NOW IT S OFFICIAL: What You Need to Know About the New US Congress By TRISTAN NORTH Director MICHELE KIMBALL Client Director AIDAN CAMAS Associate Director RUTH HAZDOVAC Associate Director
Overview Votes are still being counted from the Mid-term election which took place on Tuesday, November 6, 2018. Democrats succeeded in regaining control of the House of Representatives, gaining 38 seats so far, fifteen more than the 23 they needed to flip the House. There are currently still three undecided races in the House, so this margin could still increase. It is the Democrats largest gain in one election since the Watergate Era. Republicans will maintain control of the Senate and could expand their majority by up to three seats. Four Senate seats have already flipped from Democratic control to Republican (Florida, Indiana, North Dakota, Missouri) while Democrats have flipped seats in Nevada and Arizona. The Senate race in Mississippi is heading to a runoff on November 27th. FIGURE 1 - HOUSE OF REPRESENTATIVES RESULTS OVERVIEW This wave election also featured many historic firsts. For the first time in U.S. history, there will be over 100 women in Congress (the previous high had been 85 women). Voters elected the first two Native American women in history to Congress (Sharice Davids, KS-03, and Deb Haaland, NM-01) and the first two Muslim women to Congress (Ilhan Omar, MN-05, and Rashida Tlaib, MI-13). Alexandria OcasioCortez (NY-14) became the youngest woman ever elected to Congress at 29 years old. Tennessee and Arizona both elected their first women to the Senate. On a state level, Democrats retook the Governor s mansion in seven states (IL, KS, ME, MI, NM, NV, WI) while Republicans gained control in Alaska (previously held by an independent). Nine women so far were elected governor while Colorado elected Jared Polis to be their next governor, the first openly gay man to be elected governor. Democrats also flipped six state legislatures increasing the number of Democratic trifecta governments where the same party has control of both bodies of the state legislature and the governor s mansion to 14. Republicans have 23 trifecta governments and 13 states have split control. It is worth noting that many of the governors elected this year will get to oversee redistricting in their states in 2020, giving them the opportunity to influence Congressional district maps for the next decade. With the Democrats retaking control of the House, they will now have the opportunity to provide a check to President Trump s agenda. House Democrats will also be able to launch investigations into the administration. By maintaining control of the Senate, Republicans will still have the ultimate say over Supreme Court nominations and Cabinet appointments. Both parties have vastly different agendas and there are sure to be many public battles over these priorities. Source: Politico Leadership in the 116th Congress FIGURE 2 - SENATE RESULTS The results from the election have already kicked off races for leadership positions in the 116th Congress. In the House, Nancy Pelosi remains the early favorite to become Speaker of the House again. Rep. Steny Hoyer (D-MD) has announced that he will be running for Majority Leader and Rep. James Clyburn (D- SC) will be running to be majority whip. The trio of Pelosi, Hoyer, and Clyburn have been leading the Democratic caucus since 2002 and there is some dissatisfaction amongst younger members. While no one has announced a challenge to Pelosi for speaker yet, Representative Diana DeGette (D-CO) however, has announced a bid to challenge Clyburn for the position for Majority Whip. Source: Politico 2 3
LEADERSHIP IN THE 116TH CONGRESS LEADERSHIP IN THE 116TH CONGRESS Senate leadership will not change as drastically next Congress. On the Democratic side, leadership remains the same. Sen. Chuck Schumer (NY) as Minority Leader, Sen. Dick Durbin (IL) as Whip, and Sen. Patty Murray (D-WA) as Assistant Minority Leader. On the Republican side, Sen. Mitch McConnell (KY) will again be Majority Leader. With current Whip Sen. John Cornyn (TX) being term limited, Sen. John Thune (SD) has been elected Whip. The rest of Republican leadership will be Sen. John Barrasso (WY) as Conference Chair, Sen. Roy Blunt (MO) as Policy Chair, Sen. Joni Ernst (R-IA) as Conference Vice-Chair, and Sen. Todd Young (R-IN) as chairman of the National Republican Senatorial Committee. Rep. Nancy Pelosi Likely new Speaker of the House Rep. Kevin McCarthy Minority Leader Issue Areas HEALTH CARE Three Democratic members, Rep. Cheri Bustos (D-IL), Rep. David Cicilline (D-RI), and Rep. Ben Ray Lujan (D-NM), have announced their intention to run for Assistant Democratic Leader the Number 4 position. Rep. Barbara Lee (D-CA) and Hakeem Jeffries (D-NY) are running for the position of Democratic Caucus chair, the number 5 