Businessman Donald Trump was elected the 45th President of the United States in the early hours of Wednesday morning, ending a historic election process and setting the stage for a federal government poised to roll back much of the domestic and foreign policy achievements of outgoing President Barack Obama.
Washington will have an all-Republican government, but the Capitol's ability to implement a common agenda of policy proposals is immediately threatened by extraordinary and unprecedented fissures between the President-elect and the Republican establishment in Congress. The burden of governing falls on President-elect Trump, who will have to quickly prove that he can effectively harness the full power of the Oval Office to deliver on his campaign promises. Most of official Washington is highly skeptical, if not openly hostile, to the goals and methods of Donald Trump, meaning his Presidency will face headwinds every day.
Donald Trump's election is the biggest populist uprising in federal politics since the 1828 election of President Andrew Jackson. There are multiple Jackson-Trump parallels, separated by nearly 200 years of history: a strong populist streak, hard-core attacks against the character of presidential candidates and parties, and a polarizing candidate whose personality and record were beloved and despised in nearly equal measure. While all politicians run against the status quo to one degree or another, the President-elect attacked the nation's leading political and media institutions as corrupt, incompetent, and actively colluding to implement an agenda that was harming the interests of working Americans. The only thing more remarkable than the platform was the fact it succeeded in this election.
Now, President-elect Trump will govern as he campaigned, which is what worries his opponents, and perhaps even some of his allies. Democrats see President-elect Trump in apocalyptic terms that may make it hard to find common ground on most policy issues, though his policy flexibility may also provide unique opportunities to work across the aisle on some issues. Meanwhile, many establishment Republicans are skeptical that the President-elect is truly conservative or even a credible change agent who can unravel the policy victories of President Obama. The political establishment of both parties fears Trump's election upends most of the modern "rules" of the presidency and politics, leaving a political culture that is coarser and more likely to act impulsively and inconsistently, which serves to further undermine public confidence in government.
Our analysis (available by clicking the image below) discusses how major policy issues and economic sectors will fare in the first two years of the new Donald Trump Administration. Our team is available at any time to talk with you about how best to engage Washington policymakers to achieve your business objectives.
For more than 70 years, Arnold & Porter has been the law firm of choice for businesses, corporations and individuals seeking to solve complex public policy problems that cut across Congress, the Executive Branch, and the federal court system. With more than 80 lawyers who have served in some capacity in the federal government, and a legislative group that has more than tripled in size in the last two years, the Arnold & Porter team is extraordinarily well-positioned to provide comprehensive public policy solutions for our clients.
2017-18 – A Time to Define a Consequential Presidency
The next two years will be a frenetic period in Washington but it remains to be seen if it will be one of legislative accomplishment or logjam. One-party rule would normally suggest a peak period of legislative and regulatory action but the odd dynamic between the President-elect and his majority in Congress suggest we will see something less than peak productivity in the next two years. While there is a pent-up demand for major legislative action on a range of issues, the gulf between President-elect Trump and his party's leadership must be bridged to maximize success in the next two years.
The first year of a new Presidency is typically a period of peak legislative activity, as the new President seeks to implement a new agenda and to spend the political capital built up in winning office. The majority of President Obama's most significant legislative accomplishments – the economic stimulus package, Dodd-Frank, the Affordable Care Act, the Lilly Ledbetter Fair Pay Act, Iran sanctions, sentencing reform, school nutrition policy – were all notched in the first two years of his first term when his party had complete control of Congress (and a stronger Senate majority). If President-elect Trump follows that model and forges strong congressional ties, he may enjoy a similarly comprehensive set of accomplishments, most of which will be targeted at dismantling the accomplishments of President Obama.
Whether one supports or opposes specific policy initiatives of the new administration, the next two years will belong to the players who engage in the policy conversation instead of watching from the sidelines. The first two years of the Trump Administration will see the federal government sailing in previously unchartered waters on many issues. Public policy problems increasingly defy easy categorization as purely legislative or executive branch issues. More and more, the business community confronts complex, multifaceted public policy challenges that encompass Congress, multiple federal agencies, and even legal action in the courts.
