Tag: US House of Representatives

What Happened: Policy and Politics

Baseline: The future of the Inflation Reduction Act (IRA), signed in 2022 to boost US clean energy with new tax incentives, hangs in the balance. President-elect Trump and some Republicans in Congress have threatened to repeal all or part of it because they don’t agree with the policy, and they need the revenue savings to offset their 2017 Tax Cuts and Jobs Act (TCJA) extensions. The processing of a tax bill next year provides a rare opening for taxpayers who are dissatisfied with the IRA or with the Biden administration tax regulations which implement the IRA.

Pulse Check: Much depends on whether Republicans gain control of both chambers of Congress, enabling them to tap into the vaunted congressional budget reconciliation process and easing their path to legislative change.

What to Monitor: Expect IRA supporters to spend time educating administration officials and congressional offices about the valuable economic and other benefits provided by these tax provisions, particularly in GOP-represented congressional districts and states. Meanwhile, industries from biofuels to hydropower are lobbying for new tax credits in the 2025 tax bill, aiming to secure a place in the complex tax landscape that lies ahead.

Voters delivered a sweeping victory to Donald Trump on Tuesday, setting him up to be the 47th President, and the first since Grover Cleveland in 1892 to be elected to a second non-consecutive term. After a surprise electoral college victory in 2016 and a narrow defeat in 2020, Trump won an outright majority of the national popular vote, the first Republican to do so since George W. Bush in 2004. While his victory helped propel a pickup of at least four Senate seats, wresting back control of the chamber from Democrats, the fate of the House remains uncertain pending the counting of outstanding California mail ballots that could drag out for a week or more.

The victory was driven by disproportionate gains among key demographics and subgroups that will become clear as the dust settles, but the overall pattern was unmistakable: Trump made significant gains coast-to-coast, in urban, suburban, and rural areas, and among virtually every cohort of the electorate. His improvement in the key battlegrounds was actually dwarfed by his gains in the nation’s bluest states, with double-digit swings in places like New York, Maryland and California. In addition to avenging his 2020 loss, the President-elect can now credibly claim a popular mandate for his policies, and quite possibly the congressional majorities to pursue them legislatively.

The restoration of President-elect Trump represents a return to 2016-17, with many of the same conditions seen seven years ago: the potential for a unified Republican government, and a clear commitment from the new administration to roll back the regulatory agenda of the previous administration and institute “America-first” policies when it comes to energy, immigration and trade. The key difference is that while the outcome of the 2016 election caught even the Trump apparatus flat-footed, preparations for President-elect Trump’s second term have been underway for the past three years. Expect a second Trump administration to be savvier and more focused in carrying out its goals, installing key personnel, and implementing policy.

The expectation is that strong policy decisions are ready for implementation on Inauguration Day through Executive Orders that will clearly lay out the regulatory and policy framework for rescinding and replacing the Biden administration agenda. Examination of the Inflation Reduction Act and Infrastructure Investment and Jobs Act mechanisms will certainly occur. President-elect Trump has made clear his intentions to leverage American foreign policy through trade and tariffs rather than military means. Particularly in the energy space, President-elect Trump has pledged a return to American energy dominance backed by a foundation and focus on leveraging domestic traditional energy resources. As observed in his first term, separating campaign rhetoric from implanted policy will continue to be a critical exercise. It is a guarantee that President-elect Trump intends to staff up quickly with political loyalists who have experience in navigating the proclivities of both a Trump administration and Washington bureaucracy, one that he has yet again pledged to dismantle.

President-elect Trump re-assumes the White House with a certain Republican majority in the US Senate and a likely slim majority in the US House of Representatives, providing the ability to implement legislative initiatives while ensuring a full swath of Cabinet-level and senior-level appointees. Legislative action will be necessary for targeting provisions of the Inflation Reduction Act, and while the notion of full repeal exists in rhetoric, it is more likely that Republicans use a more precise approach, preserving legacy provisions that tend to benefit traditional energy sources and targeting those that are more renewable energy focused. However, the slim majorities in each chamber complicate the full breadth of legislation that Republicans can expect to implement. The focus in the early days of Congress will be on the aforementioned Senate confirmation process and resolutions of disapproval under the Congressional Review Act to repeal Biden administration regulations finalized in the last 60 days of the previous Congress, which are both likely to be comfortable party-aligned exercises. The tools of congressional oversight will be trained on assisting the Trump administration in implementing regulatory changes and building a record toward federal agency reforms – such as permitting, federal workforce, and agency re-organization.

© 2024 Bracewell LLP
For more on the 2024 General Election, visit the NLR Election Law Legislative News section

Which Way will the House Go? Democratic or Even More Democratic?

As we head towards the election on November 3, 2020, the question is not whether the US House of Representatives will remain in the hands of the Democrats. Polling suggests that is a near certainty. The question is by what margin they will control the chamber. Democrats currently control 232 seats, while Republicans control 197 seats, with one independent and five vacant seats. The number of seats controlled by Democrats in the 117th Congress has significant implications for Democrats’ ability to forward their agenda, especially if they are also in control of the White House and the US Senate.

Below we take a look at a few of the structural forces at play in the House elections and identify key races to watch on election night.

The Uphill Challenge for Republicans

On election night 2016, Republicans controlled 241 seats in the House. The 2018 election went disastrously for Republicans as they lost control of the House for the first time since 2010. A Republican return to control two years later was always going to be an uphill battle. The last time a party regained control of the House a mere two years after losing it was in 1956 when Democrats retook the House.

