Top Issues That Could Impact Businesses During a Biden Presidency
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The outcome of the 2020 elections did not change the challenges facing business and employees in the United States. Stimulus, the economy, taxes, and health care — all pocketbook issues — along with retirement remain top of mind.
However, with a slimmer majority for Democrats in the House of Representatives and an as-yet-undecided majority in the Senate (per this publication date) — Georgia holds run-offs for two Senate races on Jan. 5, 2021 that could create a 50-50 split or a razor-thin Republican majority of 51-49 or 52-48 — President-elect Joe Biden will be faced with deciding how much of his campaign platform can actually be turned into legislation.
With so much focus on the differences in the two parties, the next four years could be impacted by the moderates in each party and any areas where bipartisanship already exists. A Biden presidency also might prioritize executive orders, which are rule-based changes that don’t require Congressional action. Any such action would likely roll back much of the Trump administration’s executive orders, but it’s important to note that the process of moving from proposal to comment period to finalization could take up to a year or longer depending on the order and regulatory body in would impact.
Paychex is tracking these developments to provide analysis that could help businesses respond when necessary.
Passing the 2021 budget
Although this has nothing to do directly with President-elect Biden, the current legislators have until Dec. 11 to pass the 12 annual discretionary spending bills that fund the government or they have to pass a Continuing Resolution (CR) to avoid a government shutdown. This indirectly impacts the incoming president and Congress because funds need to be available to spend. Additionally, in the case of another CR, there is a potential that one of the first orders of business for a new Congress would be to finalize spending bills, taking away much of the oxygen in the room for other legislative priorities. This includes negotiations on the next potential stimulus package to address the impacts of the COVID-19 pandemic.
What Kind of Stimulus Package Would Congress Propose and Biden Approve?
More than 155 million people voted in the presidential election — a federal stimulus package could impact everyone, whether directly or indirectly. The president-elect and most of the current members of Congress recognize the need for an additional round of stimulus to aid with economic recovery, but they differ in what that should look like.
“The big question is do they get it done before Christmas or will it get punted to January or February,” said Thad Inge, Senior Manager of Government Relations with Paychex, during a Paychex Business Series Podcast. “Apparently, Biden supports (getting it done earlier) …. It’s still probably a significant challenge to get it over the finish line.
“Paychex thinks it’s needed. We think small businesses will benefit.”
Biden favors long-term economic recovery with assistance for individuals and businesses, but the concern is the deficits that will be created by the COVID-19 pandemic. Biden supports another stimulus package that would provide another $1,200 to each eligible American and other benefits, but the Senate leadership is less supportive of this direct aid to individuals and favors a much smaller relief package.
What’s at the center of the debate, beyond the price tag and focus of the relief, is the U.S. economy and the wide-reaching availability of a COVID-19 vaccine. Conservatives look at the current economic recovery and indicate a smaller relief package will do until a vaccine is available to everyone. Opponents of that approach say that six months or more could pass before a vaccine is widely available, doing damage to the health of individuals and the economy should spikes continue to occur across the country that force more shutdowns.
There have been talks among current Congressional leaders of potentially including some stimulus provisions in the budget bill to keep the government funded past Dec. 11, including individual stimulus checks and unemployment assistance. Such a bill would need to be approved by both chambers in Congress and signed by President Trump.
What can President-elect Biden do? Nothing officially until he is inaugurated on Jan. 20. After that, he still would need bipartisan support in both houses of Congress to pass any portion of the platform he campaigned on.
Perhaps the best stimulus is focusing on how to help small businesses, which make up 99.9% of all U.S. businesses in 2020 according to the latest labor statistics1. There are approximately 31.7 million small businesses, and companies with fewer than 20 employees added 1.1 million new jobs in 2019.
President-elect Biden supports the continuation of programs such as the Main Street Lending Program to help small businesses, which during the COVID-19 pandemic have benefited from funding available through the program.
Additionally, he has proposed tax credits to help achieve his goal to offer relief for millions of business owners and individuals in America. A new stimulus, even if prior to inauguration, could have an impact, and the president-elect has said that he is not in favor of making Americans wait until late January for help. Within the next stimulus there has been talks of:
- Enhancing the employee retention tax credit. This is a refundable tax credit against certain employment taxes that is equal to 50 percent of the qualified wages an eligible employer pays employees after March 12, 2020, and before Jan. 1, 2021.
- Expansion of another more targeted round of forgivable loans under the Paycheck Protection Program
- Allowing deductions for expenses paid with forgiven proceeds from a Paycheck Protection Program loan
- Expanding the Work Opportunity Tax Credit (WOTC) to a new category of hires who received unemployment
What is President-elect Biden’s Platform on Taxes?
The Biden platform on taxes primarily focuses on raising taxes on corporations and the wealthy. However, with no majority in the Senate or at best a tie that would have to be broken by Vice President-elect Kamala Harris, the chances of a robust policy that includes a tax hike are slim.