Donald Trump's election is a historical anomaly on many levels. He won a dramatic come-from-behind victory of 306 to 232 electoral votes over Hillary Clinton.
Donald Trump won without a majority of the popular vote, meaning that in four of the last seven campaigns a candidate has won the White House without winning a majority of votes cast. He also becomes the fifth President in the country's history to win without a plurality of the popular vote. The red state/blue state stasis of the last several presidential elections was turned on its head, with Florida, Pennsylvania, Ohio, Michigan, Wisconsin, and Iowa backing Donald Trump in 2016 after voting for Barack Obama in 2012. Hillary Clinton was unable to turn a single state that voted for Republican nominee Mitt Romney in 2012 to her column in 2016.
The winning coalition for Donald Trump was based on white males, a group whose electoral relevance was thought to be slipping in recent elections as America's population continued to diversify. The Trump coalition also relied heavily on working-class voters, especially those from the Rust Belt states of Ohio, Pennsylvania, Wisconsin (and perhaps Michigan), which provided the margin of victory in this race. The President-elect also rode to victory thanks to strong support from voters without a college degree, and voters who believed the Obama economy failed them personally.
Hillary Clinton could not successfully recreate the Obama electoral coalition of 2008 and 2012. She relied on a coalition of urban and suburban females, African-Americans, Hispanics, and voters with a college degree, but many of those demographics underperformed in comparison to the turnout they offered President Barack Obama in 2008 and 2012. In an election where voters talked of the need to bring new ideas and energy to Washington, Hillary Clinton's experience turned from asset to liability. The negative perception of her extensive experience, and voter concern that she was untrustworthy, were the leading elements of Clinton's defeat.
The high negative perceptions of President-elect Trump means he will need to achieve some quick policy successes to demonstrate his capabilities to a skeptical public. He will be looking to work with a Republican Congress to show voters an all-Republican Washington can make swift and effective policy changes that help everyday voters. The majority of the Trump campaign's core promises are for big changes in healthcare, tax reform, trade, immigration and foreign policy. These policy proposals will take time and political capital to move via a combination of Executive Orders, regulatory changes, and major new legislation.
President-elect Trump will be aggressive in using executive authority to undo as much of the Obama Administration's policies as possible. Almost every policy pushed via Executive Order by President Obama will be at risk from Day 1 of the Trump Administration. In fact, knowing the media-savvy ways of the President-elect, we would expect a number of executive orders to be issued immediately after he is sworn in on January 20, with a continuing series of orders in the future.
Donald Trump's victory may have lacked the sort of traditional coattails that helped push individual Senate and House candidiates of his party over the finish line, but there is no evidence that his candidacy was a drag on any Republican running for Congress this year. Very few in Washington predicted a Trump victory and fewer still envisioned an all-Republican Washington emerging from the 2016 election results. Republicans lost one Senate seat in Illinois and now have a slightly narrower majority (51 to 48) in the Senate, and still expect to prevail in the Louisiana runoff in December.
There is also a chance that Senator Joe Manchin (D-WV), who faces reelection in 2018, may become an independent who affiliates with the Republican majority. In the House, Republicans lost just 6 seats off of their historic high in 2014.
Voters sent an interesting message in the 2016 election. On the one hand, they elected Donald Trump, the biggest possible change agent to take the White House in decades. On the other hand, Gallup polling data show Congress with a 20 percent approval rating, even as voters allowed Republicans to keep control of both chambers of Congress. Indeed, less than 15 incumbent senators and representatives lost their reelection bids. The results also mean that either voters do not think the Trump Presidency needs a short-term check on his political power, or they trust congressional Republicans can work with the White House to move major legislation while using their constitutional powers to check the power of a president from their own party. We believe it is the latter.
