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  • Allon Advocacy

The Morning After

Election Day 2022 may be over, but many of the key races remain too close to call.

Election Day is over. Well, at least, the ballots at least have been cast. Millions of votes are still being counted across the country – especially in battleground states – and most of the key races remain too close to call.

Where do things stand this morning, and what do they mean for the lame duck Congress that will start next week and for the 118th Congress that will convene in early January 2023?

Let’s take a look.

The balance of power in Congress

By almost all accounts, last night wasn’t the outcome that pollsters or Republicans had expected.

Going into the midterms, Democrats controlled both chambers of Congress. Their advantages were narrow, however. Republicans needed to pick up just one seat to flip the U.S. Senate in their favor and five seats to take control of the U.S. House of Representatives.

Here is what we know right now: while not official, it looks like the House will indeed be in Republicans’ hands come January. So far, Republicans have flipped nine seats and Democrats have flipped three. Doing the math, that’s a net gain of six seats for the GOP. If those numbers hold, Rep. Nancy Pelosi (D-Calif.) will no longer be Speaker of the House come January, and Rep. Kevin McCarthy (R-Calif.), the current House Minority Leader, will likely spend the next few weeks counting votes to make sure he has enough support to become the next Republican Speaker.

There is still plenty of room for these numbers to shift, however. In fact, news networks still have not said definitively that Republicans are a sure bet to take over the House. That’s because, according to CNN, of the 435 House seats, 59 races still have not been called, and the GOP has a 198-178 advantage amongst those races that have been decided.

The Republicans’ six-seat gain so far is paltry by historical standards. In 18 of the last 20 midterm elections, the party that held the White House (in this case, the Democrats) lost seats in the House. The incumbent party also has fared pretty badly in the most recent midterm elections:

  • 2018: President’s party lost 42 House seats

  • 2014: President’s party lost 13 House seats

  • 2010: President’s party lost 64 House seats

  • 2016: President’s party lost 30 House seats

The fact that Democrats are only down six House seats thus far defies this history.

It looks like Democrats are on track to defy history in the Senate, too. The president’s party lost ground in the Senate in 15 out of the last 20 midterm elections, but, as of this early this morning, Democrats have actually gained one seat in the Senate, though four key races remain uncalled.

Of course, Democrats did have an advantage this year: they simply had fewer seats to defend. Democrats held only 14 of the 35 U.S. Senate seats that were on the ballot this year. Republicans held 21.

It looks like this favorable landscape might be enough to keep Democrats in power in the upper chamber of Congress. As of early this morning, Democrats hold 48 Senate seats and Republicans hold 48 as well. Democrats have held on to competitive seats in New Hampshire and Colorado and they have captured one seat from Republicans: the one currently occupied by Senate Banking Committee Ranking Member Pat Toomey (R-Penn.).

But Democrats aren’t celebrating yet.

Senate races have not been called in Arizona, Georgia, and Nevada — three states that are held by Democrats — and Wisconsin, which is controlled by the Republican party. In fact, there exists a high probability that control of the Senate could come down to the results of a runoff in Georgia’s race, which would mean the 2022 midterm cycle actually won’t be over for another month.

What Tuesday’s outcome means for Congress’ lame duck

The members of the 117th Congress, including the dozens of members of the House and Senate who either didn’t run for reelection or lost their primary or general elections this year, will reconvene in Washington on November 14 for a lame duck session.

Since Democrats, including President Biden, will be looking forward to divided government starting in January, party leaders may try to push several significant pieces of legislation through both chambers of Congress before their party loses complete control of the Legislative Branch. Legislative protection of same-sex marriage, cannabis banking, a major defense authorization bill (which could include a cap on credit card interchange fees), and a potential increase to or suspension of the federal debt limit are all on the table.

Of course, lawmakers also will have to decide how they are going to deal with the fiscal year 2023 continuing resolution, which expires on December 16. If lawmakers cannot act on a path forward — whether through another short-term funding measure or a full year omnibus spending bill — the nation will face another partial government shutdown in two months.

That legacy certainly is not one that Democrats want, and it is not the foot on which GOP leaders would like to start their House majority. After bitter election battle, however, it is possible.

