NAVIGATORS INSIGHTS 2018 Pre-Election Issues Report

Transcription

1 NAVIGATORS INSIGHTS 2018 Pre-Election Issues Report

2 Background On November 6, voters across America will head to the polls to cast their ballots for Members of the United States Congress, governors, and state and local officials. Up for grabs are all 435 seats in the U.S. House of Representatives, 35 of the U.S. Senate s 100 seats spread over 33 states, and 36 gubernatorial seats. This process is already underway, with early voting starting in late September in some states. We anticipate voter turnout to be exceptionally high for a midterm election year. While voter participation is generally lower during midterm elections (the number of eligible voters casting a ballot typically hovers in the 30-40% range) than presidential election years (typically around 55%), this year could see the highest midterm election turnout since the 1970s. The rise in voter interest is likely due to a variety of factors, including increased engagement on social media, enhanced interest in cable news programming, and stronger reactions to partisan issues such as public opinion on President Trump and the Supreme Court confirmation hearings of Justice Brett Kavanaugh. Expected participation of women voters, for example, could be high enough to cause the biggest gender voting gap since the 1950s, according to CNN. Historically, the political party that controls the presidency loses seats in Congress during midterm elections. Going back over one hundred years, the President s party has lost House seats in nearly every election and Senate seats in the large majority of elections. We expect this to hold true in the House in 2018, but it remains to be seen whether any potential losses will be enough to shift power from one party to another. Races in Congress and the states will be tight around the country. Navigators Global is offering the following analysis to provide clarity through the complex national media narrative, preview the likely election outcome scenarios, and identify key issues driving the government beyond the midterms. Contact us at commteam@navigatorsglobal.com to request a copy of our Navigators Insights: 2018 Post-Election Report. 1

3 Midterm Election Outlook The 2018 Midterm Elections will be hotly contested up and down the ballot in the United States. Experts on both sides have identified voter turnout as a key indicator for their respective party s chances at success. There is hope among Republicans and Democrats that the close nature of many races will cause the turnout advantage to break their way. U.S. House of Representatives With all 435 seats up for election in the U.S. House of Representatives, the path to a 218-seat majority is likely to be a narrow one. Republicans currently hold 235 House seats, compared to 193 for the Democrats (7 seats are vacant). Conventional wisdom places the number of true toss-up seats at around 30, with an expanded field of possibly competitive House districts numbering in the 70s. As is typical in a House election, swing districts 1 and voters are likely to play a major role in determining who controls the majority. While polling continues to find Democrats leading among likely voters, President Donald Trump s approval rating has also seen a recent increase. Initial results in states like Virginia, Florida, Ohio, Michigan, and those in the northeast could provide an early indicator as to the overall outcome of the election. U.S. Senate While still competitive and with both parties contesting for control, the Senate is likely to experience less variance than the House. Republicans currently hold 51 seats, compared to 49 for the Democrats. 2 The 2018 electoral map favors the Republican Party, with 26 open seats currently under Democratic control. Further, with Vice President Mike Pence serving as a tie-breaking vote on any tie in the Senate, Democrats would need to hold at least 51 seats to achieve a majority. Of the states commonly considered toss-up seats Arizona, Florida, Indiana, Missouri, Montana, and Nevada four are currently held by Democrats. Although there is a chance that Democrats take control of the Senate, current forecasts indicate that it is more likely the GOP will expand its margin in the upper chamber. Governors National momentum for Democrats is expected to be manifested in state races. In a near inverse of the Senate landscape, 26 of the 36 gubernatorial seats up for election are currently held by Republicans. With 33 governor s mansions currently under GOP control only one off the record high of 34 momentum favors at least a minor Democratic gain. Incumbent advantage will be less of a factor this year, as 13 current office holders (from both parties) are barred from running again due to term limits. Toss-up race projections here vary, but we expect the amount of tightly contested races to be in the upper single digits. Governorships, with state control and veto power that accompany them, are an important factor in the national governing of the United States. These races could have even more of a long-term impact, given the 2022 state redistricting process that will occur following the 2020 U.S. Census. Enhanced Competition There are several factors causing enhanced competition in the current election year. Retirements are up in 2018, with over 40 Republican and 20 Democratic House members either retiring, resigning, or running for separate office. While this phenomenon is not as pronounced in the Senate, retiring Republicans Jeff Flake, Orrin Hatch, and Thad Cochran have created open seats, and previous Republican and Democratic retirements triggered special elections in Mississippi and Minnesota. An additional factor fueling competition this election year is the unprecedented level of midterm fundraising undertaken by both parties. According to the National Journal, over 90 GOP incumbents in the House were outraised by their Democratic challengers in the third quarter. However, across the aisle, Republican-aligned Political Action Committees (PACs) and other outside groups have provided the party with an overall fundraising advantage going into the midterms. While fundraising advantages are typically a boost to the recipient parties, variables such as the potential of diminishing returns and the evolution of online fundraising could alter the outcome of previous fundraising trends. Due to the intensity of the midterms, it is possible that the party in control of the House and/or Senate may not be known immediately after the election if races are close and recounts are triggered. 1. Congressional districts viewed as not strongly aligned with either major party. 2. Including two Independent Senators who vote with the Democratic Caucus. 2