There had been pre-election rumblings that that House Republican leaders would face a challenge from conservative members unhappy with the potentially negative election results. Many House Republicans took issue with how House Speaker Paul Ryan (R-WI) failed to support Donald Trump once he became the party's nominee, but the reality is that strategy worked on every level and helped Republicans retain control of both chambers of Congress. We do think that dissatisfaction from the most conservative House members are likely to help them claim a seat at the Republican conference leadership table through winning one of the lower offices of the elected leadership team.
House Democrats will keep the same leadership team they have had in place for years now, with Nancy Pelosi (D-CA) as Minority Leader, Steny Hoyer (D-MD) as Minority Whip, and Jim Clyburn (D-SC) as Assistant Democratic Leader. House Democrats still have not identified the next generation of leadership that will succeed the current team comprised of members in their 70s. We may have to wait for the 2018 election cycle for the next generation of House Democratic leaders to emerge.
In the Senate, Mitch McConnell (R-KY) will remain as the Majority Leader, while John Cornyn (R-TX) is expected to continue serving as Majority Whip. The retirement of Sen. Harry Reid (D-NV) means Sen. Chuck Schumer (D-NY) will be the new Minority Leader. There remains some uncertainty at this point about who will be the Minority Whip, with both current Whip Dick Durbin (D-IL) and Patty Murray (D-WA) potentially competing for the spot.
A normal environment where the White House and Congress are controlled by the same party would be a period of intense coordinated legislative and regulatory action by the majority party. Yet, the Trump Presidency will be different for many reasons. First, President-elect Trump previously had a strained and distant relationship with congressional leaders of his own party. Speaker Ryan has a frosty relationship with President-elect Trump and declined opportunities to campaign together and, in an effort to preserve his House majority, stopped defending the Republican nominee weeks before the election. In turn, President-elect Trump regularly ridiculed the Speaker on the campaign trail and, at key moments, appeared to be campaigning as much against his own congressional majority as he was against his actual opponent, Secretary Clinton. This is an uneasy partnership where allies will have to be very careful in working together if they are to achieve their common goals.
In the Senate, Majority Leader McConnell was on record early in 2016 saying that it was essentially every candidate for themselves, and Republican Senators needed to do whatever it took to win reelection. It was a strategy that worked. The President-elect knows how to hold a grudge, and now his success is going to be closely linked to his ability to get along with his own party in Congress. We expect that the shared policy ambitions of President-elect Trump, Speaker Ryan and Majority Leader McConnell, each eager to see big things accomplished in a unified government, will be sufficient to work through the inevitable friction in their personal leadership styles.
There is one interesting constitutional upside to the strained relationship between the White House and Congress. For the last several Presidencies, there has been a continuum of activity that tilts the federal government's balance of power toward the White House and away from Congress. The deep, bipartisan skepticism and antipathy toward the incoming President creates the conditions needed for Congress to begin to shift the balance of power between coequal branches of government back to equilibrium.
President-elect Trump's relations with the Senate also will impact the speed with which his nominees move towards confirmation. Congressional Republicans will be concerned about the level of vetting done by the transition team and will be wary of being trapped supporting controversial nominees with issues that should have shaken out before nominees are submitted. Senate Democrats will have every incentive to throw up procedural roadblocks and coordinate with outside interest groups to attack the qualifications of President-elect Trump nominees. To the extent that the Trump Administration seems likely to appoint more political outsiders and business leaders, some of the political attacks on nominees are sure to succeed, and those nominations will fail.
While President Obama suffered from a reputation of holding legislators at arms-length, President-elect Trump may have troubles of his own on this front. He will need to be magnanimous in victory and embrace key Republicans who were publicly skeptical or opposed to his campaign. In turn, congressional Republicans who opposed the Trump candidacy will need to reconcile with the President-elect. President-elect Trump could excel at some of the interpersonal elements of his job and may use golfing and other social events as a way to build goodwill he can use to advance his agenda in Congress. If the President-elect Trump agenda stalls or fails in a Republican-controlled Congress, the autopsy will show the failure was a combination of policy disagreements exacerbated by poor relationships with individual senators and representatives essential to the policy issues involved.
