Publicly traded publishers rallied yesterday as several stock-market indexes hit record highs after the Senate runoff elections in Georgia. The early results gave investors a clearer view of the
political outlook for the next couple of years, removing a key uncertainty about fiscal policy.
Democrats will control the U.S. Senate for the first time since 2015. They will set the
agenda for at least the next couple of years, with a slim majority in the House of Representatives and President-elect Joseph R. Biden Jr. in the White House. Their policies are likely to affect the
publishing industry in several ways.
Without Sen. Mitch McConnell (R-Kentucky) and other fiscal conservatives
standing in the way of more stimulus to help lift the pandemic-battered economy, it's more likely the Biden administration will spend more freely to speed the recovery. Measures to avoid a deeper
recession -- such as sending out $2,000 to people -- would stimulate the economy and help publishers more generally.
More specifically, some publishers may qualify for relief
grants, venture-capital funding and low-interest loans that Biden proposed
during his campaign. Of course, the best stimulus will be to bring an end to
Taking on Big Tech
While the market rallied yesterday, the stocks for Amazon, Apple, Facebook and Google owner Alphabet
declined somewhat as investors weighed how a Democrat-controlled Senate will affect big tech companies. Their dominance in digital media has profound implications for publishers that have blamed them
for anti-competitive behavior, censorship and profiting from harmful misinformation and hate speech.
It's too early to tell whether recent antitrust lawsuits against Facebook
and Google will lead to curbs on their market dominance, and the effect on publishers. A Democrat-controlled Senate is likely to seek stricter regulation of tech giants, which may be positive for the
Higher Business Taxes
During the campaign, Biden pledged to raise the corporate tax rate to 28%, undoing the
Trump administration's cut to 21%. It's unclear whether Biden will follow through with that plan, given that the U.S. economy is still weak and unemployment is the highest in seven years. Keeping a
lower rate would help publishers free up income to keep people employed and plow back into their business.
It's more likely that taxes
on people making more than $400,000 in wages or self-employment income will be higher. That higher personal tax rate isn't likely to affect
publishers -- unless of course, we're talking about independent bloggers making money on Substack.