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Biden’s First 100 Days

THE COWEN INSIGHT

  • President-elect Biden will be sworn in on January 20 and Democrats will control DC. The pandemic response is their top priority.
  • The Georgia Senate elections transformed policy for the next two years with Democrats in both seats. With this, Biden gets his Cabinet, regulators, and judges.
  • Reconciliation is happening: There is potential for three sequential bills before January 3, 2023.
  • The biggest variable is the 60-vote filibuster.
  • Trump impeachment trial could delay stimulus.

Macro — Chris Krueger

The Georgia Senate elections changed policy trajectory in DC — full stop. With control of the House, Senate & White House, Democrats can use the reconciliation process.

Expect 2-tracks on legislation: 

  1. Bipartisan push for COVID-19 Phase 5 stimulus (under $1T)
  2. Partisan reconciliation bill in Q2 (stimulus & tax increases — effective 1/1/22)

Key Fiscal Deadlines

  • January 31 – eviction moratorium
  • March 14 – $300 checks
  • July – debt ceiling
  • September 30 – highway bill/reconciliation bill
  • December 31 – R&D tax credit

Defense – Roman Schweizer

We don’t think worst case budget scenarios due to the Democrat election sweep will pan out, but we won’t be able to prove that for several months. Our base case for next two years is defense spending flat-to-down LSD (real). 5 overhangs:

  • DoD base budget trajectory
  • OCO outlook
  • Program priority shift
  • Tighter foreign arms sales policy
  • Possibly tougher M&A, contracting & oversight

Major upcoming indicators include:

  • January / February – Confirmation hearings for key DoD officials
  • April – FY22 budget release
  • Q2/Q3 – Spending debate
  • Late Summer – Debt ceiling/budget deal

Financials & Housing – Jaret Seiberg

On the first day of the Biden administration, expect: freezing of pending rules, extending  the suspension of student loan repayments & for Biden to name a CFPB director. We see a stimulus in the first few weeks, which should boost consumer spending and credit quality. Later will be FHA premium cuts & student loan debt forgiveness.

Health Care/Pharma – Rick Weissenstein

Democrat Senate likely impacts Biden’s insurance market & tax policies more than the drug pricing agenda. Expanding the ACA using reconciliation is likely with tax increases to offset. Aggressive drug pricing measures like HR 3 are unlikely. Inflation  rebates/reimportation/deductibility of drug ads and CMMI demos are likely.

Medtech/Diagnostics/Life Science Tools – Eric Assaraf

Democrat Senate does not change our positive outlook on NIH funding and telehealth legislation under Biden. However, Congress is now likely to further grease the wheels for such legislation & may increase the level of spending on such measures.

TMT – Paul Gallant

Tech Platforms

It’s now likely that Congress passes a 230 bill. Privacy and antitrust bills are more realistic as well. Plus, an underappreciated risk is new FTC regulation of platforms.

Telecom

FCC brings Title 2 more quickly, new $ for broadband, and the FCC wants to help cable be the new 4th wireless player.


Video Transcript

Today we published an Ahead of the Curve® Series Report on Biden’s first 100 days.

Biden will be sworn-in on Jan. 20 & Democrats will control D.C. The pandemic is the top priority.

Georgia Senate elections transformed policy for the next 2 years. Biden gets his Cabinet, regulators and judges.

Reconciliation is happening. There is potential for 3 sequential bills on tax increases & fiscal spend before Jan. 3, 2023 (1st expires Sept. 30). Democrat control of the Senate likely impacts Biden’s insurance market & tax polices – more than the drug pricing agenda. Expanding ACA using reconciliation likely with an increase in corporate & individual taxes as a possible payfor.

Democratic control of the Senate does not change our bullish outlook on NIH funding & telehealth legislation under the Biden Administration.

Key fiscal deadlines

  • January 31 – eviction moratorium
  • March 14 – $300 checks
  • July – debt ceiling
  • September 30 – highway bill / government funding / reconciliation bill
  • December 31 – R&D tax credit

The Senate’s flip is the worst case scenario for defense spending, but slim majorities in House/Senate suggest bipartisan deals are needed on spending.

No matter what happens with the filibuster, we see some financial legislation as too radical to advance. That would include Postal Banking, a financial transaction tax, and a measure to hold private equity firms liable for debt incurred by companies they finance

If Senate Democrats keep the filibuster, the STATES Act becomes the primary vehicle for cannabis legalization. This bill would defer the legalization question to each state to decide. We believe it can pass, though concede it will be a close call as one would need 10 Republican votes & every Democratic vote.

Biden is free to appoint more activist DOJ/FTC/FCC officials regulating Big Tech & telecom companies.

But even with a Democratic Senate, we still see only 40% chance of passing tech legislation (antitrust/privacy/230). If Democrats eliminate the filibuster, odds would rise because only 51 votes needed.

Based on a Cowen multi-sector report led by Chris Krueger, Eric Assaraf, Paul Gallant, Roman Schweizer, Jaret Seiberg and Rick Weissenstein.

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