Democratic sweep: What it means for business
While key economic indicators provide some optimism about the economic outlook, forecasts and US macroeconomic data have been all over the map in the months leading up to the election. Some worries about the labor market eased after September’s jobs report came in higher than expected, but the manufacturing sector continues to contract. This economic volatility and a tense geopolitical landscape add to the uncertainty that’s accompanied the election.
Candidate Kamala Harris campaigned on a promise of raising the US corporate tax rate and increasing oversight of business to “level the playing field.” If Democrats take control of Congress, she would look to push some of the more ambitious parts of her policy agenda. With that said, Harris will have the challenge of building internal consensus, finding compromise between progressives and moderate Democrats, especially the New Democrats. The New Democrats, a caucus made up of members who favor pro-growth policies and are generally more business-friendly, consist of more than 100 members who could have a significant impact on policymaking.
A Democratic sweep comes as a bit of a surprise to many business leaders. In our October 2024 Pulse Survey, 76% of the US executives responding agreed or strongly agreed that there would be a divided government after the election. In addition, 77% expected an increase in executive orders and 75% expected both more regulation and litigation, regardless of who won.
A Democratic sweep could reshape the leadership agendas at many US companies. During her campaign, Harris proposed raising the corporate tax rate to 28%. If that were to pass, 75% of executives in our survey said their company would significantly reduce investments in the US. A Democratic-controlled Congress can pass a Democratic-only tax bill using budget reconciliation, bypassing the 60-vote threshold in the Senate. But even with this advantage, any tax increases proposed by a Harris administration still may not pass.
Democratic control of the White House and Congress opens the door to implementing a Harris administration’s agenda. The resulting outlook for policy and regulation — while aligned generally with the current Biden agenda — has the potential to go further if Congress is able to successfully navigate procedural hurdles and build consensus. In our October 2024 Pulse Survey, executives said the election’s outcome could significantly change how they do business, especially their company’s approach to regulatory compliance (76%), financial forecasts and budgets (75%) and trade decisions (74%). Similar numbers told us they anticipate more business litigation, regulation and executive orders (EOs) regardless of who’s president. With Democrats soon controlling both branches, companies will need to adapt quickly.
As for specific policies under a Harris administration, the executives in our survey said economic policy, corporate taxation, climate policy and technology, AI and data regulation would be among the top policy risks to their company. Congress could fast-track her agenda, particularly in areas that may have bipartisan support: China, national security, industrial policy and supply chains, trade, energy independence, privacy and cybersecurity — though, in many cases, the policy overlap is at the high-level objective but not the means to get there. Finding bipartisan, filibuster-proof consensus on legislation will require considerable effort and pressure from stakeholders.
Another check on White House policy will be the Supreme Court’s repeal of the Chevron doctrine, as well as other recent decisions that limit the powers of regulatory agencies. And to the extent they’re not preempted by federal legislation, the states will likely continue to assert themselves in key policy areas like AI, privacy and tech regulation, as well as reproductive rights and climate. Executives ranked state governments as affecting their company more directly than any branch of the federal government.
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The Democratic Party’s control of both the White House and Congress would come as a surprise to financial services executives who in our October 2024 Pulse Survey said they expected a divided government (82% versus 76% for all respondents).
One-party control would open the door to implementing Kamala Harris’s agenda. The outlook for policy and regulation, while aligned generally with the Biden agenda, has the potential to go further if Congress can successfully navigate procedural hurdles and build consensus. Consumer protection initiatives are more likely to pick up steam. That may weigh on fee income the industry generates from customers and increase the spending on regulatory compliance. A President Harris would also likely try to increase the corporate tax rate, though even with a Democratic sweep, it’s unlikely that it will go to 28%. Executives are paying close attention. Three quarters of executives responding to our survey said they would significantly reduce their domestic investments if the corporate tax rate increased to 28%.
FS executives may be reassessing their acquisition and divestiture plans in light of what a Democratic sweep could mean for antitrust reviews. In our survey, 84% of FS executives told us the election’s outcome will affect, either somewhat or to a great extent, their company’s business decisions about deals. Federal antitrust regulators are likely to be more active, though whether they’re as hawkish as they have been likely depends on who is appointed – or reappointed – to lead federal agencies. Some regulators have been pursuing cases to crack down on a range of activities they argue are anticompetitive. These efforts likely require a substantial broadening of antitrust case law. And while this effort will take time, it could have a negative effect on M&A activity.
