With the results of the U.S. presidential election finally (mostly) tallied, a new administration led by Democrat Joe Biden is set to take office in January 2021. With the change in leadership, what are the key policy shifts that organizations should expect to affect the outlook for innovation impacts and opportunities in the U.S.?
Biden will no doubt be very different in style and substance from incumbent Donald Trump, but it's important to note that in many areas, his ability to act will be limited by Congress. Pending the results of two runoff elections in the state of Georgia, the opposition Republican party will likely control a majority of seats in the U.S. Senate – and if so, they will almost certainly block any major legislative changes, ruling out, for instance, big shifts in federal spending or rewrites of regulatory law. (And notwithstanding what some see as Trump's anti-science stances, generally, federal research funding has held up under his administration).
Nonetheless, Biden still has significant leeway to make policy changes on his own in a number of areas. While we'll leave the broader macroeconomic and geopolitical forecasting to others, we see several segments innovation leaders should pay specific attention to:
Carrots instead of sticks on manufacturing and tradeBiden will back away from Trump's trade war belligerence and leave off efforts to push import tariffs – but promoting U.S.-based manufacturing will still be a priority as a component of economic recovery plans. Many of the ideas in Biden's "Build Back Better" plans, such as large new infrastructure investments, may be challenging to pass, but initiatives like tax credits to support local manufacturing and reshoring should still enjoy more bipartisan support. Look for more opportunities for alternative manufacturing than can help enable this shift and benefit from these incentives.
Greening energy policy
"Climate change" is one of the top four priorities cited on the Biden transition's website, and he'll bring a clear shift away from Trump's fossil fuel-focused energy plans. However, just as Trump's policies have had only a marginal effect, compared to global trends like low oil and gas prices and falling renewables costs, companies should temper expectations about Biden's impact, as there are big challenges still facing the U.S. government to move the needle.
Biden will bring the U.S. back into the Paris climate accord, providing a boost to clean energy developers, though the material impacts may be more muted. Plans for a sweeping "Green New Deal" energy infrastructure spending spree will be hard to get through Congress, but some spending on clean energy innovation and rollout has a good chance of finding its way into whatever stimulus plans the administration can negotiate (as it has in other countries). While Biden won't be overtly hostile to oil and gas (he has already resisted calls from the left to try to ban fracking, for instance), his administration's regulation will further burden dirty sources like coal and ease deployment of renewables. In transportation, he'll drop Trump-era efforts to stymie stronger fuel economy standards for cars. Look for the Biden administration to make the landscape more positive for energy innovation at the margin without dramatically shifting the path of the overall energy transition.
The big focus from a healthcare standpoint will naturally be on managing the COVID-19 pandemic, and the new administration can be expected to take a more proactive approach to everything from ramping up testing capacity to promoting the use of face masks. Again, any major overhauls to the healthcare system will be blocked in Congress, but Biden will be focused on preserving and as far as possible improving the functioning of the Affordable Care Act ("Obamacare") passed while he was vice president. Expect efforts at improving healthcare access while managing costs to lead to greater opportunities in digital health, telemedicine, and innovations like digital biomarkers, with regulatory agencies building on pandemic-inspired openings for these solutions – but these are more of a continuation of trends under Trump and ongoing legislative action than a disruptive break.
Emphasis on health innovation for the pandemic and beyond
While plans aren't fully clear yet, Biden's administration will likely put in place more formal guidelines around autonomous vehicle (AV) regulations. In general, the federal government has opted for voluntary guidelines and data sharing with the federal government while deferring to states to create their own specific pieces of legislation. The last policy from the federal government, AV 4.0, continued that hands-off strategy but with the notable exception that it was the first of the AV policies that included input from the White House – an indication, along with some legislative efforts currently stalled in Congress, that the federal government will be getting more involved. Biden also has a goal of half a million public electric vehicle (EV) chargers deployed under his administration and aims to change to the federal EV tax credit to eliminate the manufacturer cap so that GM and Tesla can once again be eligible for tax credits. His plans also discuss investments in public transit and bike lanes, but these spending priorities are also vulnerable to Congressional inaction.
Pushes to modernize mobility
Biden hasn't spelled out a specific agricultural plan, but key elements of his agenda will impact agrifood. Companies should look for potential opportunities to partner with research centers if targeted increases for agriculture and food R&D funding materialize. The new administration will aim to support net-zero emissions strategies for agriculture by continuing to evolve carbon markets and expanding land/conservation stewardship programs aimed at improving soil health, such as soil carbon sequestration – creating needs for more work on technologies that enable doing more with less. Biden may also pursue agriculture antitrust measures more aggressively and deploy microloan programs to promote regional crop production and small and midsize growers.
Potential shifts in agriculture.
Biden will also move decisively away from the Trump administration efforts to restrict foreign researchers from working in the U.S. and in general reject policy and rhetorical stances that have made students from overseas more leery of pursuing degrees in the U.S. While the effect may be indirect and longer-term, reversing the trend away from the U.S. as a destination for promising scholars will mean more innovative talent and would-be entrepreneurs in the country. The broader globalization of innovation and startup formation will continue as countries like China push their own innovative efforts; Biden's policies will at the margin help to maintain the U.S. position.
Openness to immigration to maintain an innovation AND entrepreneurship edge
Many specific regulatory changes and policy impacts remain uncertain – there's not much indication yet about whether Biden policies will do much to boost (or deter) advances in areas like autonomous vehicles or plastic waste recycling, for instance. But clients should be prepared to move to capitalize on these likely changes, and we'll be continuing to follow developments as the new administration takes shape.