House Minority Leader Pelosi and Senate Minority Leader Schumer are now the de facto heads of the Democratic Party. While both are articulate spokespersons for their party, their age and experience eliminate them as potential 2020 presidential nominees, limiting their control of the party to a short-term proposition. Instead, we will soon see an open battle among key senators, representatives, and governors to be identified as heirs to the Bill Clinton-Barack Obama policy legacy. Hillary Clinton's defeat will make it hard for her to exert much control over the party's future. Indeed, the party bearer in fighting Trump in the next two years may be former President Obama himself, as he plans to live in Washington, DC for a few years until his younger daughter goes to college. With a leaderless party, former President Obama seems unlikely to stand by quietly as Republicans seek to unravel his signature achievements.
Overall, President-elect Trump enters office knowing he has the potential to achieve sweeping transformation to a smaller, more conservative federal government, but his success depends in large part on showing he can get along with others in Washington. To the extent he can forge relationships with congressional Republicans, he will see legislative success.
The Trump campaign was slow to develop a transition team and skeptical Washington policy experts were even slower to engage with the transition effort. As a result, the President-elect already is behind in the process for quickly filling the administration's several thousand politically appointed jobs and compiling the detailed game plan for operating the myriad of departments and agencies of the executive branch. That shortcoming in transition planning from earlier in the year will echo for at least a year as the Trump Administration gets up and running in 2017.
It also will be harder for stakeholders to accurately predict who President-elect Trump will appoint to his cabinet and sub-cabinet positions. Wide swaths of well-qualified potential Republican nominees have jeopardized their chances of appointment to a Trump Administration by being openly critical of the Republican nominee during the campaign. In addition, while an incoming Republican Administration would typically draw from an experienced bench of appointees from the last Republican Administration, that is unlikely to happen here. President George W. Bush and his entire family opposed Donald Trump's election, as did hundreds of Bush appointees. In turn, President-elect Trump openly criticized the Bush Administration legacy, especially in regard to foreign policy.
Republican governors will be a top target for Cabinet appointments of the incoming Trump Administration, given their knowledge of working government and their status as Washington outsiders. The transition leader is Governor Chris Christie of New Jersey, and he may be a candidate for a top cabinet position, but his viability may be undermined by the Bridgegate scandal. Compared to past administrations, we expect fewer senators or representatives to be considered for executive branch appointments, in part because so few elected officials warmed to the President-elect until after he clinched the Republican nomination. President-elect Trump cannot afford to appoint anyone who holds a seat that could reduce the Republican majorities in Congress. Alabama Senator Jeff Sessions (R-AL) is an example of the type of safe-seat Republican who will be in the cabinet mix, especially since he was the President-elect's top public supporter in Congress.
We foresee a large number of business leaders joining the Trump Cabinet, especially those few leaders who were publicly supportive of his campaign or quietly served as advisors to it. There also may be more nontraditional picks inside the White House staff than would be typical, as the incoming President seeks to keep his most trusted advisors close to him in the administration.
All of the potential cabinet appointees will want assurances that they will have the opportunity to lead their departments and agencies and will not face a White House that changes its position daily on key policy issues. The lack of certainty likely will cost the Trump Administration a few people who simply cannot reconcile concerns with the president's governing style and priorities.
The transition process has, over time, become more of a challenge for incoming presidents, making it more difficult for the president's team to be fully in place in the early months of a new administration. The average time for confirmation of a cabinet official has grown from 13 days in the Reagan Administration to 35 days in the Obama Administration.
