What Industries Will Benefit From An Obama Victory? A McCain Victory?
WASHINGTON — Battered by the financial meltdown, America's business community is anxiously calculating how Tuesday's presidential election will affect it.
Energy, pharmaceutical and telecommunications companies could face tax and other policy changes no matter who wins the White House. The outcome also could determine how well alternative energy developers, generic biotechnology companies, stem cell researchers and others fare.
Labor unions put major resources behind Democrat Barack Obama and could wind up a big winner if he takes the White House. Nuclear power and the coal industry would get a boost if Republican John McCain prevails. Obama promises to raise corporate tax rates and income taxes on families making over $250,000; McCain promises to cut corporate taxes and extend all of President Bush's tax cuts.
A look at how some could fare:
UNIONS
With Obama in office and an expected stronger Democratic majority on Capitol Hill, unions could achieve their top goal of making it easier for workers to organize. Labor wants to winning passage of a measure that would require companies to recognize unions once a majority of employees sign cards expressing support.
The U.S. Chamber of Commerce opposes the bill. Steven Law, the group's general counsel, said the elimination of secret ballot votes "creates tremendous incentives for intimidation and harassment." But Bill Samuel, director of government affairs at the AFL-CIO, says, "We see (it) as a way to strengthen the middle class" by enabling more workers to push for higher wages and benefits.
Obama has endorsed the measure; McCain opposes it.
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ALTERNATIVE ENERGY AND NUCLEAR POWER
Both candidates back expanded use of alternative energy such as solar and wind power _ through greater spending in Obama' case and tax credits in McCain's.
Obama proposes spending $150 billion over 10 years to speed the development of plug-in hybrid cars and "commercial-scale" renewable energy, among other goals.
McCain favors the construction of 45 new nuclear power plants by 2030 and spending $2 billion annually in support of "clean coal."
While McCain has been a critic of government support for ethanol, most analysts think congressional support for the alternative fuel would enable it to survive under a McCain administration.
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STEM CELL RESEARCH
Few sectors have more to gain on Election Day than the nation's fledgling stem cell companies, which long have bemoaned the administration's policy limiting federal money for embryonic stem cell research. Bush believes the research is immoral because the process of culling the stem cells kills the embryo.
Both Obama and McCain support federal spending on stem cell research and could move to overturn current restrictions.
Industry executives say the policy change would shore up investor confidence in stem cell developers.
"It will relieve a lot of uncertainty among the investment community that we are going to become an outlaw industry," said Richard Garr, chief executive of Neuralstem.
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BIOTECH GENERICS
Both candidates have endorsed creating a pathway for generic biotech drugs, a long-sought goal for generic drug companies such as Teva Pharmaceutical Industries Ltd. and Mylan Inc.
Unlike traditional chemical drugs, biotech companies such as Amgen Inc. and Genentech Inc. face no generic competition in the U.S. because the Food and Drug Administration lacks authority to approve copies of biotech medicines. That is because biotech drugs, which are made from living cells or bacteria, are more complicated to manufacture than chemical drugs.
Both campaigns have praised generic drugs as a tool to lower health care costs.
"We know that expanding the use of generics and eliminating barriers to that goal must be a centerpoint of any health reform effort," said Dora Hughes, a health care adviser for Obama, at a recent industry conference.
In politics, of course, not everyone is a winner. Some possible losers include:
OIL COMPANIES
Companies such as Exxon Mobil Corp. and Chevron Corp. are likely to face higher taxes under a President Obama, who supports a windfall profits tax.
The two companies did not help their cause by reporting record profits in late October. Still, as oil prices fall, profits are likely to follow suit.
Even if a windfall profit tax is not imposed, at least eight different taxes and fees could be slapped on the cash-rich industry by a Democratic Congress looking for extra revenue, said Kevin Book, an energy analyst at FBR Capital Markets.
They include adopting a surtax on oil and gas production in the Gulf of Mexico and eliminating a 2 percent tax cut included in recent legislation, Book said.
On the other hand, oil companies could profit if McCain wins since he is a big champion of offshore drilling.
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PHARMACEUTICALS
No matter which candidate wins the White House, the largest drugmakers, such as Pfizer Inc. and Merck & Co. Inc., will struggle to defend lucrative government programs. That includes the Medicare drug benefit, which pays for medications taken by 47 million older people and which provided much-needed revenue to the drug industry last year.
Dozens of insurers now separately negotiate prices with pharmaceutical makers; the government reimburses insurers for the final cost. Though the program has come in under budget, most Democrats say greater savings could be had by letting the government directly negotiate prices with drugmakers.
Obama has pledged to take up the effort, arguing that savings could total up to $30 billion. McCain also supports giving the government power to negotiate prices, but only at the request of individual insurers.
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TELECOMMUNICATIONS
Big telecommunications carriers have forged many deals in the past eight years, such as Verizon Wireless' $28 billion purchase of Alltel Corp., approved with conditions by the Justice Department Thursday.
Such deals will likely face tougher antitrust scrutiny under either an Obama or McCain administration, analysts say.
In fact, some of the more contentious industry deals in recent years _ including the merger of Sirius Satellite Radio and XM Satellite Radio, and Google Inc.'s acquisition of DoubleClick _ might not have been approved under either candidate, says Paul Gallant, a telecom analyst at Stanford Washington Research Group.
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DEFENSE CONTRACTORS
After years of record Pentagon budgets, defense companies such as Lockheed Martin Corp. and Raytheon Co. face the prospect of slowing military spending.
Big budget deficits are projected to worsen due in part to the financial bailout package approved by Congress. Defense spending will become a prime target for cuts. That could mean trouble for over-budget programs such as the Army's $200 billion Future Combat Systems, which aims to outfit units with high-tech weapons and communications tools.
Both candidates also want to overhaul the contracting process, especially after some high-profile flops such as the Air Force's attempt to award a $35 billion contract for new aerial refueling planes over the past seven years.
McCain has promoted his role in spiking an earlier Boeing Co. contract for the planes. Obama, meanwhile, has suggested that the Pentagon's effort to build a missile defense shield for the United States and its allies could be scaled back.
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Associated Press writers Matthew Perrone, John Porretto, Joelle Tessler and Stephen Manning contributed to this report.
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CHRISTOPHER S. RUGABER | November 2, 2008 10:39 AM EST |
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