On Tuesday, Georgia voters went to the polls to complete two special elections, marked by high turnout and massive early voting, to determine two United States Senate seats forced into runoffs from the November election. Democrat Raphael Warnock defeated Sen. Kelly Loeffler, and Democrat Jon Ossoff defeated Sen. David Perdue.
With Ossoff's victory, Democrats in the United States Senate will move into a 50-50 split with Republicans and win the tie-on votes because the Vice President of the United States serves as the President of the Senate. Vice President-elect Harris will provide the edge for the Democrats.
In the immediate term, no action is expected in the US Senate until the Georgia senators are seated. The parties previously agreed that no legislation is permitted to be introduced until January 21. An agreement could be reached regarding nomination hearings but that is to be determined. In short, the US Senate is in a holding pattern.
That being said, the impact of the Georgia races significantly alters the conventional wisdom regarding the trajectory of the Biden Administration's first 100 days and the interaction with the 117th Congress. Democratic control of the Senate potentially impacts the following issues in the near term:
- Budget reconciliation
- COVID-19 response and stimulus
- Congressional Review Act
President-elect Biden will no longer need to negotiate with Republican Senate Leader Mitch McConnell to place his nominations for Administration positions on the Senate Calendar for a vote. This allows President-elect Biden a wider range of nominees to pull from.
It remains unlikely that a Democratic Senator would be pulled out of the Senate to serve in the Biden administration, as this could tip the balance of power back to Republicans.
Although Senate Democrats will face considerable pressure from progressives to eliminate or reform the filibuster, a 50-50 Senate makes it unlikely they will be able to do so. Democratic Senators Manchin, Sinema, Tester and Feinstein have expressed opposition to such a move. Additionally, newly elected Senators Mark Kelly (D-AZ) and Raphael Warnock (D-GA) face reelections in swing states in 2022, which could influence their stance on filibuster reform.
The budget reconciliation process allows a mechanism to pass certain legislation with only a simple majority in the Senate (as opposed to the usual 60-vote threshold to avoid a filibuster). Democrats will have both the FY 21 and FY 22 budgets at their disposal to pass reconciliation measures. Budget rules limit what can be included in a reconciliation measure. Generally speaking it must be related to revenue (taxes), spending or the debt limit. Extraneous provisions simply setting policies or creating new programs would not be allowed.
COVID-19 Response and Stimulus
On March 14, the enhanced unemployment insurance benefit that was extended at the end of the year will run out. This provides an opportunity to pass a new measure. The incoming Biden administration has made it clear that they are focused on the vaccine roll out, opening up schools and further stimulus checks. That, taken in combination with issues left unresolved in December, could add up to a significant amount of money being spent.
Some of the issues that were unresolved or are otherwise seen as in play are:
- State and Local money
- $2,000 Stimulus checks
- Money to open schools
- Unemployment Insurance extension
In addition, more money for vaccine distribution could come into play, should there continue to be a lag in distribution.
The ability to utilize the reconciliation process (more than once) significantly enhances the prospect for the incoming Biden Administration to enact some of its key tax policy objectives, such as increasing the maximum tax rate on individuals and corporations. Reconciliation rules prohibit changes to social security, so the Biden administration will be unable to increase payroll taxes as promised in his campaign. Biden tax proposals could be included as part of a stimulus package, an infrastructure package, or other significant economic measures. This strategy is similar to the one utilized by the GOP-controlled 115th Congress; it passed the FY 2017 budget resolution in January 2017 and the FY 2018 budget resolution in October 2017 (which included reconciliation instructions that led to the enactment of the Tax Cuts and Jobs Act ).
Congressional Review Act
The Congressional Review Act provides that Congress can disapprove a "rule" promulgated by a federal agency. The Act permits Congress to look back and disapprove rules enacted during the final 60 working days of a Congress. In 2020, the look-back period extended to June 13, 2016. If the proposed rule meets certain criteria, the joint resolution of disapproval can be taken up on an expedited basis by the Senate and is not subject to a filibuster. Should both chambers pass the joint resolution, upon the President's signature, the rule is rescinded, and the agency is prohibited from issuing a new regulation that is "substantially the same as [the rescinded] rule."