But the real delay is at the crucial sub-cabinet levels of political appointees. In the first two years of the Obama Administration, Senate-confirmed appointees to the Executive Office of the President and various federal agencies waited an average of 93 days for confirmation. President-elect Trump will be doing well if he has his full cabinet approved by mid-March (President Obama’s Cabinet was not in place until the end of April in his first term) and all the deputies at each department are confirmed by the end of June.
One unanswered question for the incoming Trump Administration is whether he will lift the ban President Obama imposed on lobbyists serving in the administration. There are few Republican lobbyists who openly supported the Trump campaign, and the new President ran as the most anti-Washington of candidates. Nevertheless, the new President would benefit from people who can make the government work and have substantive policy experience.
In 1992, Arkansas Governor Bill Clinton boiled his first presidential campaign's mission down to one phrase: "It's the economy, stupid." In the modern presidency, voters generally fixate on the state of the economy as a foremost criteria for judging an incumbent president or, as in this year's election, the president's party when the current president is term-limited. Most pre-election polls showed President-elect Trump enjoyed strong support from voters who thought economic conditions had deteriorated over the eight years of the Obama Administration. President-elect Trump did poorly with voters who thought the economy improved for them under President Obama. At the end of the day, there were simply more voters who saw a negative economic forecast for their future and voted for change over more of the same in Secretary Clinton.
The Economy Clinton Voters See Under President Obama
The Economy Trump Voters See Under President Obama
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Turbocharging economic growth is expected to be a top priority for President-elect Trump. His focal point will likely be the biggest tax reform legislation since the Reagan Administration. We would expect Speaker Ryan and Ways and Means Committee Chairman Kevin Brady (R-TX) to be particularly ambitious and aggressive in seeking a package that flattens the number of tax brackets, lowers effective tax rates, and simplifies a code that has grown increasingly complex since the last major reforms. Repatriation of foreign profits for international companies will be a priority in reform, allowing more money earned abroad to serve as seed funding for a wave of economic expansion in the United States. Repatriation will be part of a broader priority in the reform package to make America a much more competitive tax atmosphere for multi-national corporations.
We would expect Speaker Ryan will look at the budget reconciliation process as a valuable tool to drive a generational tax reform package through Congress and minimize procedural roadblocks from Senate Democrats. If tax reform uses the budget reconciliation process, congressional Democrats likely will be on the outside looking in, and will be sharp critics of the overall reform package.
Supreme Court and Judiciary
The fate of the Supreme Court is one of the reasons many voters could rationalize their choice of Donald Trump in this election. With the balance of the Court hanging on the open ninth seat, and the fact that three justices will be 78 or older on Inauguration Day, the next President may be in position to appoint four justices in a single term. Regardless what he does in other aspects of his term, President-elect Trump's biggest legacy might be his ability to shape the Supreme Court for the next 25-30 years through his nominations.
The election of Donald Trump means the end of the road for President Obama's pending Supreme Court nomination of Merrick Garland to take the seat vacated by Justice Scalia's death earlier this year. Senate Majority Leader McConnell declined to move the nomination, essentially punting the decision on the future direction of the court to the American people. Majority Leader McConnell will now keep the nomination from proceeding during the lame-duck session.
During the campaign, in a bid to win conservative support, President-elect Trump released a total of 21 candidates he would consider nominating for the Supreme Court. This unprecedented detailing of potential nominees did in fact garner Trump some support from conservative leaders who recognized shaping the Supreme Court's future was a top political issue.
President-Elect Trump's list of announced Supreme Court candidates includes:
- Keith Blackwell (Georgia Supreme Court)
- Charles Canady (Florida Supreme Court)
- Steven Colloton (8th Cir.)
- Allison Eid (Colorado Supreme Court)
- Neil Gorsuch (10th Cir.)
- Raymond Gruender (8th Cir.)
- Thomas Hardiman (3rd Cir.)
- Raymond Kethledge (6th Cir.)
