Biden offers a mixed bag for business leaders
In the waning days of the Trump administration, the schism between big business and the Republican Party burst into the open.
While corporate America notched real gains over the last four years, including lower taxes and a looser regulatory environment, President Donald Trump routinely upset major chief executives. The Jan. 6 riot at the Capitol and the refusal of Trump and many congressional Republicans to recognize the election result was the breaking point, culminating in many large companies condemning Trump and cutting off support for his allies in Congress.
But just because big business is at odds with the Republican Party doesn’t mean it’s ready to embrace every aspect of the Democratic agenda. With President Joe Biden seeking to undo much of Trump’s legacy, including some initiatives championed by big business, chief executives are approaching the new administration with a mix of optimism and apprehension.
At the most fundamental level, many executives appear grateful to move on from the Trump administration, which routinely surprised companies with abrupt changes to trade policy, immigration rules and more.
“Business hates uncertainty, and we’ve had chaotic uncertainty now for some time,” said Andrew Liveris, who stepped down as chief executive of DowDuPont in 2018 and is now a board member at IBM. “Trying to navigate through it as a company has been very tough.”
But the prospect of higher corporate taxes and new regulations that might curtail profits is unlikely to sit well with a business community struggling to recover from the pandemic. “The rubber will hit the road when we get around to things like taxes and climate tariffs,” Liveris said.
Biden began putting his policy agenda to work on Inauguration Day, signing 17 executive orders and actions in the Oval Office.
One recommitted the United States to the Paris climate accord, a move that was met with praise from business leaders, many of whom objected to Trump’s withdrawal from the pact in 2017. On Twitter, Microsoft co-founder Bill Gates cheered the move, saying that “the United States also has the opportunity to lead the world in avoiding a climate disaster.”
Other orders shielded recipients of the Deferred Action for Child Arrivals program from deportation and named an official response coordinator for the pandemic.
Sundar Pichai, chief executive
of Alphabet, applauded on Twitter the “quick action on COVID relief, the Paris Climate Accord, and immigration reform,” and said his company looked forward “to working with the new administration to help the US recover from the pandemic + grow our economy.”
But at least one early move by Biden — his revoking of a permit for the Keystone XL pipeline — was met with swift condemnation from some business leaders.
Jay Timmons of the National Association of Manufacturers, a group that just weeks ago called on the Cabinet to consider removing Trump from office, criticized the move, arguing that the pipeline would have created 10,000 union jobs.
The Chamber of Commerce, another pro-business group that took an increasingly hard line with Trump in the last weeks of his presidency, also opposed the move, calling it “a politically motivated decision that is not grounded in science.”
“It will harm consumers and put thousands of Americans in the building trades out of work,” said Marty Durbin, an executive at the chamber.
More skirmishes may be on the horizon. Biden has signaled that he is open to raising taxes on corporations.
“I’m sure there will be conflict on the tax issue for corporations,” said Richard A. Gephardt, a Democrat and former House majority leader.
The prospect of higher individual taxes is also likely to face pushback from wealthy executives. In New York, Gov. Andrew Cuomo recently floated a tax increase on high earners. Should the federal income tax rate go up, too, it could result in an effective tax rate of more than 60% for some well-paid New Yorkers.
“That’s pretty onerous,” said Kathy Wylde, chief executive of the Partnership for New York City, a trade group that represents many large employers.
Wylde added that potential changes to taxes on real estate, which Trump cut, could also be a cause for concern among executives.
“There’s probably nervousness in the real estate community,” she said.
But an increase in the corporate tax rate is a price companies may be willing to pay in exchange for an administration with more predictable stances on critical issues like trade and tariffs.
“They may like the Biden administration more on trade than they did Trump, because he jerked things around so much,” Gephardt said.
For the moment, there is a palpable sense of relief in board rooms across the country, with executives exhaling after four years during which Trump’s unpredictable outbursts led to abrupt changes in policies and sometimes targeted companies.
“The markets are relieved to be on the other side of all the tumult and uncertainty that was Donald Trump,” said Brad Karp, chairman of law firm Paul, Weiss. “You woke up in the morning and saw the president imposing tariffs, or closing borders, or retaliating against a company. Business needs predictability and certainty.”
And as Biden works to get the coronavirus under control, companies large and small will be rooting for the new administration. The pandemic has decimated the economy, sapping businesses of sales and leading to mass unemployment. Measures the Biden administration is considering, including a new stimulus package and a large government infrastructure program, could help bolster an economic recovery.
“Getting COVID under control will be good for business,” Karp said. “A stimulus plan will be good for the economic recovery. Infrastructure spending will be good for the economy.”
Immigration is another issue in which big companies have cause for optimism. Trump curtailed immigration and put caps on the H1-B visa program, which allows foreigners to work in the United States, a shift that caused headaches for many companies.
“America-first policies don’t work for global business,” Wylde said. “Those will not be missed.”
Biden signed an executive order mandating the wearing of masks on federal property. By contrast, Trump politicized mask wearing, further disillusioning business leaders who watched, dismayed, as arguments about masks erupted in their stores.
“Trump lost a lot of the business community on the mask stuff,” Wylde said. “Without a mask mandate, the enforcement agents became the business. That was a major issue for retailers.”
Already, some executives who spoke approvingly of Trump’s policies are welcoming the Biden administration. Nick Pinchuk, chief executive of Snap-on, a tool company based in Kenosha, Wisconsin, said he was hopeful that the federal government would support efforts to bolster the working class, such as retraining efforts and investments in education.
“It remains to be seen, but it looks like this administration could prioritize those things,” Pinchuk said. While not all of his employees were pleased with the election result, he said, they largely disapproved of Trump’s meddling with the democratic process and seemed willing to give Biden a chance.
“The business world wants the Biden administration to be successful,” said Blair Effron, a cofounder of Centerview Partners, an advisory firm that works with many large companies. “People understand the urgency of the moment for this country, politically, economically, health-wise and socially.”