Tribune. Since the November 2020 presidential election, investors have mainly focused on President Biden’s efforts to support the U.S. economy, including the latest $ 1.9 trillion (€ 1.595 billion) stimulus package. However, investors should not lose sight of possible regulatory changes that could end much of Trump-era deregulation.
Three areas – the environment, health and technology – are likely to be most affected.
The impact of regulations on the economy is inherently difficult to quantify. Federal agencies are only required to perform cost-benefit analyzes for rules deemed to be “Economically significant”, defined as having an annual effect on the economy of at least $ 100 million.
President Trump, concerned about reducing regulatory burdens on businesses, began his tenure with an executive order asking agencies to remove two old regulations for each new regulation. The Trump administration has also reinterpreted existing laws to make them more business friendly.
By comparison, one of Joe Biden’s top priorities is the fight against climate change. To do so, he plans to reverse a hundred or so measures of the Trump administration that targeted Obama-era environmental and public health policies.
Green infrastructure
Among the initiatives announced by the Democratic President include the reinstatement of the Paris Agreement, raising fuel economy and emissions standards with the aim of achieving zero carbon emissions by 2050, and the withdrawal from Trump’s five-year plan on offshore drilling development.
However, like Donald Trump, his successor does not envision market-based solutions to climate change, such as the cap-and-trade system that has been used successfully to tackle the problem of acid rain. It also does not plan to tax carbon emissions. The popular solution is to impose restrictions on the use of fossil fuels and to develop alternatives to them.
Joe Biden’s plan calls for spending totaling $ 1.6 trillion over ten years to build green infrastructure and increase research and development of alternatives. This figure does not take into account the cost of additional regulations, which were estimated to be over $ 100 billion a year during the Obama years. In the meantime, investors will assess the implications for energy companies, whose ability to generate satisfactory returns will depend on how well they move away from fossil fuels over time.
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