- Joan Larsen (Michigan Supreme Court)
- Senator Mike Lee (R-UT)
- Thomas Lee (Utah Supreme Court)
- Edward Mansfield (Iowa Supreme Court)
- Federico Moreno (S.D.FL.)
- William Pryor (11th Cir.)
- Margaret Ryan (Court of Appeals for the Armed Services)
- David Stras (Minnesota Supreme Court)
- Diane Sykes (7th Cir.)
- Amul Thapur (E.D.Ky.)
- Timothy Tymkovich (10th Cir.)
- Don Willett (Supreme Court of Texas)
- Robert Young (Michigan Supreme Court)
We think it is highly likely that the first two Supreme Court nominees will come from this list of 21 candidates because it will show the President keeping a key promise to the conservative movement. If the President-Elect has more than two nominations during his term, we think the list of candidates will expand and evolve over time.
For the first Supreme Court nomination from President Trump, we expect a process that takes at least two months, from nomination to confirmation. The last 11 Supreme Court Justices waited an average of 74 days between the date of their nomination and their Senate confirmation. In instances where the President's party also controlled the Senate, the confirmation process for recent nominees has not moved any faster, with an average of 72 days. The fastest confirmation process was 50 days (Justice Ginsberg) and the longest was 99 days (Justice Thomas). Thus, it seems likely the new Associate Justice would not be sworn in fast enough to take part in most of the cases pending before the Supreme Court in its 2016-17 term.
With a Republican Senate, one would think President-elect Trump's nominees would have an easy path to confirmation, but that may not be the case. First, Republicans have a narrow majority of only 51 or 52 seats in the Senate, and likely will have only a one or two-seat majority on the Senate Judiciary Committee, the starting point for the federal judiciary confirmation process.
President-elect Trump's top Senate ally, Sen. Jeff Sessions, is a key member of the Judiciary Committee and may emerge as the quarterback of administration efforts to move Supreme Court and key appellate nominees through the Committee. However, several Republican critics and opponents of President-elect Trump also are on the Judiciary Committee. Sen. Ted Cruz (R-TX) and Sen. Lindsey Graham (R-SC) both ran for the Republican nomination for President and were strong critics of Donald Trump's qualifications to serve in office. Sen. Orrin Hatch (R-UT) and Sen. Mike Lee (R-UT) come from a state Trump barely won because the vast majority of voters thought he lacked the moral grounding to serve as President. The Republican senators on the Judiciary Committee will want to move the President's Supreme Court nominees, but political conditions suggest they will be cautious about getting behind nominees who might be controversial. The relationships between the Trump White House and Senate Judiciary Republicans will play a role in how bold the President can be in picking judiciary nominees.
For two reasons, Democrats on the Judiciary Committee are unlikely to offer much support to the Supreme Court nominees from President-elect Trump. First, the Judiciary Committee is packed with ideologically motivated people in both parties who simply oppose the other party's guiding principles in making these appointments. Second, Judiciary Democrats may look to provide a difficult path for Trump's nominees as payback for the way Republicans handled the Merrick Garland appointment this year and slow-walked President Obama's judicial nominees the last two years.
One thing that is notable about President-elect Trump's list of nominees and his likely philosophy in picking nominees to the federal courts is his consideration of state Supreme Court justices. It is likely that a President Trump will have a more expansive list of federal court nominees that includes experienced judges from state systems,\ and also more legal practitioners that can bring a different perspective to the bench. This experiential diversity would be a marked departure from what recent presidents have done.
While all of the attention is naturally on the new administration and the 115th Congress, focus soon will shift back to the 114th Congress and the unfinished business that must be completed in a post-election "lame-duck" session. Congress is expected to reconvene on November 14, and its session is likely to last into at least the first week of December.
