(Bloomberg) — Makers of wind turbines such as Siemens AG
and warships including Austal Ltd. would be among the winners in
President Barack Obama’s budget plan, which would boost defense
spending and extend tax credits for renewable energy.
Oil companies including Exxon Mobil Corp. would take a hit
from increased public-land lease costs, and drugmakers such as
Gilead Sciences Inc. would probably receive lower revenue from
The $4 trillion budget Obama sent to Congress Monday
outlines his goals for agency spending and tax policy for the
fiscal year that begins Oct. 1. Republicans, who control the
U.S. House and Senate, will work on their own blueprint and are
already rejecting major elements of the president’s plan.
The winners, if Obama’s approach prevailed:
Construction machinery makers — including Caterpillar
Inc., Deere & Co. and Terex Corp. — would benefit from highway
funding in Obama’s six-year, $478 billion infrastructure
program, said Bloomberg Intelligence senior analyst Karen Ubelhart and analyst Brian Friel.
The program would be funded in part by a 14 percent one-time tax on about $2 trillion in U.S. companies’ profits that
are stockpiled overseas. Lawmakers in Congress have instead
proposed a one-time tax incentive to pay for infrastructure
About 65 percent of the country’s major roads are rated in
less than good condition, said a report in July by the White
House Council of Economic Advisers and National Economic
Council. About 25 percent of bridges require “significant
New York, New Jersey and Connecticut are among the states
with the most roads rated in poor condition, the report said.
Wind turbine manufacturers including General Electric Co.,
Gamesa Corp. Tecnologica SA, Nordex SE, and Vestas Wind Systems
A/S would benefit from the extension of production tax credits
for the industry, according to a Bloomberg Intelligence note.
“All of these renewable energy credits have been on-again,
off-again,” Rob Barnett, an analyst with Bloomberg Intelligence
in Washington. “Absent comprehensive tax reform, there is an
argument that since the oil and gas industry have these
benefits, why can’t renewable energy companies enjoy them?”
Military contractors would gain from Obama’s push to
bolster defense funding. The Defense Department seeks $534.3
billion for fiscal 2016, exceeding existing budget caps by $36
Lockheed Martin Corp., based in Bethesda, Maryland, is the
No. 1 military contractor and top vendor across federal
agencies, according to a Bloomberg Government ranking last year.
The Air Force plans to spend $13.8 billion from fiscal 2016
through 2020 to develop a new long-range strike bomber. Falls
Church, Virginia-based Northrop Grumman Corp. is competing
against a team of Lockheed and Chicago-based Boeing Co. for the
program. The Air Force plans to select a winner this year.
For the Navy, the five-year defense budget calls for
building 48 vessels, including 14 Littoral Combat Ships built in
different versions by Lockheed and Henderson, Australia-based
Adding defense funds after five years of decline would
require a compromise between Obama, who wants to raise spending
caps on domestic programs, and Republicans who oppose more
Information technology companies that perform work for the
federal government, such as NCI Inc., Booz Allen Hamilton
Holding Corp. and CACI International Inc., would be poised for
slight gains under Obama’s plans, according to a review by
Friel, the analyst.
Federal agency spending on information technology services
would increase by about 3 percent to $86 billion in fiscal 2016
from an estimated $84 billion this year.
The administration seeks to let federal agencies use a
streamlined process for purchases of as much as $500,000 in
goods and services. Currently, federal agencies can buy certain
items valued as high as $150,000 without following the same
paperwork requirements as for larger purchases.
Telecommunications and information technology companies,
such as Verizon Communications Inc. or Insight Enterprises Inc.,
would be among the main beneficiaries from the change, Friel
The losers, under Obama’s proposal:
Obama’s plan would boost royalty rates on oil and gas
leases on public lands, raising $2.5 billion over the next 10
years, according to the budget.
It’s unlikely to happen with Republicans controlling both
chambers of Congress, Barnett said. Regarding the oil and gas
companies, Barnett said, “I think they’re very safe.”
Oil and gas companies also would lose some tax preferences,
including the expensing of intangible drilling costs.
Drugmakers, including Foster City, California-based Gilead
Sciences and North Chicago, Illinois-based AbbVie Inc., would
suffer under a revision in the way Medicare prescription drug
prices are determined.
The Department of Health and Human Services would be
allowed to negotiate drug prices directly with manufacturers of
certain high-cost drugs. Currently, insurance plans negotiate
with drug manufacturers and the government can’t intervene.
Gilead Sciences and AbbVie produce hepatitis C treatments,
which can cost $1,000 a day and do away with less effective
drugs for the liver infection.
Because letting the government negotiate with drug
manufacturers would lower the cost of the drugs, “the
pharmaceutical industry would suffer,” said Brian Rye, a
Bloomberg Intelligence analyst.
Many college sports fans would lose a tax deduction for
money they donate to get seats at college sporting events.
Currently they can deduct 80 percent of such donations.
Eliminating that tax break would raise about $2.5 billion over
the next decade.
Obama’s budget also would repeal tax-exempt bond financing
for professional sports facilities. The proposal would raise
$542 million over 10 years.
To contact the reporters on this story:
Kathleen Miller in Washington at
Heidi Przybyla in Washington at
To contact the editors responsible for this story:
Jodi Schneider at