Policy and Political Outlook from Venable's Government Affairs Practice

Congress is back in session and Venable's Legislative and Government Affairs team has forecasted the top priorities for the remainder of the 115th Congress. Comprised of former members of Congress, Congressional staff, and regulatory officials, we have a comprehensive understanding of the federal regulatory and policy process. Our team provides a 360-degree approach to advice, compliance, advocacy, and analysis. Continue reading to see what we think is in store for the next few months.

• As of now, the Senate is scheduled to start an eight-week work period today, with breaks for Rosh Hashanah and Yom Kippur. The Senate target recess date is October 26.
• The House of Representatives will have a two-week Washington work period, followed by a one-week district work period, followed by a two-week Washington work period. Its target recess date is October 12.

Those work periods could be extended, as Republican leadership in either chamber could choose to give Senators and Members more time to campaign in their districts or states.

September Agenda – Top Priorities

• Supreme Court nomination of Judge Brett Kavanaugh
• Pass Appropriations bills for FY19
• Conference report on Farm Bill

The House and Senate will work to move conference reports on Appropriations and the Farm Bill before the Senate turns its attention to the Supreme Court nomination of DC Court of Appeals Judge Brett Kavanaugh.

Currently, nine of the twelve appropriations bills have been approved by at least one chamber through a series of so-called minibuses, bundles of two or three funding bills considered as one. However, with different funding levels and other legislative disagreements, House and Senate appropriators must quickly resolve their differences in conference during the abbreviated September work period in order to get the minibuses to the President's desk by the end of the fiscal year (September 30). Anything that cannot be agreed to by both chambers and signed into law will have to be funded by a short-term continuing resolution (CR), which would extend government funding for any remaining agencies at its current level until after the November elections. A "clean" CR, even one with limited scope, would be difficult without significant support from House Democrats, meaning it would likely be paired with one of the minibuses or a bipartisan priority, such as the Farm Bill.

After spending is addressed, but before the Supreme Court's fall term commences on the first Tuesday in October, we expect that the Senate will move to debate and vote to confirm Judge Kavanaugh as the last act before the election.

While we do not believe that the Congress will spend much time on issues beyond the priorities we have outlined above, one or both bodies could seek to address a number of hot-button issues, including health care, immigration, and tax.

Health Care

Health care remains a potent issue for both sides, and the Republicans could try one more time between now and the end of the year to fulfill their long-standing promise to repeal and replace the Affordable Care Act (ACA), which would still be very difficult. First, such a repeal consideration could not begin without the passage of a new budget resolution with the requisite reconciliation instructions. Even if the House and Senate could achieve that, which is problematic, limited time still makes it difficult. Recall that in July of 2017, Republican Senators John McCain (AZ), Susan Collins (ME), and Lisa Murkowski (AK) sided with Democrats to vote "no" on the "skinny repeal" of the ACA. The vote total was 49-51, and the ACA remained in place. Since that vote, two Senate seats have changed – Democrat Doug Jones has filled the Republican seat in Alabama, and Senator McCain passed away this week. In order to pass the "skinny repeal" bill, Senator Jones would need to buck his party and Senator McCain's replacement would have to reverse his vote – and/or Senators Collins or Murkowski would need to change their votes. As of now, we do not believe there is enough time to pass a budget, let alone craft a compromise that would satisfy Senators Jones, Murkowski, and Collins.

Immigration

Immigration could also complicate a year-end scenario. President Trump could insist on funding for the border wall, in exchange for which Democrats would probably demand concessions on "dreamers" and a path to citizenship. The politically combustible nature of a debate on these issues weeks before an election seems to dictate paralysis. However, we cannot dismiss the possibility that the President will seek this fight in the context of government appropriations, accompanied by a threat to shut down the government unless the funding is forthcoming. It is because of this threat that the Congress is seeking to fund the government through a series of minibus bills, signing the bulk of appropriations into law for the full year, and limiting the scope of a potential veto threat to agencies like Homeland Security, where major political obstacles remain.

