Republicans poised to take House in tight midterm elections
3 min read
Republicans appeared poised to take control of the House of Representatives but the Red Wave many expected heading into the midterm elections seemed to fade as results trickled in late Tuesday.
While many House races won’t be called for a day or two, Republicans were projected to have gained at least six seats late Tuesday, more than the five needed to win control of the lower chamber.
The fate of the evenly-divided Senate was less clear late Tuesday with competitive races in Georgia, Pennsylvania, Nevada and Arizona remaining toss-ups.
If Republicans take one or both chambers, the divided government is expected to mean spending gridlock next year and heading into the 2024 presidential elections.
For muni market participants, the midterms aren’t expected to bring big market changes, with lobbyists touting the same agenda regardless of party control: the restoration of tax-exempt advance refunding, protection of the tax-exemption, raise the ceiling on bank-qualified debt and reduce the state and local tax cap deduction.
Republican control of the House would bring leadership changes to key finance and tax-writing committees that affect the municipal bond market, including House Ways and Means, Appropriations and Transportation and Infrastructure.
If in control, the GOP is likely to launch investigations into state and local use of pandemic funds and how the Department of Transportation is spending the massive amount of infrastructure funds allocated in the Infrastructure Investment and Jobs Act.
House Republicans are scheduled to hold their leadership elections next Tuesday.
The House Ways and Means Committee drafts tax legislation and is one of the few committees whose policies directly impact the municipal market. If Republicans take the House, the new chair will be a contest between Rep. Jason Smith of Missouri, Vern Buchanan of Florida, and Nebraska’s Adrian Smith.
While recent years haven’t yielded many large legislative wins for the muni market, lobbyists like the Bond Dealers of America and the Government Finance Officers’ Association have made inroads with many rank and file Republicans and consider themselves to be in good standing with Republicans in the Ways and Means Committee and the House Municipal Finance Caucus.
GOP control of the House Appropriations Committee, which allocates funding to federal agencies and departments, could see Rep. Hal Rogers of Kentucky, who has spent 40 years on the committee, return as chair. Rep. Mike Simpson from Idaho or Oklahoma’s Tom Cole are other contenders. If Democrats retain control, Illinois Rep. Mike Quigley will likely become chair.
If Jason Smith becomes House Ways and Means chair, then the top spot on the Budget Committee will be open to either Rep. Earl L. Carter of Georgia, Jodey Arrington of Texas or Lloyd Smucker of Pennsylvania.
The House Committee on Transportation and Infrastructure, which has jurisdiction over all modes of transportation, would likely see Missouri Rep. Sam Graves, who has pledged to scrutinize infrastructure investment, as the new chair.
On the Senate side, the powerful Finance Committee may be led by either Mike Crapo, R-Idaho or Ron Wyden, D-Ore., depending on who controls the Senate.
The Senate Appropriations Committee may be headed by either Democratic Sen. Patty Murray of Washington or Republican Sen. Susan Collins of Maine. Either way, it would be the first time a woman has led the powerful committee, which oversees a large chunk of federal spending.
The Senate Budget Committee would likely see Lindsey Graham become chair if the GOP takes control.
In the Senate, 35 of 50 seats were up for election Tuesday, as were all 435 seats in the House. Heading into the midterms, the Senate has 48 Democrats, two Independents, and 50 Republicans. The House has 220 Democrats, 209 Republicans, and six vacancies.
Thirty-six gubernatorial seats are up for election and a full 85% of state legislative seats are also on the ballot.