In our survey, FS executives said they’d remain committed to technology modernization and indicated plans to continue investing. Technology will likely remain a perennially big budget item in FS considering its potential efficiency gains through hyperautomation as well as its possible boost to competitiveness, compliance and growth.
The election’s outcome also wasn’t going to change expectations for more rules. Roughly three-quarters of FS executives said they were anticipating regulation (76%) and executive orders (72%) to increase no matter who wins.
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Kamala Harris capturing the White House and Democrats securing majorities in both the Senate and the House of Representatives would signal a shift in the political landscape and would likely bring changes in policy and governance. With unified control, Democrats would be in a position to try to push forward a progressive agenda.
Harris will likely concentrate on the priorities outlined throughout her campaign. This may include fortifying and renewing subsidies for the Affordable Care Act (ACA) and expanding drug negotiations through the Inflation Reduction Act (IRA). Harris aims to facilitate the negotiation of prices for 50 drugs annually. She also aims to cap cost-sharing for generic medications at $2 per dose under Medicare Part D, set a $2,000 limit on out-of-pocket drug expenses and extend the $35 cap on insulin costs to all individuals.
Moreover, the Harris administration may seek to enhance access to reproductive healthcare, add certain dental and vision benefits to Medicare and expand Medicaid. During her campaign, she said she also plans to use antitrust laws to address perceived anticompetitive activities within the healthcare industry and alleviate medical debt burdens through the American Rescue Plan (ARP). Her agenda includes boosting transparency for pharmacy benefit managers (PBMs), implementing targeted tariffs and enhancing access to services that allow seniors to remain at home.
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Technology, media and telecom (TMT) executives are bracing for significant shifts in how they conduct business should Kamala Harris become president with a Democratic Congress. Key concerns for the sector include heightened regulatory scrutiny, increased corporate compliance pressures and changes in tax policy.
According to our October 2024 Pulse Survey, 75% of the executives responding said that their company would significantly reduce investments in the US if the corporate tax rate increased to 28%. Additionally, a Democratic Congress is likely to push for rollbacks of other aspects of the Tax Cut and Jobs Act (TCJA). Depending on the proposal, some of these reforms could lead to reductions in hiring, capital investments, innovation budgets and so on. TMT companies are also keeping an eye on Harris’s support for changes in the GILTI tax regime. And then there’s the potential impact of ongoing digital service taxes (DSTs) other countries are levying against US tech giants as a retaliatory measure.
Prioritizing investments in compliance and sustainability in a Harris administration could gain further traction in the sector as Europe tightens carbon emissions regulations, pushing companies to focus on sustainability initiatives that go beyond mandatory requirements. Regulatory oversight remains a primary concern, and given the regulatory focus on national security, especially regarding tech infrastructure, tech executives should expect growing pressure to demonstrate robust cybersecurity protocols. Reliance on digital platforms and data-driven services leaves the sector vulnerable to both domestic and international cyber threats, risks that are expected to only intensify under a Harris administration. In preparation for these developments, 56% of executives said they plan to increase their regulatory compliance investments under Harris.
Rounding out the list of concerns is the recent trend of increasingly protectionist trade policies. Executives will continue tracking this development, as 74% said the election would affect trade decisions either somewhat or to a great extent, especially around supply chains, sourcing and sales. TMT companies should consider adjusting their sourcing strategies to mitigate potential disruptions, particularly in the semiconductor space.
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The cybersecurity tide won't turn much, if at all, from what former President Biden started if Democrats control the White House and Congress. There will likely be a continued push to establish a federal regulatory framework and increase inter-agency coordination to drive more strategic and holistic approaches to cybersecurity across industries. Moreover, companies seem to be taking action. According to the 2025 Global Digital Trust Insights survey, 96% of the global executives responding said that regulations spurred heightened cybersecurity measures and increased investments in the last 12 months.
Harris will likely view regulation as a catalyst to help businesses raise the bar on baseline cyber defense and resilience standards to safeguard investors, consumers and the public at large. More executive branch initiatives — such as the National Cybersecurity Strategy Implementation Plan — will further the mission of sector-based and technology-based regulation that originated (in the form of TSA Security Directives 1 and 2) as a response to ransomware attacks and breaches that went unchecked. There will also likely be a continued focus on national staffing and agency development to support reporting and coordination efforts for the private sector.
Cyber incident reporting rules introduced under the Biden administration, including the SEC cyber disclosure rule and the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA), are key to increasing transparency. Finalizing the proposed CIRCIA rule should remain a priority for a Harris administration to continue progress in this area.
