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What We Can Expect Now that Democrats Control the Senate

As a result of the Georgia election outcomes, Democrats and Republicans will each control 50 seats in the Senate, which means that Vice President-elect Kamala Harris, as President of the Senate, will have the power to vote whenever there is a tie. This effectively gives Democrats a majority and thus control of the Senate. It will mean that Democratic Senator Chuck Schumer of New York will replace Republican Senator Mitch McConnell of Kentucky as the Senate Leader and be in control of the Senate agenda, including which bills come to the Senate floor for debate and who chairs the Senate committees. Senate committee ratios will also have to be re-negotiated under a 50-50 Senate.

The following are some of the broader impacts: First, President Biden will have an easier time confirming his Cabinet and filling key positions requiring Senate confirmation. President Biden will have greater freedom to nominate who he wants as the ability of Republicans to hold up more controversial candidates by not allowing a hearing or vote on a nominee will be more limited. This includes the nomination of federal judges. Second, Senate Democrats will control which bills get committee hearings and are debated on the floor, limiting the ability of Senate Republicans to totally block President Biden’s agenda. Look for immediate actions on addressing vaccine roll-out, additional pandemic stimulus funding and passing a budget resolution.

The expectations and ambitions of the progressive wing of the Democratic party will be heightened with the removal of the obstacle of a Republican- controlled Senate. While President Biden has been mostly silent on (and several moderate Democrats opposed to) such issues like ending the filibuster, increasing the size of the Supreme Court or doing away with the Electoral College, these issues could reemerge and distract from other Democratic agenda items. All of this will increase the leadership challenges for both Speaker Pelosi and even more for Leader Schumer who may have to fend off a 2022 progressive primary challenge.

While for many legislative issues Democrats will need sixty votes in order to overcome Republican opposition, they will be able to use the tool of “reconciliation,” which is legislation that can only include provisions that change spending and/or revenue (tax laws) to meet the targets set by a congressional budget resolution (a budget resolution must be passed by both House and Senate in order to use reconciliation process). There can be more than one bill depending on the instructions in the budget resolution. Only a simple majority is required for passage in the Senate and the legislation is subject to time limits for debate and can’t be filibustered. This could allow Democrats to move tax legislation increasing the corporate tax rate, the top individual tax rate and or the estate tax, as well as other non-tax issues that have a revenue impact.

There are limits to what can be done in reconciliation under what is referred to as the Senate’s Byrd Rule, named after the late Sen. Robert Byrd (D-W.Va.), which requires provisions in reconciliation bills to be budgetary in nature—affecting revenue or spending. Simply having a budgetary impact is not enough as provisions must have as their primary purpose an impact on revenue or spending. The Senate parliamentarian provides advice on whether provisions comply. If a provision doesn’t produce a change in outlays or revenue, it’s subject to a point of order. It takes 60 votes to waive the point of order and keep the language in the measure. So under the rules of reconciliation, policy issues like creating a fiduciary duty of care for financial advisors or changes in retirement policy that may have a revenue impact, but not as the measures primary purpose would likely not be deemed appropriate under reconciliation.

A Democratic Senate majority will also have the ability to utilize the Congressional Review Act (CRA) to reverse regulations finalized at the end of the Trump administrations. This is in addition to the expected directive to be issued on President Biden’s first day in office to freeze all non-final regulations, like the recently published final Department of Labor prohibited transaction exemption rule issued last month. Note it only takes a simply majority to pass a CRA resolution in the Senate.

Much of how the political agenda plays out will depend on the lens that the Biden administration and Democratic leadership views the political landscape. Do they believe that they only have until the mid-term congressional elections in 2022 to be audacious and seek to accomplish as much as possible in the first 24 months due to a fear that Republicans will regain control of the House of Representatives, where Democrats only enjoy a slim 4-seat majority? Note that historical trends have seen the President’s party lose House seats in all but two of the most recent mid-term elections. Or will President Biden largely maintain his post-election posture of seeking to build consensus and bring the country together by focusing on more moderate less controversial items? This will of course significantly depend on the receptivity of the congressional Republican minority, or at least a sufficient number of them to work with the new Administration.