring many millions of additional Americans. While this will boost the
number of insured citizens, new regulations may limit certain advanced private
sector initiatives such as personalized medicine (AI and Gene Therapies).
Although telemedicine is already federally insured, Biden says his
health care proposal will expand Obamacare so that 97% of Americans are insured
and cost $750 billion over 10 years. Biden is eager to introduce a public
health insurance option (NHS style) - available premium-free to individuals
making below 138% of the federal poverty level. Stricter COVID
related lockdown measures are expected under Biden, while Trump is much
keener to open up the economy.