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The 2016 Election: Congress

Andrew3 / Blog / 0 Comments
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While there has been tremendous interest in the race for the US president, there are also other important elections being held for various seats in the US Congress.  Every two years, all 435 members of the US House of Representatives are up for re-election and around one third of the 100 members US Senate.  In the House, a simple majority rule prevails when legislation needs to be passed out of committee or needs to be agreed upon as it is brought to the floor for a vote or to be passed.  218 out of 435 members are all that is needed to proceed. .  In the Senate, a simple majority is needed to pass a bill out of committee.  However, current Senate rules dictate there must be 60 votes to end debate and bring a bill to the final vote.  Currently, Republicans control both chambers.

Why does this matter for business?

Because whoever controls Congress controls the agenda for critical legislation on regulations, tax reform, and budget.  Also, control of the Senate usually means control of the confirmation process for cabinet level positions and for prospective justices of the US Supreme Court.  The latter is a critical issue at this point as the current Supreme Court party representation is a 4-4 split, with a vacancy resulting from Republican Justice Scalia’s death, and a likely additional vacancy with the onset of   Democrat Justice Ruth Bader Ginsberg’s retirement.

If a party has a majority in one of the chambers, they can usually name the chairman or chairwoman of most of the committees and set the agendas for many of these committees.  They can often shape the legislation from the content to the timing of the bill as it is brought up for a vote.  They can often effectively bury legislation that the party doesn’t like and bolster legislation that they want to pass.

For Democrats, this could mean that they could gain the capability to put forward bills on issues like gun control, immigration, healthcare, energy, and infrastructure.  For Republicans, it gives them the ability to move forward on bills for tax reform, regulatory reform, and limiting the size of government.

 

Where do the races stand?

In the US House of Representatives, Republicans have a 247-188 majority.  This is the largest Republican advantage since 1928.   Democrats will probably need to win 30 Republican seats while retaining all of their 188 seats, in order to seize a majority in the House.  According to RealClearPolitics polling, there are 21 toss up races with 17 Republicans and 4 Democrats in this category.

Here’s the total picture:

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From this graphic, it appears the Republicans are likely to retain control of the House, but lose a portion of their majority.  It’s very difficult to predict US House races because there is very little polling data with which to forecast outcomes. .  However, historically, the House is influenced by the US Presidential election and a large victory by Democrat Hillary Clinton could lead to a larger loss for the current Republican majority in the chamber.

For Illinois, there are two races to watch and they are at opposite ends of the state.  In the toss-up category, we have Illinois 10th district with current Republican Robert Dold vs. Democrat Schneider.  In the likely GOP category, we have Illinois 12th District Republican Mike Bost vs. Democrat CJ Baricevic.

In the US Senate, Republicans have a 54-46 majority.  For this election cycle, there are 24 Republican seats up for re-election, but only 10 Democrat seats.  For Democrats to gain control of the Senate, they would probably need to win at least 4 seats currently held by Republicans, hold all of their 10 seats up for re-election and win the White House to have the Vice President act as the tiebreaker.  For Republicans to retain control, they can only lose three seats they currently hold, unless they can somehow overturn a substantial handful of seats currently held by Democrats.

 

Here are the key states to watch:

Current R-seat and polling:  MO (R+1.0%), NC (R+3.2%), NH (R+1.3%), PA (+1.7%)

Current D-seat and polling:  NV (R+1.2%)

 

Also, the RealClearPolitics polling data for the Senate shows three states currently held by Republicans are solidly going to Democrats:  WI (D+6.3%), IN (D+3.7%) and IL (D+7.0%).  In all of the Senate races, the polling is spotty.  As an example, the Illinois race has only 3 polls taken, but they consistently show Democrat Tammy Duckworth ahead of Republican Mark Kirk by +14%, +2% and +5% for an average of +7%.

For control of the Senate, Democrats will need to win Nevada or lose Nevada and then win two of the four states where Republicans are slightly ahead.

Potential Outcomes

The most recent 2016 theme is the Democrat “Blue Wave,” where the House and the Senate turnover.  This would likely be a simple majority for Democrats in both chambers without the key 60 majority needed in the Senate.  This would probably allow Democrats to set the legislative agenda on a wide range of issues.  Moreover, a Blue Wave with a win by Hillary Clinton would probably insure that many of the Obama administration’s policies would continue and be extended.  This potentially could mean a large infrastructure spending bill; extending tax breaks for alternative energy; and higher taxes on the wealthy and corporations. (See Comparing Trump and Clinton Tax and Economic Plans)

If Republicans maintain control of both chambers, we can expect them to act as a break wall for a Clinton presidency on the key issues mentioned above.  If Trump wins, then a unified government would likely pass a large tax cut for corporations and individuals; there would likely be a moratorium on any new regulations, and there would be an attempt to “repeal and replace” the Affordable Care Act and Dodd-Frank financial reform.  There would also likely be many oversight hearings on the Wikileaks documents on the Clinton Foundation and the email server problems of candidate Clinton.

With a split Congress, there would likely be protracted battles on all issues, no matter who wins the presidency. . There would likely be oversight hearings in the House, but none in the Senate.  There could even be a showdown and shutdown of the US government over spending issues and debt ceiling next spring.

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