Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
In mid-term elections held across the United States on 6
November 2018 for the 116th Congress, Democrats took a majority in
the House of Representatives while Republicans extended their
majority in the Senate.
Given that Democrats will now have control of the House while
Republicans will maintain their majority in the Senate, the
likelihood of policy gridlock will almost certainly increase, with
Republican efforts to make the 2017 individual tax cuts permanent
or eliminate Obamacare likely off the table until following the
2020 presidential and congressional elections.
Despite the election results, IHS Markit expects the Trump
administration to rely on executive actions such as issuing
executive orders and via promoting new regulations to pursue
priorities associated with his America First agenda, particularly
on sanctions, trade relations with China, and immigration.
With control of such committees, Democrats will be authorized
to issue subpoenas for the attendance of witnesses and the
production of documents, increasing the likelihood of subpoenas
being issued against members of the executive branch.
All 435 seats in the House of Representatives, the lower
congressional house with important budgetary powers, were at stake.
With Republicans currently holding 236 seats, to obtain a majority
Democrats needed to gain 23 additional seats. At the time of
publication Democrats had picked up 26 seats. In the Senate, the
upper congressional house with crucial approval powers, only 35 of
the 100 Senate seats were up for re-election. During the current
congressional term Republicans held a two-seat majority (51-49). At
the time of publication, Republicans had expanded their majority,
gaining three seats by winning in Florida, Indiana, Missouri, and
North Dakota, but losing a seat in Nevada. Additionally, Democrats
appeared poised to take control of seven additional
governorships.
Policy gridlock
Given that Democrats will now have control of the House while
Republicans will maintain their majority in the Senate, the
likelihood of policy gridlock will almost certainly increase, with
Republican efforts to make the 2017 individual tax cuts permanent
or eliminate Obamacare likely off the table until following the
2020 presidential and congressional elections. Despite the likely
legislative impasse, certain policy areas lend themselves to
bipartisanship, and are thus comparatively more likely to advance.
One would be efforts to improve US infrastructure, where Trump has
proposed a USD1.5-trillion 'Legislative Outline for Rebuilding
Infrastructure in America'. Additionally, despite the recent lack
of progress, a Democratic majority in the House would increase the
likelihood of some sort of Deferred Action for Childhood Arrivals
(DACA; individuals brought over by their families to the US as
children without immigration status) for border-wall funding
legislation to be approved in the next congressional term. Another
area of compromise would likely be on pharmaceutical drug
manufacturing, where the Democrats have advocated for increased
transparency on how prices are determined.
Investigation implications
As the majority party in the House, Democrats will now have
control over the chamber's various committees. With control of such
committees Democrats will be authorised to issue subpoenas for the
attendance of witnesses and the production of documents, increasing
the likelihood of subpoenas being issued against members of the
executive branch. Investigations not only dominate the time of
staff members so that they are unable to focus on pursuing policy
objectives, they can also lead to contract cancellations and
amendments if found controversial or if they did not follow proper
procedures.
Furthermore, under the Internal Revenue Code, the chair of the
House Ways and Means Committee can submit a written request for any
tax return or return information of any US citizen, increasing the
likelihood Democrats request Trump's unreleased tax returns and
then conduct further investigations based upon the information
gathered. Accordingly, the administration will have to decide how
much it will co-operate with such investigations, with
disagreements over compliance likely to lead to legal cases brought
before federal courts.
For Republicans, maintaining control of the Senate will be
particularly beneficial to the Trump administration as it has the
constitutional authority to approve the president's nominations,
including for judicial, cabinet, and diplomatic positions, the
importance of which was underscored by the September 2018
confirmation process for Judge Brett Kavanaugh's nomination to the
US Supreme Court seat vacated by Anthony Kennedy.
Reliance on executive action
Outside of the 2017 congressional overhaul of the tax code, much
of Trump's action as president has relied on using his executive
authority outside the control of Congress. With Democrats taking
control of the House, IHS Markit expects the Trump administration
to rely even more on executive actions such as issuing executive
orders and via promoting new regulations to pursue priorities
associated with his America First agenda, particularly on foreign
policy, trade, and immigration. In particular, Trump is likely to
pursue renegotiations of additional trade agreements as well as
further trade actions targeting trade imbalances with China and
alleged Chinese intellectual property theft and forced technology
transfers, which will probably receive Democratic support. The
Trump administration has also applied sanctions and the threat of
sanctions as a primary foreign policy tool. Additional deregulation
efforts, particularly environmental and labor deregulation, are
also a fundamental agenda item for the Trump administration,
especially in relations to the energy, mining, and manufacturing
sectors.
Increasing risk of politically motivated violence and
urban protests
As evidenced by the series of mail bombs sent to a number of
high-profile Democrats and media outlets in October, the risks of
politically motivated violence for both politicians and the public
remain high. IHS Markit expects similar episodes involving
low-sophistication improvised explosive device (IEDs) or firearms
to likely increase in the run up to the 2020 presidential election.
Additionally, the likelihood of well-organised protests in the
one-year outlook similar to the Women's March (21 January 2017) or
the March for Our Lives (24 March 2018) and involving hundreds or
even thousands across urban centers including Los Angeles, New
York, San Francisco, and Washington DC remains elevated. These
protests are predominantly issue-driven, including around
immigration, gun control, the environment, or reproductive rights,
and tend to be well organized and mostly peaceful. However,
demonstrations by individuals associated with right-wing extremist
organisations have become increasingly common, as have counter
protests organised by members of the so-called anti-fascist
(Antifa) movement.
Outlook and implications
The mid-term results highlight the ongoing political divisions
within the country and the parties. Although Senate Republicans
candidates did well in conservative rural states that voted heavily
for Donald Trump in 2016, Democrats did far better in suburban
House districts that voted for Hillary Clinton. Of note for the
Democrats, many of their most prominent progressive candidates like
gubernatorial candidates Stacey Abrams (Georgia), Andrew Gillum
(Florida), and senatorial candidate Beto O'Rourke (Texas) lost
their respective races. Democrats, therefore, will be more likely
to jettison some of their more pronounced liberal policies like
'Medicare for All' or a guaranteed USD15-per-hour minimum wage once
they take power in the House in January 2019. Incoming Speaker of
the House Nancy Pelosi (D-CA) has already indicated that she will
not seek impeachment charges against President Trump despite calls
for such action by some of her more left-wing caucus. The
progressive Senate losses will likely also help potential centrist
Democratic presidential candidates in their search for the 2020
party nomination. Finally, as many moderate House Republicans lost
their re-election efforts, a more conservative Republican caucus
will emerge. The members remaining will be more inclined to support
Trump policy objectives like taking a hard line on immigration and
supporting socially conservative items.