4 While rapid news cycles and late-breaking national developments could still impact this year s races, Navigators is preparing for the following scenarios, in order of most to least likely: 1. Republicans Maintain Control of Senate, Democrats Take House Control 2. Republicans Maintain Control of Both Senate and House 3. Democratic Party Takes Control of Both House and Senate The differing outcomes of these possible scenarios would have a wide-ranging impact in Washington, D.C., including in the makeup of Congressional Leadership and Committee control, the rate and productivity of federal governing, and, perhaps most importantly, in the relationship between Congress and the Trump Administration. Lame Duck On November 13, the current Congress will return to session for the lame duck 3 period, which is expected to run until at least December 13 (and likely longer). Legislators have a packed fall agenda, and while there are some must-pass priorities, there will be a myriad of legislative options before them. The election and control of the House and/or Senate will play a major role in the outlook of this final session of the 115 th Congress. House Leadership Importantly, the outcome of the 2018 Midterm Elections will be a driving factor in Leadership elections for both parties in the House of Representatives. The GOP will hold its elections the week of November 13 when newly-elected Members are in Washington for orientation proceedings. The retirement of current Speaker Paul Ryan opened the top House job for Republicans. If the party maintains its control of the House, current Majority Leader Kevin McCarthy (R-CA) may receive credit for having weathered a blue wave. 4 Still, a guaranteed smaller majority will make receiving the required 218 floor votes to become Speaker difficult. It remains to be seen how much leverage the House Freedom Caucus will exercise to pave the way to a McCarthy Speakership. Freedom Caucus leaders Jim Jordan (R-OH) and Mark Meadows (R-NC) may demand a committee chairmanship in exchange for McCarthy s support. Or, perhaps more likely, they may demand appointment as Rules Committee Chair (a powerful position in the House, as it sets the parameters for floor debate). Unlike many other committee positions, appointment to Rules Chair is at the sole discretion of the Speaker. It is also possible that McCarthy is unable to garner 218 Republican votes for Speaker, in which case others in the conference could throw their hat into the ring. This could include House Majority Whip Steve Scalise (R- LA) or even a back-bench member not identified at this time. Regardless, it is sure to be a process marked by drama and intrigue should Republicans retain their majority in the House. If Democrats retake control of the House, they will hold leadership elections no earlier than December 5. Current Minority Leader and former Speaker Nancy Pelosi (D-CA) is expected to win the position of Speaker of the House. However, there may also be movement toward outlining a succession plan for the Democratic party in the chamber, as Pelosi recently stated that [t] here has to be a transition at some point in all of this. If Democrats are unable to gain control of the House, then we expect the leadership election process to become much more volatile as the party would likely be pressed to refocus its strategy moving forward. Senate Leadership Regardless of the outcome of the 2018 Midterm Elections in the Senate we do not expect any leadership changes to take place for either party. The one exception is that Senator John Thune (R-SD) will likely take over as Whip because current Whip Senator John Cornyn (R-TX) is term-limited. 3. The legislative period whenever one Congress meets after the succeeding Congress has been elected but before its term begins. 4. A term for national electoral momentum favoring the Democratic party candidates. 3