Overall, advancements in artificial intelligence (AI) and emerging technologies will continue to garner closer scrutiny, especially when it comes to its responsible use and the risks that need to be managed. A Harris administration would likely double down on efforts to put frameworks and guardrails around these technologies.
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A Democratic Congress would likely prioritize Kamala Harris's tax policy agenda if she wins the White House, especially with key individual provisions of the 2017 Tax Cuts and Jobs Act (TCJA) expiring at the end of 2025 and several significant business tax provisions set to change.
Harris has called for the top US corporate tax rate to be increased to 28% from 21%. The prospect of an increase is causing concern for many public companies. Across the C-suite, 75% of the executives responding to our October 2024 Pulse Survey said that their company would significantly reduce investments in the US if the corporate rate increased to 28%.
A Democratic-controlled Congress makes it easier to use budget reconciliation procedures and avoid the 60-vote threshold needed in the Senate to advance tax legislation. The TCJA was enacted using reconciliation under a joint House and Senate budget resolution. However, even a Democratic-controlled Congress might not adopt all the tax increase proposals that a Harris administration might propose. For example, President Joe Biden was unable to secure enactment of many of his tax increase proposals when Democrats narrowly controlled the House and Senate during his first two years in office. Still, Congress could change other business tax rules in ways that would increase the tax corporations pay even if the 21% rate remains in place.
Individual provisions that are scheduled to expire include the 37% top individual income tax rate on ordinary income, the 20% deduction for pass-through business income and the higher standard deduction. Without action, key international business tax rates will increase, including the rate of tax on global intangible low-taxed income (GILTI), the rate of the base erosion and anti-abuse tax (BEAT) and the foreign-derived intangible income (FDII) rate.
A 2025 tax bill considered under reconciliation would be subject to the same requirements as TCJA to sunset provisions that increase federal deficits in future decades. That means the TCJA individual provisions could be extended to a new sunset date under reconciliation procedures but could not be made permanent unless their cost is covered by other revenue increases or spending reductions.
As debt concerns mount, the fiscal cliff becomes steeper, leaving Congress to look elsewhere for revenue. Business leaders will need to evaluate how the tax policies being proposed will affect US economic growth and opportunities for US households should the TJCA extend or expire. The budget deficit in 2025 is projected by the Congressional Budget Office (CBO) to exceed $1.9 trillion, and interest will be $1 trillion. By contrast, in 2017, before President Donald Trump’s or President Joe Biden’s terms, the deficit was $665.7 billion, and interest was under $300 billion.
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How fast and how far would a Harris administration extend the protectionist stance laid out in 2018-19 with tariff hikes, and left largely unchallenged during the Biden administration? These are key considerations, given the emergent bipartisan consensus in Washington to pull trade, tax, regulatory and investment levers to support the national interest in strategically important industries.
How fast? As a candidate, Harris has expressed discomfort in using blunt trade measures to jolt US relations with trade partners. She has criticized the idea of imposing tariffs across all imports to the US. It’s likely that the new administration will maintain President Biden’s trade trajectory on tariffs with a hardening stance toward China, considering the recent new and proposed increases to tariffs on Chinese imports of steel, electric vehicles, advanced batteries, solar cells and other products.
How far? Harris has shown interest in tying trade negotiations to other policy goals, for example with pro-environment and labor provisions. In 2020, as senator, she voted against replacing NAFTA with the United States-Mexico-Canada Agreement (USMCA), citing insufficient measures to tackle climate change. With the USMCA up for review in 2026, the new administration is likely to establish priorities on trade over the next year. New tariffs on steel and aluminum from Mexico, effective this year, indicate that the US continues to extend its trade policy reach vis-a-vis goods transiting USMCA partners. Separately, Harris’s “America Forward” plan for tax credits, outlined during the campaign, made clear intentions to continue shaping policy to protect US competitive advantage in critical industries.
A president can impose tariffs under many conditions, including unfair trade practices, without Congress. Unified party control over the federal government could signal fewer challenges or delays for the administration in implementing its foreign trade agenda. Congress nonetheless may push for certain provisions as part of its role in monitoring and oversight of US trade arrangements, for example, during the USMCA review period.
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The message from executives ahead of the elections was clear: It would be full steam ahead on artificial intelligence (AI) no matter who occupies the White House. In PwC’s October 2024 Pulse Survey, 52% of executives surveyed said a Harris victory would lead to increased AI investments. Fifty-three percent said the same about a Trump victory. In both scenarios, only 5% said AI investments would decrease. Since AI will be a foundational technology, like the internet — intrinsic to everything companies do — it’s bigger than any election. The technology will keep advancing. The value it creates for business will keep multiplying too.
