Legislative / Policy Update
Tax Cuts. One of the items not expected to see Congressional action during the lame duck session is a tax cut bill. This was not on anyone’s radar until last Monday (Oct. 22), when President Trump announced, “We’re going to be putting in a 10 percent tax cut for middle-income families. It’s going to be put in next week, a 10 percent tax cut. Kevin Brady is working on it.”
While it’s technically possible for legislation to be introduced during one of the House’s pro forma sessions between now and the elections, Ways and Means Chairman Brady indicated that his timetable for action is not as immediate as the President’s. Brady said he will continue to work with the Administration “over the coming weeks” to develop the tax cut plan and “we expect to advance this in the new session of Congress if Republicans maintain control of the House and Senate.”
Flood Insurance. Unlike the new tax cut bill, one piece of legislation that is actually expected to be considered during the lame duck session would extend the federal flood insurance program. The question is will Congress agree to a long-term reauthorization with comprehensive reforms or pass another short-term extension. While many lawmakers would like to reform the program, an agreement has proved elusive. Since Sept. 30, 2017, Congress has passed seven short-term extensions, the most recent of which will expire Nov. 30.
Last November, the House passed a reform bill that would extend the flood insurance program until Sept. 30, 2022, but the Senate has yet to act on its version. The differences separating lawmakers are not so much partisan as geographic, pitting coastal lawmakers against those from landlocked areas. Coastal lawmakers fear that major reforms of the program could lead to higher insurance premiums, which, in turn, would mean their constituents couldn’t afford to purchase policies. The House measure would allow the Federal Emergency Management Agency (FEMA) to impose larger premium increases than are currently allowed.
Given that the Senate wants to pass its own bill and a conference committee would then have to hammer out the differences between the two, it’s likely that another short-term extension will be needed by Nov. 30. While it’s possible that lawmakers could agree to a comprehensive reform bill before Congress adjourns in December, no one would be surprised if the debate continues in 2019.
Big Picture. The 2018 election is just eight days away and the consensus among pollsters is that the enthusiasm gap is narrowing. A new NBC News/Wall Street Journal poll shows Democrats now enjoy only a four-point lead in midterm election interest, much narrower than their 10-point average lead for the first nine months of the year. This tends to happen each election cycle as candidates are back in their districts campaigning. There are 17 seats currently held by Republicans that are leaning towards Democrats, while only two seats held by Democrats are leaning towards Republicans. If those numbers hold over the final week, Democrats would only need to win eight of the 30 toss-up seats to take the majority in the House.
Factoid #1. Over the past 21 midterms, in the period running from the one-month-prior to two-months-after the elections, the stock market has produced a median 8% gain. During this period, there was only one notable decline: a 4% drop in 1978, which was coincidentally also the last time a sitting Democratic President has seen his party control both the Senate and House of Representatives after a midterm election.
Factoid #2. FiveThirtyEight conducted a statistical analysis predicting 2018 midterm results if only women or only men voted. For the female voters, analysts projected that there would be 275 Democratic districts and 160 Republican districts. These numbers would add 44 more Democratic seats than FiveThirtyEight’s current election projections of 231 Democratic districts. If only men voted, however, there would be a projected 249 Republican districts and only 186 Democratic seats -- a drastic reduction in Democratic districts. In contrast, the online analysis also calculated that if only nonwhite people voted, there would be 388 projected Democratic districts and a mere 47 Republican districts.
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House Democrats are moving forward with reconciliation legislation to provide $1.9 trillion in Covid relief, with a floor vote expected late next week. In the Senate, Democrats have adopted new caucus rules that have resulted in numerous changes in subcommittee leadership, particularly at the Appropriations Committee.Read More