5 Top Legislative Priorities Resolving remaining appropriations legislation will be a top priority for Congress prior to the current December 7 funding extension expiration date. H.R. 6147, which packages the Interior-Environment, Financial Services, Agriculture-FDA, and Transportation and Housing and Urban Development Appropriations bills, is currently in conference with lawmakers optimistic they will produce a bill ready for passage shortly after the midterm elections. The remaining spending bills Homeland Security, Commerce-Justice-Science, and State-Foreign Operations could experience a more difficult path to passage, with outside issues potentially coming into play. President Trump has indicated that he is expecting Congress to act on funding border wall construction between the U.S. and Mexico, which could affect both the Homeland Security Appropriations process and the entire lame duck session at large. Given the packed legislative slate, it is possible that certain funding bills, such as Homeland Security, are extended again via another continuing resolution. 5 We are also monitoring the criminal justice/sentencing reform process, as both parties have identified it as an outstanding priority. In addition to the above, Republicans have identified tax reform and extension, reaching a new deal on the Farm Bill, 6 passing the Jobs Act 3.0, and reauthorizing the Violence Against Women Act (VAWA) as key lame duck priorities. The GOP will also be eager to continue the nominations process with both judicial and agency nominees, such as Kathy Kraninger to head the Consumer Financial Protection Bureau. Elsewhere in the Administration, the Commerce Secretary 7 position may become vacant. Democratic leaders have indicated that they are also eyeing the Farm Bill and VAWA, and are looking ahead to the possibility of a Medicare Part D 8 fix and/or human trafficking legislation to be attached to the remaining Fiscal Year (FY) 2019 spending bills. While a fix to the Deferred Action for Childhood Arrivals (DACA) program, potentially including an E-Verify update, is possible during the lame duck period, the path forward on that issue remains complicated. Both parties are considering additional priorities during this period, including a disaster bill providing relief to states and communities affected by recent storms like Hurricane Michael, renewing the flood insurance program, tackling drug pricing issues, and considering a potential autonomous vehicle bill package. Conversely, party leaders on both sides have indicated that ratification of the new United States-Mexico-Canada Agreement (USMCA) will not take place during the lame duck session, pushing that into the next Congress. Looking Ahead to 2019: Mapping the Trump Administration s Priorities The roadmap for the 116 th Congress will come into focus following the midterm elections on November 6. However, the Trump Administration has already begun to outline its priorities for the coming year. The makeup of the House and Senate will play an influential role in the Administration s pursuit of its goals, but we expect the White House to maintain its general course in the next year while keeping an eye on the 2020 presidential election. The Trump Administration is particularly interested in pursuing the following issues in 2019: an infrastructure plan government reform continued changes to trade policy immigration reform the next phase of tax reform 5. An action which would automatically keep the same funding levels as the previous year. 6. The primary federal food and agriculture policy bill, typically renewed every five years; the previous Farm Bill was enacted in Currently held by Wilbur Ross. 8. Medicare prescription drug coverage. 4

