Joe Biden has been vice president for almost two years, which puts him close to the middle of his first term. The next presidential election cycle, along with other political happenings, is already on the minds of many Americans concerned about the state of the economy.
There is no separating politics and business. For instance, during his presidency, former president Donald Trump advocated for pro-business measures, primarily through the Tax Cuts and Jobs Act of 2017. The financial services industry gained tremendously from the new regulations, especially the 21% corporation tax rate.
Looking beyond 2023, there are some elements to consider in addition to the economic policies of the Biden administration, which are an important variable when investigating the connection between business and politics. Historical inflation, supply chain challenges, and the aftereffects of the 2009 COVID-19 outbreak are all examples.
Understanding the effects of political events on American firms and the economy is essential reading for anyone pursuing an advanced degree in business.
The CARES Act
Economists have pointed fingers at supply chain disruptions for driving higher prices. Some people think that stimulus checks and other government handouts cause inflation. The CARES Act of 2020 and the American Rescue Plan 2021 resulted in price rises due to the massive government aid they provided.
However, the San Francisco Federal Reserve Bank disproves exaggerated claims about the effect of government spending.
Forbes and other publications have reported that many economists disagree with the notion that all government expenditure causes inflation. Sometimes, when politics and business work together, everyone benefits.
Furthermore, Forbes predicts inflation will naturally decline when supply chain efficiency recovers, and interest rates climb.
How the Current Political Climate Affects Enterprise
While multiple investigations into election tampering have found no evidence that former President Donald Trump and his followers were responsible for stealing the 2020 election, the current political climate remains explosive for several reasons.
The physical attack on the Capitol on January 6, 2021, was a direct outcome of efforts to discredit and change the results of the 2020 election, which had damaged public faith in the democratic process. Only 20% of Americans are “very confident” in the electoral system, per a recent ABC News/Ipsos poll. Election integrity and extremism concerns threaten to undermine the long-term viability of the economy, in addition to the political repercussions.
According to Harvard Business Review, a robust government and a well-established democracy are good for American business. Any weakening of these social underpinnings poses a danger to capitalist free markets.
However, the stock market isn’t the only part of the economy that can feel the aftershocks of political uncertainty.
The Stock Market and the Midterms
Financial services firm Oppenheimer predicts market volatility in the run-up to and immediately following the 2022 midterm elections. They claim businesses feel the effects of the stock market’s erratic behavior during midterm election years.
Oppenheimer warns clients to “ride out the storm” and not make hasty investments because of the anticipated market volatility. Instead of worrying about temporary setbacks, investors should concentrate on the big picture.
Employment Policies and Startups
Labor law policy changes that affect taxes, insurance obligations, and wages are another example of how politics can affect business.
The President has also been an outspoken supporter of small businesses and the need to broaden the demographics of those who control them. One of President Biden’s four pillars of economic policy is making it easier for small businesses to gain access to investment capital and take advantage of federal spending in ways that are beneficial to such enterprises.
A Plan for Prosperity: The Biden-Harris Agenda
The White House released the 58-page Biden-Harris Economic Blueprint in September 2022, outlining the administration’s economic strategy and aims. It rests on these five foundational elements:
- Increasing worker agency through expanding access to good employment and unionization protections
- Investment in domestic manufacturing and infrastructure development to make the United States the world leader in clean energy jobs and innovation.
- Increasing corporate competition by encouraging small business growth and entrepreneurship.
- Motivating effort and making sure firms pay their dues
According to the Biden administration, these tenets will serve as the basis for addressing long-standing economic difficulties and delivering feasible solutions for middle-class Americans and small company owners.
Planning Beyond the Year 2023
Understanding the interconnected nature of business and politics is crucial for any aspiring business leader. Online MBA programs at Washington State University cover various topics, from business law and data analysis to strategic planning, making them ideal for anybody interested in the future of business and the variables that shape it. Education is the key to becoming an industry expert and opening doors, so getting one is crucial.
