POST ELECTION LANDSCAPE – POLITICAL LANDSCAPE NOVEMBER 7, 2018 ______________________________________________________________________________ Overview The return of divided government in 2019 adds another layer of uncertainty to an already unpredictable political climate in Washington. The dynamics between likely Speaker Nancy Pelosi, a strengthened Senate Majority Leader Mitch McConnell, and a embattled President Donald Trump portend to be epic theatre. The central question is whether there is room for two tracks in Washington – one seeking any common ground on policy and one playing politics around investigations and 2020 positioning – or if it is just a race to political DEFCON 1. Before getting to 2019, however, the main responsibility of Congress over the next several weeks will be the extension of the current Continuing Resolution or passage of the remaining FY19 Appropriations bills. The four bill package of Financial Services, Agriculture, Transportation-HUD and Interior are nearly entirely done, but have been collateral damage in the immigration debate that has caused the Homeland Security, State-Foreign Operations and Commerce, Justice, Science bills to stall. Border wall funding will hold up serious consideration of Appropriations bills at this point, and now that the election is out of the way, Democratic control of the House could either lead to a quick punting to a CR or White House insistence on getting these bills done now to ensure some priorities are complete before Democrats control the House Appropriations Committee. Other issues like extending flood insurance, consideration of a disaster aid supplemental, passing a new or extending the current Farm Bill and nominations will all be top of mind for leaders in both parties during the lame duck and heading into the New Year. Senate With the successful expansion of their majority, Senate Republicans will head into the lame duck and 2019 focused on: REPUBLICAN LEADERSHIP SHUFFLE At this point, it appears likely that the departure of term-limited Majority Whip John Cornyn (R- TX) will allow several junior members to jump one rung – John Thune (R-SD) to Whip, John Barrasso (R-WY) to Conference Chair, and Roy Blunt (R-MO) to Policy Committee Chairman. With elections scheduled for November 14, time will be short for an outsider to mount a challenge. Blunt’s promotion would open up the Conference Vice-Chairman position where several members are considering runs, including Mike Lee (R-UT), Deb Fischer (R-NE), and Joni Ernst (R-IA), and McConnell is prioritizing having a conservative female member on his leadership team. Meanwhile Cornyn has been promised a continued unofficial seat at the leadership table, probably as ‘Counsellor” to Leader McConnell. With Cory Gardner (R-CO) now in his own reelection cycle, the caucus will need a new Senatorial Chair in a cycle that presents a daunting map for the Republicans. The only person who has been working to solidify support is Todd Young (R-IN). The Chair will mount a majority defense in several states where President Trump is unpopular, such as Colorado and Maine, while the cycle also features potentially tight races in Alaska, Georgia, Iowa, and North Carolina. On the positive side for Senate Republicans, Alabama is a likely pickup with Doug Jones (D-AL) facing somebody other than Roy Moore. APPROPRIATIONS In general, the budget and appropriations process in 2017-18 was marked by bipartisanship and regular order. That calm will come to a screeching halt in December when we expect a major showdown over immigration policy. While the outlines of wall funding for DACA legislation remains a possibility, the emergence of additional hot button issues since the February 2018 immigration-inspired shutdown – particularly the surge of families claiming asylum on our Southern border, but also fights on Temporary Protected Status designations, ICE raids, and perhaps birthright citizenship – means the odds of a deal are remote. Such an outcome would mean either a partial government shutdown or a continuing resolution. The FY20 appropriations process will obviously be complicated by the disparate priorities of the House Democratic majority and Senate Republicans, but Chairman Richard Shelby (D-AL) and Ranking Member Pat Leahy (D-VT) have worked together to keep policy riders off nearly all of their Committee passed legislation. This result has led to common ground on domestic spending, which will also be needed if leaders of the Appropriations Committee as well as the Speaker and Senate Majority Leader work to address the sequester that will go into effect later in 2019. If that happens, with balanced control and few riders, it’s possible that the top line numbers will allow appropriators to have another year of positive outcomes. NOMINATIONS The likely resignations or firings of multiple Cabinet Secretaries will create numerous openings that will require considerable investment by Leader McConnell and his committee chairs to fill. In addition to AG Jeff Sessions resignation today, we expect turnover at many of the following departments: