Possible Midterm Outcomes and Their Ramifications in Washington

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With less than 50 days to go before the midterms, a divided government looks very likely come 2023. While the electoral outlook has shifted in Democrats’ favor this summer following a handful of developments, including the overturning of Roe v. Wade and the easing of some price pressures, like gas, Republicans are still expected to flip the House. Recent generic congressional ballot polling – which simply asks voters whether they plan to vote for a Democrat or Republican – does show Democrats slightly ahead, erasing a lead Republicans held since last fall. But most agree Democrats would need a more sizable lead to have a chance at keeping control of the House of Representatives.

The Senate is expected to be close, but pollsters currently give Democrats a slight edge at retaining control in 2023. Democratic Senate candidates are currently running close in the polls in a few more-Republican states, like Ohio and Wisconsin, which have some in the party optimistic Democrats could control 53 or 54 seats come the new year. However, persistent polling errors in those states dating back to 2016 might be giving Democrats a more rosier picture than reality.

It is more realistic for Democrats to retain control at the current 50-50 margin or maybe pick up one seat in Pennsylvania to narrowly expand their majority. As a final caveat on the current electoral outlook, there is still over a month until election day. While the rising prevalence of mail-in voting due to the pandemic means many more voters are casting ballots before election day, any significant political developments between now and then still have the possibility of turning the outlook on its head.

So as things currently stand, a divided government is likely with Republicans controlling the House of Representatives and Democrats controlling the Senate. But what does this mean?

On Capitol Hill, a divided Congress is not expected to be a particularly productive Congress. Instead, we expect a lot more politics than policy over the next two years, especially as the 2024 campaign cycle ramps up in earnest. In the House, with the ability to set committee agendas, we expect Republicans to immediately launch oversight investigations. These could include investigations of the president’s son, the Afghanistan withdrawal, COVID aid fraud, and the January 6th Committee. On policy, we got a peek at their agenda, albeit broadly stated.

We also expect Republicans to put a lot of energy into making permanent the tax cuts they ushered in with the Tax Cut and Jobs Act in 2017. Twenty-three of those tax cuts expire at the end of 2025. And Representative Vern Buchanan (R-FL) – a strong contender for the next Chairmanship of the Ways and Means Committee – and other House leaders recently introduced a bill to do just that.

In addition to the tax agenda, we expect Congress to quickly pivot their attention to the myriad issues associated with cryptocurrency and other digital assets, which is expected to be a bipartisan and spirited process given the stakes for this new industry.

In a narrowly controlled Democratic Senate, Majority Leader Chuck Schumer (D-NY) will likely prioritize judicial nominations, which only require a simple majority vote in the chamber. With Democratic legislative priorities unlikely to advance through a GOP-controlled House, Senate Democrats will be limited in what agenda items they can address. This points to lawmakers seeking areas of potential bipartisan agreement.

As for politics, Senate Democrats face a tough 2024. There are more than a handful of Democrats competing in red states, including Sens. Joe Manchin (D-WV), John Tester (D-MT), and Sherrod Brown (D-OH). This will likely prompt senators to hold hearings to bring attention to their priorities, given it will be difficult, if not impossible, to legislate on them with a Republican-controlled House eager to position the party for large electoral gains in 2024.

From the Biden Administration’s perspective, without the opportunity to pass its agenda through a Democrat-controlled Congress, it will likely seek to achieve wins and advance priorities through executive orders and the regulatory process.

Should Republicans regain control of both chambers of Congress, we expect Republicans to make significant strides on their tax agenda while also focusing on scoring political points ahead of the 2024 elections through advancing partisan legislation and daring Biden to veto.

One thing all the potential midterm outcomes have in common is that the 118th Congress projects to be a mix of policy with a heavy dose of politics. For organizations engaged in policy, 2023 will be no time to take a break. Due to incumbent retirements and losses in primaries, the 118th Congress will have at least 50 freshman members. This follows the 117th Congress having nearly 60. So, it will be important to engage in education efforts with these new members and recognize that each one of them is a potential champion for whatever advocacy goals you, or your organization, has in Washington.