8 November 2018
The results of the US midterm elections will have implications for how business gets done in Washington during the next two years. The 116th Congress will be a divided one, with Democrats controlling the House of Representatives and Republicans in control of the Senate. While some races have not been decided, it appears that House Democrats will have roughly a ten-seat majority, having gained more than 30 seats in that chamber. In the Senate, Republicans will have a slightly larger majority than during the 115th Congress.
While congressional leaders for the next Congress will be elected in the coming weeks, and legislative priorities are still being sorted out, a few things are clear.
First, the Republicans’ hold on the Senate is likely to result in a renewed effort to confirm judges and other nominees by that chamber. Republicans have already prioritized the nomination and confirmation of young, conservative judges who can serve on the federal bench for many years, and we expect these efforts to be redoubled in the next Congress. There could also be another US Supreme Court nomination during the 116th Congress.
In the House, Democrats are likely to use their majority to check the power of the Trump administration. House Democrats will use the threats of, and actual investigations and subpoenas of, administration officials and documents. Indeed, likely Democratic committee chairs have suggested they will use their power to examine President Trump’s tax returns and to investigate the firing of Attorney General Jeff Sessions. We expect investigations like these to proliferate during the 116th Congress, as well as an examination of Russia’s interference in the 2016 election.
Both Democrats and Republicans will elect their congressional leadership later this year, although committee assignments are not likely to be finalized until early in 2019. While several Democratic House candidates stated during their campaigns that they would not support US Rep. Nancy Pelosi for Speaker of the House, we expect that she will win the race for Speaker. We also expect that Rep. Pelosi’s second turn as Speaker will be a relatively short one, as she may indicate early on that she intends to serve in a transitional role.
Committee leadership will also change in the House, with Rep. Richie Neal (MA-01) taking over as Chair of the Ways and Means Committee, Rep. Jerry Nadler (NY-10) as Chair of the Judiciary Committee, Rep. Maxine Waters (CA-43) as Chair of the Financial Services Committee, Rep. Elijah Cummings (MD-07) as Chair of the Oversight and Government Reform Committee, Rep. Peter DeFazio (OR-04) as Chair of the Transportation and Infrastructure Committee and Rep. Nita Lowey (NY-17) as Chair of the House Appropriations Committee.
On the Republican side, Rep. Kevin McCarthy (CA-23) and Rep. Jim Jordan (OH-04) are running for Minority Leader. In the Senate, Republican leadership and committee assignments are more certain, with leadership positions likely to remain largely the same as in the 115th Congress. However, we expect that Sen. John Thune (R-SD) will take over as Republican Whip due to term limits on Sen. John Cornyn (R-TX). We also expect that Sen. Charles Grassley (R-KS) will take over the chairmanship of the Senate Finance Committee and that Senator Roger Wicker will become Chairman of the Senate Committee on Commerce, Science & Transportation.
There will be several contentious issues in the next Congress, not least of which will be those related to trade. The next Congress will have to decide whether to consider and approve the United States–Mexico–Canada Trade Agreement, as well as to provide oversight on a number of existing and potential trade actions initiated by the administration. We anticipate that trade policy will remain a very active, controversial and confrontational topic in the next Congress, and we expect more frequent and aggressive hearings involving senior administration trade officials regarding the administration’s trade policy.
While House Democrats and Senate Republicans are expected to clash over many legislative priorities, there are a few areas that are ripe for compromise. As attention turns to the 2020 presidential campaign, the administration will be focused on delivering on President Trump’s promises. Both parties and the administration have expressed a desire to address infrastructure issues in the next Congress. Health care and immigration may also prove fertile ground for bipartisan compromise. Privacy and the implications of social media are also at the forefront of legislators’ agendas in both parties.
As leadership elections are held and legislative priorities become more clear, businesses should pay close attention to the shifting ground in Washington. In particular, companies that benefited from changes in the regulatory environment during the past two years may find themselves the focus of House hearings critical of those changes. House committees may seek to explore companies’ relationships with the Trump administration and the perceived negative impact of the Trump administration’s regulatory changes on consumers and competition.