position. Rep. Pete Aguilar (D-CA) and Rep. Katherine Clark (D-MA) will face of for the position of Democratic Caucus vice-chair. On the Republican side, Rep. Kevin McCarthy (R-CA) has been elected Minority leader, defeating Freedom Caucus member Rep. Jim Jordan (R-OH) by a vote of 159 43. Rep. Steve Scalise will be Minority Whip. Rep. Liz Cheney (R-WY), daughter of former Vice President, Dick Cheney, has been elected GOP Conference Chair, after current Chair, Rep. Cathy McMorris Rodgers (R-WA), announced she would not be running again for that post. In the United States, the issues of health care coverage and rising costs were an important factor that helped elect more women than ever at both the federal and state levels, and was a key driver leading to the Republican loss of the U.S. House of Representatives. With the Democrats taking control of the House, health care is set to figure more prominently in the 116th Congress. Expect to see early action on: Securing protections for those with pre-existing conditions seeking private health insurance coverage; Lowering prescription drug prices; Improvements to the Affordable Care Act (ACA); Addressing a possible expansion to the Medicare program as the first step to Medicare for All ; and, Ending surprise medical billing. Sen. Mitch McConnell (R-KY) Senate Majority Leader Sen. Chuck Schumer (D-NY) Senate Minority Leader Drug pricing is an area where Democrats and the Trump Administration may be able to find common ground. Leaders of both the House and Senate of both parties have said it will be a priority in 2019. As the year progresses, expect also to see: A push for passage of the Creating and Restoring Access to Equivalent Samples (CREATES) Act, which seeks to end ploys that delay competition of generic and bio-similar drugs; More funding options for opioid-related initiatives; and A focus on cosmetics legislation. 4 5
Drug pricing is an area where Democrats and the Trump Administration may be able to find common ground. Leaders of both the House and Senate of both parties have said it will be a priority in 2019. As the year progresses, expect also to see: A push for passage of the Creating and Restoring Access to Equivalent Samples (CREATES) Act, which seeks to end ploys that delay competition of generic and bio-similar drugs; More funding options for opioid-related initiatives; and A focus on cosmetics legislation. On the state level, implementing Medicaid program expansions with funding from the ACA to allow for coverage of more low-income uninsured individuals will continue to dominate the work in many states across the country and was a key election driver in 3 heavily Republican states that voted to do so: Utah, Idaho, and Nebraska. Other top initiatives to be implemented as a direct result of this election: In Nevada, taxes were removed from the sale of Durable Medical Equipment (DME) and feminine hygiene products; Utah and Missouri joined 31 other states in legalizing or decriminalizing the use of marijuana for medical purposes; and Michigan was added to the list of 9 states Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, Vermont, Washington plus the District of Columbia which now allow for the use of marijuana recreationally. Expect priority work to continue on: Out-of-state insurance purchasing of association health plans; Prescription drug pricing and access; and, Health technology and care innovations. FINANCIAL SERVICES Congresswoman Maxine Waters (D-CA-43) will likely be the new Chairman of the House Financial Services Committee. For the past two years, Republicans have made cutting regulations and taxes for big business a priority, but that is likely to change under Democratic leadership. Congresswoman Waters has already indicated that she intends to investigate Deustche Bank and its dealings with the Trump Organization. With the memory of the 2008 financial crisis still fresh, Democrats will likely look to increase oversight of large financial institutions which have been lessened by the Republican controlled Congress. Waters has been highly critical of moves taken by Republicans (and some centrist Democrats) to roll back Dodd-Frank regulations. Any further efforts to reform this legislation is now unlikely with Democratic control of the House. As healthcare was the most important factor for voters this past election, there may also be additional scrutiny of pharmaceutical companies next Congress. Fighting the high price of prescription drug prices is something that both parties would like to accomplish. It is also possible that Democrats could take up legislation to regulate cybersecurity of big financial institutions. IMMIGRATION Leading up to the Mid-term election, President Trump did his best to stoke fears over immigration, hoping that it would mobilize the Republican base. Since assuming office, President