House Republicans are going into the cycle with 31 of their members retiring. By comparison, Democrats have only 12 members retiring. The incumbency advantage in House races has traditionally been significant. With Republicans having to defend 31 open seats while trying to win back enough seats to retake the House, the proposition of a productive election night becomes all the more challenging.

The Challenge (and Opportunity) For Democrats

Since the 1994 Republican takeover ended 40 years of Democratic rule of the House, we have seen three change elections: 2006, 2010 and 2018. A change election occurs when the minority party flips a significant number of seats previously held by the majority party. The challenge for the new majority party after winning a change election is to keep those seats from immediately flipping back to the other party in the next election. This is one of the key challenges that House Democrats face on November 3. In order to keep their majority, Democrats must hold seats that Republicans won in 2016 with Donald Trump at the top of the ticket.

Democrats are also attempting to expand the electoral playing field with competitive candidates in as many of the seats being vacated by retiring Republicans as possible. This will allow Democrats to potentially grow their majority.

A Time Zone Approach to Reading Election Night

Below are 24 seats that will be important for deciding party control and margin in the House. They are currently evenly divided between Democrats and Republicans, 12 to 12. The charts below are divided by time zone for your convenience as you follow along on election night.

The Democratic seats are predominantly held by incumbents seeking reelection for the first time with President Trump at the top of the ticket. Democrats’ ability to hold these seats is critical to growing their margin in the House. If Democrats lose these seats while not picking up Republican seats, it will be a very bad night for the Democrats.

The Republican seats are a combination of incumbents seeking reelection and open seats. If Republicans lose these races in states such as California, Pennsylvania and New York, it may be indicative of a defeat at the top of the ticket hurting the party down the ballot.

Time Zone Chart

How Much Does Margin Matter in the House?

It goes without saying that the margin in the House matters—but how much? It really comes down to the ideological diversity within the majority. If the majority party has 225 members who vote in ideological lockstep, then it doesn’t matter whether the majority party ultimately has 235, 255 or 275 votes in the House.

Ideological diversity is better understood in terms of a bell curve. On one tail of the curve are members who are more ideologically strident and represent districts that support their position: the far left or far right of the party. On the other tail of the curve are members who represent toss-up districts and who, regardless of their personal ideology, must be more careful with their votes. The vast majority of the party may be largely in ideological agreement with their more strident members but are willing to make compromises to achieve policy outcomes that protect members in toss-up districts. The difficulty governing in the House comes when the members in toss-up districts and/or the strident members are too numerous and refuse to vote for any compromise.

When the ideologically strident members refuse to compromise, we call that the John Boehner problem. When Speaker Boehner led a Republican majority with 234 members but faced a far-right flank of 25 members committed to opposing all legislation that wasn’t exactly what they wanted, it effectively limited his ability to lead the House. In the latter part of his speakership, Boehner regularly had to make compromises with the Democrats that gave the minority vastly more influence in the final legislation than they typically command.

In 2009, Democrats had 257 seats in the House and still struggled to secure 218 votes to pass the Affordable Care Act. The problem then was too many members from toss-up seats and too many members who were not as far left ideologically as the majority of their caucus. The current Democratic majority of 232 is arguably less ideologically diverse than the larger 2009 majority.

With a robust progressive agenda on the table for 2021, Democrats may face the challenge of garnering sufficient support on critical legislation from the ideologically strident members who may be reluctant to compromise.

The margin will still matter significantly if Democrats control the White House, the Senate and the House and seek to move major progressive legislation. The effort to get to 218 votes will always be a challenge. Democrats will have to meet that challenge while satisfying the vast sweep of their majority and their more ideologically strident members. Doing so will be easier if there are 255 Democrats as opposed to 245 Democrats in the House.in the aftermath of the general election, which will make the politics of that vote an event unto itself.

© 2020 McDermott Will & Emery
For more articles on the election, visit the National Law Review Election Law / Legislative News section.

Death and Taxes: House Bill Eliminates “Death” Tax in 2024

On November 2, 2017, the U.S. House of Representatives’ Ways and Means Committee released its proposal for tax reform via the Tax Cuts and Jobs Act. The House’s draft legislation contains a number of provisions that, if enacted, would significantly change the wealth transfer landscape, including the total repeal of the estate and generation-skipping transfer taxes as of January 1, 2024.

Under the proposal, commencing on January 1, 2018, the individual lifetime gift and estate tax exemption amount will be doubled to $10 million ($20 million for married couples), indexed for inflation—$11.2 million per person in 2018 ($22.4 million for married couples). This increase in the exemption amount also applies to the generation-skipping transfer tax.

The draft legislation calls for a total repeal of the estate and generation-skipping transfer taxes as of January 1, 2024, while preserving the ability of beneficiaries to obtain a basis adjustment as to inherited property. Although the gift tax is set to remain in place, a reduction in the rate from 40% to 35% is provided for. Similarly, the annual exclusion—scheduled to increase to $15,000 per individual in 2018 ($30,000 for married couples who elect to split their gifts)—looks certain to survive.

This post was written by the Tax, Estate Planning & Administration  of Jones Walker LLP., © 2017
For more Family, Estates & Trusts legal analysis, go to The National Law Review