But this election matters, especially since it’s uncertain what approach to regulating AI a Harris administration might seek. It could take a lighter touch, similar to how the Clinton administration addressed the rise of the internet. Or it could seek tougher regulations, building on President Biden’s executive order on AI or moving closer to the European Union’s AI Act. How to regulate AI was not a prominent topic in leading up to the election, and AI hasn’t been a strict partisan issue to date. Still, the odds of stricter regulation have risen.
The Democratic “trifecta” could also impact a critical foundation for AI — energy. The computational systems and data centers that support AI and cloud require vast and growing amounts of electricity. The new, unified government could issue both executive orders and pass legislation to advance renewable energy initiatives. Such executive orders or legislation would be a strong indicator that companies should prioritize sustainability, adopt clean energy technologies, and prepare for stricter environmental regulations.
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In our October 2024 Pulse Survey, 55% of respondents said their companies plan to increase sustainability investments should Kamala Harris win the election. This may reflect confidence in her continuation of Biden-era policies that emphasize sustainability in international alliances, trade negotiations and economic plans. This includes support for laws like the Inflation Reduction Act (IRA), which provides tax credits and incentives for initiatives that reduce greenhouse gas emissions. Companies may be investing more in sustainability regardless of the regulatory backdrop because it helps meet growing consumer demand for sustainable products, manage environmental risks and comply with sustainability disclosure regulations in key international markets.
Executives are likely concerned about the US and global regulatory environments due to a wave of new global sustainability disclosure rules. An open question is whether that regulatory pressure would intensify if the SEC’s climate rules are finally enacted. They are currently on hold and being challenged in court.
As part of Harris's broader goals to increase federal oversight and strengthen regulatory agencies, her administration may pursue regulations that challenge emissions-intensive industries like oil, natural gas and steel. However, her administration may face challenges given the Supreme Court’s recent Chevron ruling that may lead to agencies like the EPA and the SEC having reduced authority to interpret regulations. Companies should prepare for an increase in litigation as these issues are sorted out.
Harris’s agenda may also include efforts to position the US as a leader on the global response to climate change, with support for clean energy investments, improved home energy efficiency and energy independence. Although she moderated some of her positions during the campaign on fracking and vehicle emissions, the Harris administration and a Democratic Congress may push for tighter regulations and standards than a Trump administration, consistent with Biden’s administration, and support for the electrification of automobiles. Regardless of the election, business leaders should continue to consider sustainability risks and opportunities across their operations, products, supply chains, and business models to address the threats to their long-term strategies as well as potential areas of growth.
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A Democratic sweep of the presidency and both houses of Congress would likely give Harris an easier time enacting her agenda than President Biden has been able to with a Republican-controlled House. Legislation should be easier to pass and the Senate will likely be able to approve political appointments more quickly for Harris, though some confirmations still may take months. Corporate taxes would be more likely to rise in the coming years, and companies would have to continue to keep an eye on ESG legislation. Consumer protection initiatives might by more likely to pick up steam — affecting sectors from consumer goods to banking and beyond. Sectors that are already highly regulated, including healthcare, pharma and air travel, would need to watch for new initiatives in Congress and the federal bureaucracy.
Federal antitrust regulators would likely be more active than they would likely be under a second Trump administration. Whether they stay as hawkish as they were under the Biden administration would depend on who gets appointed — or reappointed — to head various federal agencies. Some regulators, including the Federal Trade Commission (FTC), have been pursuing cases to crack down on a range of activities they argue are anticompetitive. These efforts would require a substantial broadening of longstanding antitrust case law and, while this would take time, it could have a negative effect on M&A activity.
Regulators in the departments of Justice, Treasury and Commerce, among others, have gotten more involved in reviewing or restricting international deals. A broad US political consensus that viewed globalization and increasing free trade as positives began to unravel in the 2010s. More populist initiatives, including a renewed focus on industrial policy, have added new wrinkles to cross-border M&A. International deals aren’t dead by any means, but they have gotten more complicated.
Harris’s proposal to increase the corporate tax rate to 28% could alter the economics of M&A in the US. Higher taxes can reduce after-tax profits, making companies less attractive to potential buyers. Increased tax burdens can also reduce cash flow, limiting their ability to finance deals. Companies may also reconsider large transactions due to the higher cost of capital, leading to more cautious dealmaking.
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The road ahead: How the 2024 election will impact your business
Check back for more election updates and insights as they unfold.
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