Of the numerous items that may see action in the lame-duck session, the only truly "must-pass" items are appropriations measures to address funding the government beyond December 9 (including a defense supplemental funding request for additional funds needed to fight terrorism in the Middle East), when the current Continuing Resolution (CR) expires, and the National Defense Authorization Act (NDAA), which specifies the budget and expenditures for the Department of Defense and has passed Congress for 54 straight years. Prior to the election, both parties expressed optimism that Congress will finish its appropriations work and not leave FY 2017 business for the new administration to handle (via a long-term CR), but that optimism will be tested in the lame-duck session. Indeed, in the lame-duck session following the last presidential election in 2012, Congress ultimately had to pass a long-term CR through the following March. Multiple CRs, in fact, have become commonplace in recent years.
At this time, both Speaker Ryan and Majority Leader McConnell have indicated that they prefer to enact several smaller appropriations packages (or "mini-buses") rather than one large "omnibus" bill. House Minority Leader Pelosi, along with other Democrats, strongly oppose this strategy, fearing the Republicans would pass a defense spending bill and simply allow domestic programs to settle for a long-term CR. With Republicans maintaining control of Congress and capturing the White House, we expect leadership will want to wrap up its work in short order so as to clear the decks for the new Congress and administration. Republicans may even make short-term funding concessions to Democrats, knowing that taking control of the White House in January will leave congressional Republicans better positioned to implement their long-term budgetary and spending priorities.
Congress also will need to consider potential supplemental funding packages for Hurricane Matthew and other disaster relief. On immigration, action may be pursued to reauthorize the EB-5 Regional Center Program. The somewhat controversial program allows immigrants to apply for legal permanent residence if they invest $500,000 in a US commercial project or create 10 jobs in the country. While Congress extended the program as part of the CR, there are technical and legal questions raised by the Congressional Research Service (CRS) about whether the program's extension through a CR properly meets the sunset provisions outlined in the law.
During the election season, congressional staffers have continued to negotiate a final conference agreement for the Water Resource Development Act (WRDA), and it is possible this agreement will be voted on by Congress before the end of the year. One element likely to be in the bill will be about $200 million in aid for the residents of Flint, Michigan, who face an ongoing water quality crisis caused by infrastructure failures.
In addition to the appropriations and NDAA endgame, both Speaker Ryan and Leader McConnell have suggested that the 21st Century Cures bill, which would invest new money in medical research and speed up the Food and Drug Administration approval process for new drugs and devices, will be a priority in the lame-duck session. The bill enjoys bipartisan support; however, it has been delayed thus far over negotiations on how to offset its cost, particularly mandatory new spending that is a Democratic priority. With Republicans poised to hold control of the next Congress, they may force some reduction in this mandatory spending as the cost of getting the bill to the finish line in the lame duck.
What is normally an annual ritual of renewing dozens of expiring temporary tax breaks – or "tax extenders" – is less likely to be repeated this year. While last year's bill made many of the extenders part of permanent law, there remain 36 tax extenders set to expire at the end of 2016, and they include popular provisions for homeowners and renewable energy incentives, among other items. It is likely that Congress will consider an extenders package in some form in the lame-duck session. However, Republicans may simply hold off on those provisions until next year, figuring that with Donald Trump in the White House, they can fold the extenders into a much broader comprehensive tax proposal that will be a legislative priority in 2017 or leave the orphaned extenders out all together.
There is also a possibility that Congress could consider legislation to technically amend the Justice Against Sponsors of Terrorism Act (JASTA), which passed earlier in the fall by overriding President Obama's veto. A bipartisan collection of senators and representatives have indicated they may push for changes to JASTA to protect American service members abroad from retaliatory actions and to address other concerns raised by foreign governments.
Finally, President Obama could make one final public plea for Congress to consider ratifying the Trans-Pacific Partnership (TPP) during the lame duck, but this would be an exercise in futility. Both Presidential candidates opposed TPP in its current form and opposition to it was a signature element of President-elect Trump's electoral appeal. It would be unfathomable that a Republican majority would use the lame duck to pass something so controversial and opposed by their incoming President.