If both parties are willing to compromise, there is opportunity for each to gain something of what they want — for Republicans, it could be extensions to provisions of the Tax Cuts and Jobs Act that are nearing sunset, while Democrats might eye alternative energy enhancement tax cuts that Biden favors.
One other area where bipartisanship could carry the day is retirement, and President-elect Biden has proposed providing a new tax credit for small businesses that offer a retirement savings plan to employees. The proposed new credit would offset 100 percent, instead of 50%, of certain costs involved with implementing a new employer-sponsored retirement plan. Nearly a dozen states have enacted laws to mandate private employers to participate in the state-run savings program if the employer fails to offer an employer-sponsored retirement plan. The new tax credit would give employers more options to consider when complying with their state’s mandate.
What is President-elect Biden’s Approach to Health Care?
President-elect Biden has made strengthening the Affordable Care Act (ACA) the cornerstone of his proposed healthcare platform. The ACA is still in effect, but the U.S. Supreme Court heard oral arguments in California v. Texas, reviewing a lower court ruling that the individual mandate provision is unconstitutional and seeking to invalidate the entire ACA. A decision is expected in the spring and may have an impact on the ACA.
Biden recently announced that he wants to bring back the penalty for not being covered under health insurance. However, given the make-up of Congress, unless the Democrats win both seats in Georgia the potential to reinstitute the mandate is slim.
On other items related to health care, he may use executive orders to undo many rule changes that were done during the Trump administration, revising the rules to closer match what existed under an Obama administration. These rule changes can be accomplished by regulation and do not need Congressional involvement.
He has also proposed a public option and allowing undocumented immigrants to buy in. Again, the public option is more controversial and does not garner bipartisan support. It is unlikely, regardless of the results from the upcoming January run-offs for two Senate seats in Georgia and with the new make-up of Congress, that any federal-based changes for a public option will occur.
However, the ability for states to experiment with more local public options may be easier under a Biden administration if the rules under 1332 are changed back to rules similar to the Obama administration rules. Washington was the first state to move in this direction, but with the potential repurposing of federal funds to support a program, more states may consider this possibility.
“There are some executive orders that Biden will try to pull back on,” Inge said. “But the bigger things he might have a more difficult time with (depending on the majority in the Senate). There has to be some caution around reversing regulations because Biden doesn’t want to make a move that could remove people from their health care. So, we might not see legislative action on health care or even taxes for two years.”
How Will the Biden Administration Impact Federal Employment Laws and Regulations?
President-elect Biden has voiced his support for raising the federal minimum wage to $15 per hour. It is unlikely that he would gain any traction with a divided Congress to move on this. However, eight states have already enacted legislation that will raise their state minimum wage rate to $15 per hour in the future.
Notably, Florida voters supported an increase in their state minimum wage rate to $15 per hour over the next several years, which could signal momentum to raise the minimum wage in additional states and perhaps even the federal minimum wage.
Based upon the attention being garnered, including a lawsuit filed by three civil rights groups, it has been speculated that one of the first employment law changes might come in the harassment and diversity training area. The Trump administration issued an executive order prohibiting the offering of certain diversity training deemed anti-American by the president. This applies to federal agencies, contractors and grant recipients.
President-elect Biden also favors returning the salary threshold for overtime eligibility to the Obama-era proposal of more than $47,000, rolling back President Trump’s threshold of just more than $35,000. With the new rule recently set, Inge said he couldn’t see the overtime rule being a “top priority” for Biden right out of the gate.
When it comes to paid leave, Biden has proposed that businesses be required to permanently provide up to seven days of paid sick and family leave. He also has supported the FAMILY Act, which would provide 12 weeks of paid leave, including a possible path for independent contractors. With federal and state measures enacted during the COVID-19 pandemic, including the Families First Coronavirus Response Act, paid leave continues to remain a hot topic.
Other notable topics a Biden presidency might impact
Retirement is a largely bipartisan issue and it will drive policy changes. President-elect Biden has indicated he supports aggressive measures such as federal automatic 401(k).
Cannabis is being thought of as a stimulant for suffering state economies, with some states passing provisions in the 2020 elections to legalize recreational marijuana (Arizona, New Jersey and Montana), while South Dakota voters approved ballot initiatives to legalize recreational and medical marijuana. Mississippi voters approved medical marijuana.
Although Biden has not supported federal legalization for recreational use, his task force determined that medical marijuana should be legalized, and states should make their own decision on recreational use. Biden likely would reverse the policy of the Department of Justice to prosecute matters that are legal at the state level.
Financial services such as banks and other lenders could see a potential tighter regulatory environment under President-elect Biden, as well as a larger government role in facilitating consumer financial services.
Much of what might get done in the next four years from a legislative standpoint hinges on the makeup of Congress, with moderates primed to influence the outcomes. Paychex will continue to monitor legislation that could impact your business.
12020 Small Business Profile, https://cdn.advocacy.sba.gov/wp-content/uploads/2020/06/04144224/2020-Small-Business-Economic-Profile-US.pdf