6 Likely Priorities, Regardless of Outcome The Administration understands bipartisan voter concerns over the rising deficit. President Trump recently requested that each of his cabinet leaders cut their department budgets by 5% in The President emphasized that even the Pentagon would be subject to this reduction, although conventional wisdom and his own commitment to a number around $700B indicate that this is unlikely. No matter the outcome of the election, we expect the Administration to accelerate its use of executive actions, including on issues such as deregulation and indexing capital gains. This course of action would be even more aggressive in 2019 and beyond if the Democratic Party controls one or both chambers of Congress. U.S. Trade Representative Robert Lighthizer notified Congress on October 16 of the Administration s intention to enter into new trade agreements with the United Kingdom, European Union, and Japan. The required 90-day notification moratorium expires on January 14, This remains an ongoing process; for example, during a recent Japan-U.S. summit in September, Chief Cabinet Secretary Yoshihide Suga stated that [it] will not be an easy negotiation. The Administration will continue its posture on trade with regard to tariffs in the coming year. This economic pressure will extend to China, with diplomatic pressure added as well. The scheduled December 1 meeting between President Trump and President Xi at the G-20 summit in Buenos Aires could chart a path forward for the two countries. The Administration s intersection with China will also extend to 5G and supply chain issues in the coming year. Elsewhere in the Administration, the State Department has plans to reorganize its cybersecurity office. The Commerce Department will continue its efforts to ensure information privacy, with potential mounting pressure on tech companies such as Facebook and Google could also be a year for high-level leadership changes within the Administration. UN Ambassador Nikki Haley is serving only until the end of While Haley was confirmed easily, her successor will need to go through the confirmation process, which will be strongly impacted by the makeup of the Senate. The position of EPA Administrator also awaits a confirmation process, with Andrew Wheeler currently serving as Acting Administrator. Other positions, such as that of Attorney General, may also experience turnover in the coming months. Further, there is speculation on potential Supreme Court vacancies caused by retirement or other factors, which could lead to yet another contentious confirmation battle in the upper chamber. As the 2020 presidential election approaches, we expect campaigning to ramp up once again later in the year, perhaps as early as during the August recess. After that point, there are diminishing odds that any major Administration initiative will pass prior to Scenarios The Trump Administration will pursue its target policies regardless of the outcome of the 2018 Midterm Elections. However, it will be forced to react to the post-election congressional landscape accordingly based on Democratic control of the House with a Republican Senate, full GOP control, or full Democratic control of both chambers. Here is what we expect in each of these scenarios: 1. Democratic House, Republican Senate If the GOP maintains its hold on the Senate, but Democrats take control of the House, then we could see an extended period of policy gridlock in Washington, D.C. Any Democrat-passed bill in the House would need Republican support to both clear the 60-vote hurdle in the Senate and survive a Presidential veto. Depending on early results in Congress, the Democratic Party could turn its attention toward The primary concern for the White House under a Democratic House would be the increased focus on oversight and investigations into the Administration. These committees, such as the Judiciary, Homeland, and Oversight Committees, have subpoena power and the President s legal defense team could increase its staffing in anticipation of Democratic committee leader actions. House Republicans are bracing for this scenario and have compiled a list of concern areas, including potential dealings with Russia, the travel ban, and the President s tax returns, among others. 5