Tax

House Ways and Means Chairman Kevin Brady has indicated that the Committee intends to move forward on a "Tax Reform 2.0" during the month of September. The objectives of this legislation, as described in a document released on July 24, are to (i) protect the middle class and small business tax cuts, (ii) spur new business innovation, and (iii) promote family savings. Less certain is whether the House of Representatives would consider the legislation before the November elections. In any event, as the Tax Reform 2.0 legislation will not benefit from the procedural protections that were available for last year's consideration of the Tax Cuts and Jobs Act (that is, the budget reconciliation rules), there is little chance that this legislation will be taken up by the Senate. Chairman Brady is also working with the Trump Administration to implement the provisions in the Tax Cuts and Jobs Act and identify those provisions that require corrective legislation. A deal on technical corrections and expired "extender" tax provisions will be a hot topic of conversation for the lame duck session.

Post-election Outlook

Scenario: Republicans hold the Senate/House flips

We believe that the Senate will likely remain in Republican hands (see analysis below).

The Republican-controlled Senate has set a December 14 target date for adjournment, but should the House of Representatives change to Democratic control in January, there will probably be a push to try and move whatever legislation can be moved to the President's desk, including non-controversial member priorities. That said, it will still be virtually impossible to garner the 60 votes necessary to pass contentious legislation in the Senate.

Scenario: Republicans hold the House of Representatives and Senate

In late November, if Republicans somehow remain in control of the House, we expect a quick session before the 115th Congress is adjourned, focused mainly on consensus authorization bills. The House will be preoccupied with leadership elections and committee chairmanship races. Members will also be ready to leave town, go home for the holidays, and celebrate their good fortune. Most importantly, outgoing Speaker Paul Ryan (R-WI) will want to adjourn quickly, and we have seen no indication that the retiring Speaker wants to pass a lot of measures before leaving, as did his predecessor, John Boehner.

Political Landscape

House of Representatives

The Democrats need to pick up 23 Republican seats to gain the House majority. According to the website Real Clear Politics, the Democrats are currently favored to win 199 House seats in the November midterm elections, and Republicans are favored to win 193.

That leaves 19 seats that Democrats need to win. The most likely targets are 43 seats considered toss-ups. Of the 43 seats, 41 are Republican controlled. Nine of them are in congressional districts that either have more Democratic Party voters or are split. The 34 remaining toss-up races are in congressional districts that have more Republican voters than Democratic.

Many of the districts that the Democrats need to win are those that Hillary Clinton carried, and, according to Dave Wasserman of the Cook Political Report, Republicans are not well positioned for these races.

Of the 25 Republicans sitting in districts Hillary Clinton carried, only five are currently well-positioned to survive a wave: Reps. David Valadao (CA-21), Carlos Curbelo (FL-26), John Katko (NY-24), Brian Fitzpatrick (PA-01) and Will Hurd (TX-23). But eight others aren't seeking reelection, and 12 others are in Toss Up or worse. Those 20 largely suburban, college-educated seats make up the bulk of the 23 seats Democrats need.

He concludes, as we do, that Democrats are favorites to win back the House of Representatives, though not overwhelming favorites.

Democrats remain clear but not overwhelming House favorites. On the low end, it's possible House control may not be decided until days after the election. It's also possible a "Blue Wave" could propel Democrats to historic gains, well past the 23 they need. Right now, Democrats appear poised to gain between 20 and 40 seats, with 25 to 35 the likeliest outcome.

If you would like to view the Cook Political Report House race ratings page, click here.

When looking at the House race ratings page, what stands out is that the path for Democrats to win the majority is led by Pennsylvania, but opportunities also exist elsewhere, including in California, Texas, Florida, Ohio, and Michigan.

However, when analyzing the toss-up races, it is easy to see why it is difficult for professional political handicappers to definitively predict that the House will flip. For example, Orange County, California has four competitive races in seats now held by Republican Members Dana Rohrbacher, Mimi Walters, Ed Royce (retiring), and Darrell Issa (retiring). Democrats could sweep all four seats or be shut out completely. No one should count out either Mr. Rohrbacher or Ms. Walters at this stage, and the Republican candidates in the open seats are running strong races in districts that have more Republican voters than Democrats.

