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Getting the final word on the 2020 elections, even as it took
until early 2021, has set the stage for the 117th Congress and for
a new administration. But it is a stage that shifted in terms of
the political and administrative landscape for at least the next
two years.
The two runoff elections for the US Senate seats in Georgia were
won by Democrats and the margin of victory in both races is outside
the level that would have forced a recount. Sen. Kelly Loeffler
(R-Ga.) was defeated by Democratic challenger Raphael Warnock and
Sen. David Perdue (R-Ga.) was defeated by Democratic challenger Jon
Ossoff. That gives Democrats a 50-50 tie in the Senate, with the
challengers not seated until the results are certified later this
month. Once that happens, it will mean that Kamala Harris will cast
deciding votes in the event of a tie, giving control of the chamber
to Democrats.
Democrats already have a narrow majority in the House of
Representatives of 222-211. But there also still are two
outstanding races in the House—one in New York state and now
the Louisiana House seat that was to be filled by Republican Luke
Letlow who died from COVID-19.
Impacts ahead from shift in Washington
Another round of checks for Americans and additional COVID
stimulus help are expected to be the immediate impacts. Actions
ahead are expected to see the checks for Americans bumped up to
total $2,000 or an increase of $1,400 from the $600 per person most
already have received.
Plus, there is expected to be aid for state and local
governments emerging in the next round of COVID aid that Congress
is expected to approve.
The slim Senate control should ease the way for cabinet-level
appointees that have to be approved by the chamber. President-elect
Joe Biden already has made most of the top-line selections for key
posts, avoiding nominees that would have been more controversial.
That could mean some of the sub-cabinet roles filled by some of
those more-controversial nominees.
Moderates will be key players now, particularly Sen. Joe Manchin
(D-W.Va.) and potentially those like Sens. Lisa Murkowski
(R-Alaska) and Susan Collins (R-Maine). As long as the filibuster
survives — and that seems more likely — many Democratic
priorities will need 60 votes in the Senate.
That also means that legislative efforts are not going to be as
aggressive or bring the significant changes that could take place
with larger majorities in both chambers. This will force
legislative efforts to be more centrist in nature as opposed to
ones that would be more reformative in nature.
Democrats will regain the gavels in the various Senate
committees, with Sen. Bernie Sanders (I-Vt.) likely as chairman of
the Budget Committee and he likely will push reductions in defense
spending. Sen. Ron Wyden (D-Ore.) would chair the Senate Finance
Committee, which is in charge of tax writing and trade policy. He
wants to tax gains in capital assets each year even if they are not
sold. Sen. Sherrod Brown (D-Ohio) would chair the Banking panel and
Sen. Elizabeth Warren (D-Mass.) on the financial institutions
subcommittee would try to change rules to steer lending and capital
to their priorities and cut lending to fossil-fuel companies. Sen.
Dick Durbin (D-Ill.) will lead the Judiciary Committee.
Regulation and executive orders still key
While a divided Washington would have accelerated the regulatory
and/or executive order action in Washington, the close margins in
the House and Senate will mean that regulation/executive order
stands as a key action point for a Biden administration.
The expectation still is that there will be a degree of
"re-regulation" taking place — reversing the deregulatory
efforts and executive orders from the Trump administration.
While there are tools that Congress can use on the regulatory
front — the Congressional Review Act (CRA) — that can be a
tricky tool to navigate as using that route also means that a
similar rule cannot be pursued in the future. So that could give
Congress pause in using the CRA to an extensive degree. Indications
are that regulations finalized since August 21 would be potential
candidates to be addressed via the CRA.
Climate change moving up on the agenda
While we do not expect a "sea change" on the legislative front
involving climate change, there will be a clear shift, which will
accelerate efforts to combat climate change. The control of the
House, Senate and White House by Democrats will facilitate it, but
the close margins will temper the degree of change that can be
accomplished.
Incoming Senate Agriculture Committee Chair Debbie Stabenow
(D-Mich.) has made clear that climate change will be a key focus,
specifically creating a carbon market for US agriculture. "We
certainly will be deciding ... what bills come to the floor, which
is a dramatic difference, and as well as what bills are brought up
before the committee," Stabenow told a congressional reporter. "As
chair of the Agriculture Committee, we're going to lead an effort
to create a voluntary climate exchange and ... climate policy for
farmers and ranchers, and that's a top priority for me," Stabenow
said.
Stabenow was one of the sponsors of the Growing Climate
Solutions Act last year. Under the bill, USDA would provide
information to farmers and forest owners interested in
participating in carbon markets, and it would certify businesses to
verify that participating landowners are carrying out practices
that capture carbon, reduce emissions, or improve soil health.
But the keys for anything related to climate change for US
agriculture are what type of changes that may be sought for
agricultural producers and perhaps, most importantly, what size of
payments can producers expect to receive in exchange for climate
actions. That will be the key for the situation moving forward as
farmers will not be willing to change cropping practices, etc., if
they are not provided with an attractive payment to make up for any
changes to productivity that result.
Infrastructure also gaining traction
The Trump administration had pushed infrastructure as a likely
area of bipartisan agreement. Democrats were on board, but how to
pay for action on infrastructure stymied agreement as conservative
Republicans balked. However, with a focus on the economy key, that
has more observers expecting infrastructure action will become a
reality.
And if it is melded into efforts to bolster the economy, that
will likely temper spending critics. Infrastructure actions loom
large for agriculture as improvements to waterways, roads and
bridges facilitate getting farm products to market and will create
a slew of jobs as projects get underway.
Tax changes less likely
Given the immediate focus on the economy for the Biden
administration, pushing through significant changes in tax law does
not seem likely. Actions to increase taxes on businesses or even
high-income Americans would likely temper economic activity and,
thus, would run counter to the administration's goal of
jumpstarting the US economy.
Trade policy still further down on the list
No major changes are expected on trade policy ahead. The Biden
administration will review the Phase One agreement with China and
is not seen adjusting tariffs on Chinese goods that were put in
place by the Trump administration. That means a new trade deal with
the UK will be further down the road and even the US rejoining what
was the Trans-Pacific Partnership (TPP) agreement will take time
and would be an area where a Biden administration would seek
changes.
How to pay for actions is important
While deficit spending accelerated with the COVID aid efforts
that have been deployed, when it comes to efforts like climate
change, there will still be questions of how to pay for any such
activities such as payments to farmers.
There becomes a point where not everything can be considered
"emergency" spending and, thus, outside of the need for spending
increases to be met with offsetting declines in other areas. Unless
Democrats can adopt changes in the way the Senate operates, the
spending question will loom over the consideration of activities
relative to climate change, in particular.
Potentially narrow window for change
The focus is on the next two years relative to the ability of
Democrats to move forward on their agenda. History shows the party
in control of the White House often loses seats in the first
mid-term election that comes after taking office. However, history
has not proven near as reliable for how elections are playing out
in the current climate.
But Democrats will push hard to move forward on their agenda
over the next 18 months as they eye those mid-term elections.
Posted 13 January 2021 by Roger Bernard, Policy Analyst, IHS Markit