Federal lawmakers also will likely consider the annual National Defense Authorization Agreement (NDAA), which renews federal defense policy and spending authorization levels. Congress has never failed to send this annual bill to the president’s desk so this legislation could attract a few policy riders (pieces of legislation that do not have to get done this year, but that have strong, legislative champions). Specifically, we could see several, somewhat minor tax provisions that are set to expire attached to the NDAA, along with a potential vote on an amendment to cap credit card interchange rates.

Sen. Joe Manchin (D-W.Va.) also has made it clear that he wants Senate Majority Leader Chuck Schumer (D-N.Y.) to make good on his summer promise to schedule a vote on permitting reform for federal energy projects. Opposition from progressive Democrats and Republicans sank that bill in August. We would not be surprised to see that outcome again this winter.

What Tuesday’s outcome means for the 118th Congress

While it is somewhat easy to predict what the lame duck agenda will look like, it’s harder to predict what the legislative docket will look like come January because of the sheer number of races that still have not yet been called.

Whichever party is in charge will probably have just the slimmest of margins. It will be difficult to push through any legislation, much less anything particularly significant or partisan.

We would like to say that this landscape means lawmakers will be in the mood to compromise, but given the vitriol between the two parties, that is hard to imagine. Moreover, in the House, if the GOP does indeed win a majority, the smaller-than-expected margin would empower just a small group of conservative Republicans to wield significant control over GOP leadership. Still, lawmakers could work together on issues like digital asset regulation or a federal data privacy regime, where there is some cross-partisan agreement. Of course, they also will have to deal with things like the annual spending bills that Congress must pass and they will have to decide how to handle the debt limit before the end of the summer to avoid a catastrophic default.

If Republicans control one or both chambers, we most certainly will see a proliferation of oversight hearings. In particular, GOP lawmakers will be asking a lot of questions of the Consumer Financial Protection Bureau (CFPB) and the U.S. Securities and Exchange Commission, both of which have been frequent targets of GOP criticism in recent months. And if the Supreme Court ultimately upholds a recent Fifth Circuit Court of Appeals decision and determines that the CFPB’s funding structure is unconstitutional, Republicans in Congress will have a significant role in shaping the future structure of the agency.

What happened in the states?

Seats in the U.S. House and Senate obviously were not the only positions on the ballot yesterday. Voters in 36 states also cast ballots for their respective governors, and state legislatures across the country were up for grabs.

Of these 36 seats, 16 were held by Democrats going into Tuesday and 20 were held by Republicans. As of early this morning, Democrats hold 21 governorships and Republicans hold 24. Races will have not been called in Arizona, Hawaii, Kansas, Nevada, and Oregon. But the Democratic candidate is currently in the lead in all of these states.

Democrats took back the governors’ mansions in two traditionally blue states: Maryland and Massachusetts. While those states lean heavily Democratic, for the last eight years they each have been governed by two moderate Republicans.

According to Ballotpedia’s count, 88 of the country’s 99 state legislative chambers in 46 states also were up for grabs yesterday. These elections represented 6,278 of the country’s 7,383 state legislative seats, or an incredible 85 percent.

Of the 88 chambers that were up for election, Democrats controlled 32, Republicans controlled 55, and the Alaska House was controlled by a multipartisan power-sharing agreement.

According to Ballotpedia, the status quo has held in most states. For example, Democrats maintained control of the Minnesota House and the Maine House and Senate while Republicans kept control of the Georgia, Nebraska, and Pennsylvania state senates. All of these had been considered battleground races.

With a federal government that is likely to be divided, it is possible state legislators will try to pick up some of the slack. We already have seen state governments advance dozens, if not hundreds of bills on data security and digital assets. If Congress and the White House continue to stalemate on these important matters, we could see even more activity in the states.

And economy policy matters — taxation, regulation, and employment and labor — certainly will be on state lawmakers’ minds as the country faces sustained inflation and a potential recession.

According to CNN, nearly three-quarters of voters who cast ballots yesterday told exit pollsters the economy is “poor” or “not good.” About the same number said inflation has caused them severe or moderate hardship.

Given Tuesday’s results, one thing is certain: Democrats and Republicans will have to work together to address those negative feelings.

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