7 Along these lines, impeachment proceedings against President Trump have been suggested by some Democratic members of Congress. Much like the impeachment process of then-president Bill Clinton in 1998, a Democrat-controlled House would likely move to impeach President Trump in the lower chamber. However, like that against President Clinton, this effort would fail in a Republican-held Senate. That said, both parties may want to demonstrate to constituents that there remains a desire to get things done in Washington, D.C. and not alienate voters any further. Operating under this assumption, it is possible that a Democratic House majority may find areas of cooperation with the Trump Administration. While Democrats may be reluctant to give Trump a victory, common ground could be found in advancing a new infrastructure plan. During a recent interview, the President indicated that infrastructure may be something that can bring us together. However, questions surrounding funding for a plan has led to skepticism over its chances of successful passage. On trade, Democratic and Administration priorities could align on items like the new USMCA, although they would need to see meaningful overhauls to the agreement before any sort of quorum would be reached. The volatility of the midterms also has representatives from the other members of the agreement Canada and Mexico concerned that the deal could be changed before being ratified. 2. Full GOP Control If Republicans maintain control of both the Senate and the House, morale among the party and a willingness to work with the Administration will be higher than ever. Republican priorities include: an updated version of tax reform, including the newly-touted middle class tax cut and beyond, a replacement for the Affordable Care Act, immigration reform, entitlement reform, welfare reform via a new jobs training program or other avenues, a re-write of telecom and online content regulation, government reform, and perhaps even pension and education reforms. A Republican Congress would also work with the Administration to increase defense spending while perhaps decreasing discretionary spending to meet the President s budget goals and on developing a new infrastructure plan, although skepticism remains on the latter. The GOP would likely continue to pressure the White House on trade protectionism. Additionally, if it does not pass during the lame duck session, then a renewed attempt at passing a preferred version of the Farm Bill would be a priority for the party and Administration. 3. Full Democratic Control While unlikely, it is possible that Democrats gain control of both the House and Senate. In this scenario, an entirely different universe of issues would come into play. The oversight and investigatory priorities outlined above for a Democratic House/Republican Senate environment would still exist, and impeachment proceedings against the President would become much more likely in this instance. The outlook on immigration reform would change under full Democratic control of Congress. In this scenario, border security and legal immigration provisions would be less likely to be added as incentives to gain Republican support in a hypothetical reform package. Along the same lines, a Democratic Congress would be less likely to increase defense spending, with potential defense cuts going toward discretionary programs instead. 6

8 Democrats may also pursue healthcare overhauls (either through a single payer/medicare for All push or Affordable Care Act stabilization), an infrastructure plan, a stimulus package for Puerto Rico, minimum wage increases, criminal justice/sentencing reform, and data privacy changes, among other issues. Congressional Committees in the 116 th Congress Control of Congressional Committees in the House and Senate is a critical component of the outcome of the 2018 Midterm Elections. Retirements, term-limited Chairs, and committee leaders up for reelection in vulnerable states and districts are additional variables in how the Committees will look in 2019 and While this picture will become clearer following the midterm and subsequent party leadership elections, the following represents the current congressional committee outlook for the 116 th Congress: United States Senate Committees Republican Control Democratic Control Chairman Ranking Member Chairman Ranking Member Agriculture Pat Roberts Debbie Stabenow Debbie Stabenow Pat Roberts Appropriations Richard Shelby Patrick Leahy Patrick Leahy Richard Shelby Armed Services Jim Inhofe Jack Reed Jack Reed Jim Inhofe Banking Pat Toomey (possible) Sherrod Brown Sherrod Brown Pat Toomey (possible) Budget Mike Enzi Bernie Sanders Bernie Sanders Mike Enzi Commerce, Science and Transportation Roger Wicker Bill Nelson Bill Nelson Roger Wicker Energy and Natural Resources Lisa Murkowski Maria Cantwell Maria Cantwell Lisa Murkowski Environment and Public Works John Barrasso Tom Carper Tom Carper John Barrasso Ethics Johnny Isakson Chris Coons Chris Coons Johnny Isakson Finance Chuck Grassley or Mike Crapo Ron Wyden Ron Wyden Chuck Grassley or Mike Crapo Foreign Relations Jim Risch Ben Cardin Ben Cardin Jim Risch Health, Education, Labor and Pensions Lamar Alexander Patty Murray Patty Murray Lamar Alexander Intelligence Richard Burr TBD TBD Richard Burr Homeland Security Ron Johnson Claire McCaskill Claire McCaskill Ron Johnson 7