Why the 2018 Senate Races Affect the 2017-18 Legislative Agenda
In the months leading up to the nominating committee, Washington Republicans were fearful that Donald Trump's nomination would mean collapsing support for House and Senate Republicans. Yet, even at Donald Trump's lowest pre-election moments, there was plenty of evidence that Senate Republicans in particular were capable of running well ahead of their Presidential nominee and would not be beholden to the top of the ticket to pull them to victory on Election Day.
Now, as with many things in a world where Donald Trump is the President-elect, we reach a unique point in electoral politics. Typically, the off-year elections of a new President have resulted in losses for the President's party. President George W. Bush is the only Republican President in the last 100 years to gain both House and Senate seats in the first off-year election of his Presidency. Three of the Republican Presidents since World War II gained one or two Senate seats in the first off-year of their terms (Nixon gained 2, Reagan 1, and George W. Bush 1), but the average post-WWII Republican president has lost 12 House seats in the first off-year election.
Given the slightly narrower Republican majorities in both chambers of Congress (51 seats in the Senate and 238 seats in the House), it would normally not take much of a wave against President Trump's policies to bring Democrats to power in in 2018.
While President-elect Trump and congressional Republicans do not have history on their side in the upcoming 2018 elections, they have significant structural elements in their favor. First, in the House, the 2010 redistricting process reduced the number of competitive House races, so Republicans just have fewer toss-up seats to defend, and many of those toss-ups were won by the Democrats this week. Second, the lack of a presidential race means a turnout model that is generally more favorable for Republicans than the electorate that turns out in presidential years. Republicans have picked up both House and Senate seats in three of the four past off-year elections, but that one loss was under President George W. Bush, when Democrats retook Congress in the 2006 elections as a rejection of President Bush's policies. The Bush collapse in the 2006 elections is fresh in the minds of top congressional leaders in both parties and will drive many of the strategic policy and political decisions they each make in the next two years. Third, the dominance of Republicans in state government and Congress means Democrats have a thinner bench to draw on in finding candidates for 2018 Senate races.
The 2018 elections will be very difficult for Senate Democrats, as they must defend 25 seats in 2018 (including the two independent senators who vote with the Democratic Caucus, Sen. Angus King (I-ME) and Sen. Bernie Sanders (I-VT)), compared to the 8 seats Republicans will need to defend. In many respects, it will be the mirror image of the 2016 line-up when Republicans defended 24 seats to the 10 held by Democratic Senators. Republicans have not held more than 56 seats in the Senate since 1923, but 2018 may be their best chance in decades to do so if voters generally approve of the first two years of President Trump's Administration.
Included in that 2018 election list are Democratic-held Senate seats in states that have voted for Donald Trump, Mitt Romney, and John McCain in the last three elections, including: Montana, North Dakota, and West Virginia. There are also several "purple" states – Florida, Indiana, Missouri, Ohio, Pennsylvania, Virginia, and Wisconsin – each won by Donald Trump in this election, and which now make Democratic incumbents running in those places in 2018 vulnerable. Democratic party leaders will target Republican incumbents in Arizona and Nevada where fast-growing Hispanic populations make it more likely a Democratic challenger can win, but overall the Senate Democratic Caucus will be playing defense in the 2018 election cycle.
Five moderate Democrats in traditionally Republican states – Heidi Heitkamp (D-ND), Jon Tester (D-MT), Claire McCaskill (D-MO), Joe Manchin (D-WV), Joe Donnelly (D-IN) – will have some level of outsized influence on the legislative process because they are vulnerable in 2018. President-elect Trump and Senate Majority Leader McConnell will be looking for opportunities to secure support from those five Senators, giving them the potential to craft deals where they trade a vote for some say in shaping major legislation. Alternatively, the Trump Administration and Senate Majority Leader will look for ways to target those five senators and place them in a position where they are casting tough votes against popular legislative proposals, allowing Republican candidates to campaign against the voting records of those Democratic incumbents.