The same can be said about parts of Michigan. Rep. Michael Bishop and Rep. David Trott are vacating seats that lean Republican, with a PVI of +4 GOP. It is therefore likely that both seats will remain in the Republican column. However, if a "blue wave" forms, they could also be won by the Democratic Party. We simply do not know until we get closer to Election Day whether the elements of a "blue wave" will materialize.

That is why, at this time, we expect Democrats to take control of the House of Representatives, but as that great philosopher Yogi Berra once said (and in this political environment it's particularly true), "It ain't over till it's over."

U.S. Senate

Today, Republicans hold a 50-49 advantage in the Senate, with one vacancy due to the passing of Senator John McCain. By Arizona law, the governor must appoint a Republican (same party as the deceased) to serve out Sen. McCain's term or to serve until 2020. Therefore, Republicans will continue to hold a 51-49 advantage for the balance of the year.

As is true every election, 35 seats, more than a third of the Senate, are on the ballot. What is unusual is the disproportionate number of Democratic seats, 25, that will be vulnerable. By comparison, in 2020, a presidential year, 12 Democratic seats will be on the ballot, compared with 21 Republican, and in the next midterm election in 2022, 12 Democratic seats will once again be available, compared to 22 Republican seats.

As of today, only 7 of the 35 are considered toss-ups by Real Clear Politics. Another 5 seats could end up in play. These 12 are:

Unlike the House of Representatives, the Senate map makes it very difficult for Democrats to reclaim the chamber. They would need to win every race an incumbent is running in, and two out of the three races in Nevada, Arizona, and Tennessee. Absent a significant blue wave, this is unlikely. President Trump won many of these states in 2016 and remains popular there, the Republican challengers to the incumbents are more formidable than in past elections, and Republican voters remain pleased with the party in these states. In order for Democrats to win in these states, the incumbent must increase Democratic turnout over 2016 levels, and flip a coalition of Trump-voting Independents and Republicans.

Even if the Republicans do not pick up any seats, should they hold the chamber, it will be a more pro-Trump Senate than it is today. Trump will be losing key critics and adversaries, such as deceased Senator John McCain and retiring Senators Bob Corker (TN) and Jeff Flake (AZ). Other Republican Senators, like Lindsey Graham (SC) and Chuck Grassley (IA), have adopted a more conciliatory posture toward the President.

116th Congress Early Outlook

Given the analysis above, it is therefore very likely that the 116th Congress would consist of a Democratic House intent on providing strong oversight of President Trump personally, as well as his Administration as a whole. Leadership will put a number of messaging bills on the floor concerning taxes, health care, and the environment, but extensive hearings and investigations, armed with subpoenas, will be the main focus. Look for public investigatory hearings to be led by the current Ranking Judiciary Democrat Committee Jerry Nadler (NY) and top oversight Democrat Elijah Cummings (MD), with ancillary hearings held in Energy and Commerce and House Financial Services. Whether any of this leads to impeachment proceedings, especially given the likely Senate party composition, is anyone's guess, but Rep. Nancy Pelosi (D-CA) and seasoned Democratic leaders know well the dangers of proceeding down that road during a presidential reelection cycle. They may conclude that hearings and reports are sufficient to make their case to voters in 2020.

On the Senate side, the Administration is likely to enjoy a Republican Senate that is more aligned with President Trump and absent major new revelations, will likely work to counteract the House and help the Administration position itself for the reelection campaign.

It's important to note that with control of the Senate, the President will still have a lot of influence over the national agenda through executive branch nominations and judicial appointments. This is particularly true now that confirmations may no longer be filibustered and are subject only to a majority vote. If Republicans maintain control over the Senate in 2019, and should another Supreme Court vacancy occur, their majority could prove politically critical. However, to pass legislation, as always, the 60-vote requirement will likely force the two parties to find ways to work together if they want to get anything accomplished.

If you have questions or would like additional information, please contact a member of our team.