Trump has tried to make it seem that Democrats have no alternative plan to his hardline immigration stances. Now that Democrats have control of the House, it is likely that they will propose some type of comprehensive immigration reform plan to highlight a contrast in vision. It is highly unlikely that immigration reform passes next year, so this will be mostly symbolic. Democrats would be likely to include business immigration provisions in any larger package. Prior to the Democrats taking back control of the House, the only check to the Republican immigration agenda had been the court system. Previously, Democrats had indicated that they might be willing to swap a deal on the Deferred Action for Childhood Arrivals (DACA) Program in exchange for some boarder wall funding. It is possible that this deal gets revived in the next Congress. The Trump Administration is also expected to issue a longawaited proposed rule that would no longer allow spouses of H-1B visa holders to be eligible for employment in the US. As many families rely on two incomes, this could have a major impact on employee mobility and on companies looking to move talent into the US using the H-1B visa. Immigration remains a politically polarizing issue in the US but it has a major impact on businesses and there will likely be legislative proposals to monitor in the next Congress. CYBERSECURITY Cybersecurity is likely to be a top priority for Democrats in the House of Representatives next Congress. While in the minority, Democrats have been largely unsuccessful in getting Republicans to beef up election security in the wake of Russian interference in the 2016 elections. Rep. Bennie Thompson (DMS) who is likely to be the new Chairman of the Homeland Security Committee, has noted that in addition to election security, supply chain security would be another priority of a Democratic controlled House. With some hotly contested races still being counted and the 2020 election looming, election security will likely get a lot of attention next year. 6 7
Both Democrats and Republicans would also like to see some version of a federal privacy law. California enacted privacy legislation earlier this year that is set to go into effect in 2020. Federal law makers and businesses would prefer to handle this issue on a national level so that people do not need to deal with different regulations in each state. A push for a federal privacy law could also lead to further investigation of technology and social media companies that have already been on the hotseat regarding lapses in information privacy. Supply chain security and safe guarding intellectual property will also be a focus of the larger cybersecurity effort. Earlier this year ZTE, one of China s leading Android phone manufacturers admitted to illegally exporting U.S. technology. President Trump s decision to quickly overturn a trade ban with ZTE prompted bipartisan backlash from Members of Congress who wanted to hold ZTE accountable. It is likely that Congress will attempt to take action to protect supply chains and American technologies. TRANSPORTATION One of President Trump s main campaign promises was to deliver a massive investment in the country s crumbling infrastructure that would put thousands of people to work. A proposal by the Trump Administration earlier this year which called for a $200billion investment in infrastructure did not gain any traction. The proposal aimed to generate over $1trillion in total investment with the difference coming from private investors. While legislation has not worked out this Congress, it could be an area to generate a bipartisan victory in the next Congress. Rep. Peter DiFazio (D-OR), the likely new Chairman of the House Committee on Transportation and Infrastructure has a proposal that calls for a $500 billion investment in the country s infrastructure. DiFazio has made it clear that he intends to have this investment paid for, likely through a mix of 30-year bonds and indexing the gas tax for inflation. Regardless of new investment, Congress must appropriate additional funds to keep pace with current funding levels. In addition to improving crumbling roads and bridges, any infrastructure project would also likely tackle aging water infrastructure, an issue highlighted by the Flint water crisis, and look at expanding rural broadband access. Leaders Pelosi and McConnell have both spoken about how infrastructure will likely be on the agenda for next year. DiFazio hopes to have a plan laid out in the first half of 2019. ENERGY & THE ENVIRONMENT Climate change is another issue that Democrats hope to bring attention to in the next Congress. Leader Pelosi has already spoken about how she would like to revive the House Select Committee on Energy Independence and Global Warming which operated from 2007 2011 before being disbanded