With the election finally over, one might think Mark Heesen, president of the National Venture Capital Association, would be pleased on one point. With Mitt Romney no longer campaigning, the NVCA will have a rest from constantly correcting reports casting Bain Capital’s investments as venture capital.
Not quite. Though Romney may be out of the picture, Heesen says, the lobbying group still has to get an incoming Congress up to speed on the venture business. And given that more than 40% of House members will have between 0 and 6 years of experience in Congress, there will be plenty of work ahead.
“It’s one of the most inexperienced congresses that we’ve ever had.” Heesen says. “So the education of what venture capital is is going to be intense with these new policymakers.”
Overall, Heesen says, the election results brought few surprises. Democrats did a bet better than expected in closely watched Senate races, but House races came out pretty much as predicted. As for Romney’s defeat, Heesen says he doesn’t think the candidate’s private equity background was either a big positive or negative in the race, noting that the popular vote was fairly close.
That said, now that the lame duck session of Congress is getting back to business, and Obama preps for a second term, venture industry insiders can expect a host of issues to come to the forefront that should have an impact on the industry.
Tax policy is one thing to watch. Obama campaigned on a platform to raise taxes for the wealthy, and debate around several tax issues should be of particular interest to entrepreneurs, VCs, and angels. One is what lawmakers believe should be the differential (if any) between ordinary income and capital gains. Another is whether current treatment of partnership income continues or whether it will be taxed at a corporate rate. Also in question is whether tax credits will be eliminated to allow for a lower overall corporate tax rate. This would effect both energy tax credits as well as many credits used by life science portfolio companies, the NVCA says.
On immigration, the NVCA expects both parties will want to address both the legal and illegal aspects of immigration legislation together, rather than as separate, stand-alone bills. Venture lobbyists, meanwhile, will continue to advocate for a streamlined path for high-skilled entrepreneurs, either in a comprehensive immigration bill or through stand-alone legislation.
As for energy, Obama’s reelection means priorities such as energy tax matters, manufacturing, rules addressing air pollution, and energy exports will be at the top of the agenda. Newly elected Senators like Tim Kaine (D-VA), Joe Donnelly (D-IN), and Martin Heinrich (D-NM) also will likely be solid additions to the pro-renewable efforts in the Senate, the NVCA says.
The expectation is that the Obama Administration will continue its push for advancement of renewable energy on all fronts: everything from tax incentives to regulatory policies, to export policies. However, while President Obama continues to call for passage of a Clean Electricity Standard, a divided Congress makes that unlikely.