9 Chuck Grassley or Lindsey Graham Dianne Feinstein Judiciary Rules Dianne Feinstein Chuck Grassley or Lindsey Graham Roy Blunt Amy Klobuchar Amy Klobuchar Roy Blunt Small Business Marco Rubio Jeanne Shaheen Jeanne Shaheen Marco Rubio Veterans Affairs Johnny Isakson Jon Tester Jon Tester Johnny Isakson Indian Affairs John Hoeven Tom Udall Tom Udall John Hoeven Special Committee on Aging Susan Collins Bob Casey Bob Casey Susan Collins United States House of Representatives Republican Control Democratic Control Chairman Ranking Member Chairman Ranking Member Administration Rodney Davis Zoe Lofgren Zoe Lofgren Rodney Davis Agriculture Mike Conaway Collin Peterson Collin Peterson Mike Conaway Tom Cole or Kay Granger or Tom Graves Nita Lowey Appropriations Armed Services Nita Lowey Tom Cole or Kay Granger or Tom Graves Mac Thornberry Adam Smith Adam Smith Mac Thornberry Budget Steve Womack John Yarmuth John Yarmuth Steve Womack Education and Workforce Virginia Foxx Bobby Scott Bobby Scott Virginia Foxx Energy and Commerce Greg Walden Frank Pallone Frank Pallone Greg Walden Ethics Susan Brooks Ted Deutch Ted Deutch Susan Brooks Patrick McHenry or Blaine Leutkemeyer Maxine Waters Financial Services Foreign Affairs Maxine Waters Patrick McHenry or Blaine Leutkemeyer 8

10 Mike McCaul or Joe Wilson or Steve Chabot Mike Rogers (AL) or John Katko Eliot Engel Bennie Thompson Homeland Security Intelligence Eliot Engel Bennie Thompson Mike McCaul or Joe Wilson or Steve Chabot Mike Rogers (AL) or John Katko Devin Nunes Adam Schiff Adam Schiff Devin Nunes Doug Collins or Steve Chabot Jerrold Nadler Judiciary Natural Resources Jerrold Nadler Doug Collins or Steve Chabot Rob Bishop Raul Grijalva Raul Grijalva Rob Bishop Steve Russell or Jim Jordan Oversight and Government Reform Elijah Cummings Rules Elijah Cummings Steve Russell or Jim Jordan Pete Sessions Jim McGovern Jim McGovern Pete Sessions Randy Hultgren or Frank Lucas or Dana Rohrabacher or Randy Weber Blaine Leutkemeyer or Steve Knight Jeff Denham or Sam Graves Science, Space and Technology Eddie Bernice Johnson Nydia Velazquez Small Business Eddie Bernice Johnson Nydia Velazquez Transportation and Infrastructure Peter DeFazio Veterans Affairs Peter DeFazio Randy Hultgren or Frank Lucas or Dana Rohrabacher or Randy Weber Blaine Leutkemeyer or Steve Knight Jeff Denham or Sam Graves Phil Roe Mark Takano Mark Takano Phil Roe Way and Means Kevin Brady Richard Neal Richard Neal Kevin Brady 9

11 Key Dates Below is a preview of projected key dates. November 6: Election Day November 13: Beginning of Lame Duck Congressional Session Week of November 13: House Republican Leadership elections November 27: Mississippi Senate run-off election date (if needed) November 30: Joint Select Committee on Budget and Appropriations Process Reform deadline to advance final proposal November 30: Expected signing date of the United States-Mexico-Canada Agreement (USMCA) November 30 - December 1: G-20 Summit in Buenos Aires; Trump-Xi meeting expected Week of December 5: House Democratic Party Leadership elections December 7: Continuing Resolution providing partial government funding expires December 13: Final day of 115 th Congress (planned) January 3: 116 th Congress begins January 14: U.S. trade negotiations with Japan, the European Union, and the United Kingdom able to begin (90 days from Congressional notification date) February 4: President Trump submits FY 2020 budget March 1: Final day of debt limit suspension period (note: deadline could be extended by Treasury Department) September 30: FY 2019 end date & appropriations expiration deadline Post-Election Report The information contained in this report is a pre-election projection of likely outcomes based on existing Navigators insights. Please contact us at commteam@navigatorsglobal.com to request a copy of our Navigators Insights: 2018 Post-Election Report. 10