when Republicans regained control of the House. After President Trump pulled the United States out of the Paris Agreement, Democrats have been looking for ways to highlight the pressing issue of climate change. For now, states and cities have begun to take leadership to ensure the goals in the Paris Agreement are met. Currently, it does not appear that Democrats have a sweeping plan to address this problem. It is possible that Congress will once again discuss a carbon tax but that is a policy that has failed to gain serious traction in the past. Having reclaimed the majority in the House, it is likely that Democrats will use their investigative power to make sure that the federal government is properly enforcing existing clean energy and environmental regulations. Where possible, Democrats will look to promote clean energy policy solutions. By retaking control of the House, Democrats also prevent a climate change denier from continuing to be Chairman of the House Science Committee. TRADE/TARIFFS The election results are unlikely to change much regarding President Trump s trade war with China. With a split Congress, trade policies are one area where the President can make many unilateral decisions and influence policy. Despite the tariffs impacting both Democratic and Republican leading areas of the country, it is unclear how much of an impact they had on voters. Senators McCaskill (DMO), Donnelly (D-IN) and Heitkamp (D-ND) both lost in states that were heavily hit by the tariffs, but Democrats picked up House seats in areas impacted by the tariffs in Minnesota, Iowa, and Illinois. Most Republicans have been hesitant to speak out against the Trump tariffs and while in the minority, many Democrats have silently agreed with the moves that Trump has been making. Democrats have shown willingness to support the Chinese tariffs when they boost American workers. When dealing with American allies such as Mexico and Canada in the new USMCA negotiations, Democrats may not be as friendly to the President. Democrats will want to ensure that American labor is protected under this new deal and that environmental protections are included. Democratic leaders have already made it clear that they intend to have hearings on the various trade deals to make sure that they meet the appropriate standards. ANTI-CORRUPTION Democrats have made it clear that one of the first things they would like to do next Congress is pass sweeping anti-corruption reform legislation. Both Rep. Chris Collins (R-NY) and Rep. Duncan Hunter (RCA), GOP Congressman currently under indictment won re-election Tuesday. In fact, Republicans have already proposed a new rule for GOP members that they would have to step down from leadership and committee assignments if they are indicted for a felony. Pursuing anti-corruption legislation would also allow Democrats to paint a strong contrast between themselves and the Trump administration. The first two years of the Trump Administration saw some high-profile cabinet secretaries resign due to ethics related issues such as Tom Price (HHS), David Shulkin (VA) and Scott Pruitt (EPA). Secretary of the Interior, Ryan Zinke, is also currently under investigation for ethics related issues. 8 9
Two main goals of anti-corruption would be to target the influence of lobbyist money and campaign finance reform. There are a wide array of ideas on how to best accomplish these goals and it remains to be seen what might make it into an anti-corruption Bill. It is likely that Congress would look at limiting the influence of corporate and lobbyist money and expanding voting rights. Sen. Elizabeth Warren has legislation that would also ban members of Congress from becoming lobbyist once no longer in office. It remains to be seen if this legislation will gain traction or remain as more of a messaging Bill. Conclusion The results of the recent US elections will have an enormous impact on legislative priorities next Congress. There will likely be many high-profile battles over priorities between Democrats and Republicans now that control of Congress is divided. Interel will continue to monitor issue areas of concern for our clients in the US and around the Globe. Please reach out to Tristan North (Tristan.north@interelgroup.com) if you have any questions about our update, or would more information about the government and public affairs services offered by Interel. Across more than 70 markets worldwide, Interel helps clients successfully navigate the complexities of policy and regulatory environments at the national and local levels as well as across borders on multimarket and global projects. Our consultants and experts provide the necessary insights and perspectives for making confident business decisions and the relationships and credibility to engage with the right decision-makers and opinion leaders. 10