Defense, Homeland Security, Commerce, Interior, and Energy as well as the UN Ambassador and the FCC. With an enhanced majority and no filibuster available to Democrats, Leader McConnell should be able to muscle through any nominee that does not spark resistance from his own party. The mechanics of processing these high-level posts, however, will suck up bandwidth, time, and staff attention and delay legislative activity in affected committees. The shuffle may also delay or uproot lower-level executive branch appointments that have proven problematic for the entire Trump Administration. At the same time, the majority will continue to move judicial confirmations as fast as committee and floor time will allow, and there is always the possibility of another Supreme Court vacancy; as Lindsey Graham put it last night, “the conservative judge train will keep rolling along.” NEW CHAIRMEN AND COMMITTEE RATIOS While the majority is familiar, many of the leading figures will be new, or in new roles. The retirements of Finance Committee Chairman Orrin Hatch (R-UT) and Foreign Relations Committee Chairman Bob Corker (R-TN) will likely allow Chuck Grassley (R-IA) and Jim Risch (R- ID) to assume the chairs, with Judiciary falling to maverick Lindsay Graham (R-SC). Thune’s shift to Majority Whip will necessitate a new Chairman of the Commerce Committee, likely to be Roger Wicker (R-MS). An increased majority will also enable Leader McConnell to negotiate better committee membership ratios either by dropping a seat on the Democratic side or adding a Republican seat, depending on the committee and vacancies. THE DEMOCRATIC MINORITY Given the difficulty of the 2018 Senate map, where Democrats were required to defend 26 of the total 35 seats that were up, including 10 states that Trump won in 2016, the loss of three net seats, while disappointing for party leaders, will unlikely lead to inter-caucus recriminations or major fallout. In the days ahead, Senate Democrats will point to the difficulty of the map while attempting to beat back narratives about their difficulty winning in rural areas. In those rural areas where there were bright spots for Senate Democrats, Senators Joe Manchin (D-WV) and Jon Tester (D-MT) will be credited for building and sustaining a brand and will be looked to for guidance on competing outside of urban and suburban America. There will also be lingering questions, particularly from more moderate caucus members, about whether progressives in the party put too much emphasis on the Kavanaugh vote to the detriment of moderate members in Trump states. Last night’s Senate results are unlikely to provide instructive takeaways going into primary season on issues many Democrats hope to resolve, including their party’s proactive platform on health care (Medicare for all vs. Medicare expansion), immigration (abolish ICE vs. pursuing comprehensive reform efforts), and the broader question of the most effective candidate profile (progressive vs. moderate, young vs. old, male vs. female). Instead, Senate Democrats will likely look to the results in suburban House districts and Midwestern gubernatorial elections as the playbook for 2020 candidate recruitment and messaging. Senate Democrats are unlikely to cooperate on any major pieces of legislation in the upcoming Congress; however, some Democratic Senators have cited infrastructure and drug pricing as opportunities for bipartisan work. Senate Democratic staff point to lower profile bipartisan wins like last Congress’s opioid bill as the model for potential work across the aisle. Of course, all of this will hinge on the President’s willingness to deal with the House Democratic leadership going forward. 2020 MAP The big question is whether yesterday’s results dug Senate Democrats into a hole deep enough that they will be unable to compete for the majority in 2020. The 2020 Senate map is certainly an improvement for Democrats, with Republicans defending more seats, but those seats are nearly all in reliable red states. The obvious pick-up opportunities are in states where Hillary Clinton won (Maine – Susan Collins (R-ME) and Colorado – Cory Gardner (R-CO)). The reach races will be in (Iowa – Joni Ernst (R-IA)) where Dems did well in the House last night, (North Carolina – Thom Tillis (R-NC)), and (Arizona – Jon Kyl (R-AZ) or another appointee). Senate Dems will likely lose Doug Jones (R-AL) in Alabama, especially as it is a presidential election year. House For the first time since 2010, Democrats will soon hold control of the House of Representatives. Democrats did particularly well with suburban women and independents, to go along with an intense activist base that helped swell voter turn-out across the board. Though a number of races remain undecided, Democrats are headed for a gain of more than 30 seats, and they’ve been filled with a record number of diverse candidates. Democrats now are in charge of a body geared almost exclusively to the whims of the majority, and with gavels and subpoenas at their disposal, we expect a very bumpy road for the Administration for the next two years.