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      article by Envestnet
      This piece is approved to use with clients.

      Why a One-Seat Senate Pickup is a Big Deal for Democrats

      By Steve Boms
      Dec 12, 2022

      And that’s a wrap. Well almost.

       

      As of early this morning, we know the outcome in all but one of the 2022 midterm election races. There is still a state-mandated recount going on in Colorado’s 3rd Congressional District, where Republican incumbent Lauren Boebert is currently ahead. But all of the other congressional races of the 2022 election cycle have now been called.

      The edge in the House right now is 221 to 213 in favor of Republicans. That margin was reached last Friday when Democrat Adam Gray conceded to the Republican candidate, John Duarte, in the race to represent California’s 13th Congressional District. If Rep. Boebert ultimately is declared the winner, the edge for Republicans will be 222 to 213 in the House.

      The margin in the Senate will be 51 Democrats to 49 Republicans. That news came early this morning after Democratic incumbent Sen. Raphael Warnock defeated Republican challenger Hershel Walker in a runoff in Georgia held yesterday. (Under Georgia law, if no candidate garners more than 50 percent of the vote on Election Day, a race goes to a runoff to be held four weeks later between the top two vote getters.)

      The Democrats’ one-seat advantage in the Senate may seem small, but it is significant compared to what the party has been working with during the current Congress. For the last two years, the balance of power in the Senate has been 50 to 50. That not only meant Vice President Kamala Harris needed to be on hand to cast tie-breaking votes — which she was 26 times, getting her awfully close in less than two-years to the all-time record for a vice president, 31 — it also meant Democrats had to share power on Senate committees.

      With Warnock’s win, Democrats now will have more breathing room on these policymaking and oversight panels in the next Congress.

      Let’s examine what that means exactly.

       

      How Senate Committees are Structured

      The U.S. Senate has 24 committees. As the Senate Committee on Homeland Security and Governmental Affairs has explained, these panels each have a specific legislative or investigative duty to carry out or they are tasked with oversight of a specific part of the U.S. federal government. These committees review bills, conduct oversight investigations, issue reports, and hold hearings on issues of interest to the committee that are under its jurisdiction.

      As such, these panels are very powerful.

      When a senator introduces a bill, the chamber’s parliamentarian assigns that legislation to a committee or, in some cases, multiple committees to review. Cryptocurrency legislation could be assigned to many different committees, for example, including the Senate Banking, Housing and Urban Affairs Committee or, the Agriculture, Nutrition, and Forestry Committee, which has oversight responsibilities for the Commodity Futures Trading Commission. It’s all up to the parliamentarian.

      Each full committee has subcommittees that share specific tasks within the panel’s jurisdiction. On the Senate Finance Committee, for example, there is a subcommittee just for tax and Internal Revenue Service oversight. Another subcommittee is responsible for focusing on international trade issues.

      How many members of each party sit on a committee or subcommittee is proportional to the party’s balance of seats in the entire Senate. If Republicans held two-thirds of all Senate seats, for example, they would receive two-thirds of seats on each committee and subcommittee.

      Because the Senate was divided 50-50 in the 117th Congress, the membership of each committee and subcommittee had to be divided in half, equally split between Democrats and Republicans.

      In addition to senators who sit on the panels, each committee and subcommittee has a chair from the majority party and ranking member from the minority party. These two leaders work together to coordinate the direction of the committee, but the chair and the majority party normally have the final say in what matters a committee or subcommittee considers.

      Vice President Kamala Harris was the tie-breaking Senate vote in the 117th Congress, so Democrats held the chair positions on all Senate committees and subcommittees. But unlike in congresses past when one party had a clear majority, in the 117th Congress the minority party ranking members had a bit more power than usual since the margin in the Senate was so close.

      So did each member of a committee or subcommittee.

       

      Practical Implications of Power-Sharing 

      As the law firm Holland & Knight explained, with the Senate’s 50-50 split, a power-sharing agreement was necessary to determine how Senate committees and floor procedure would operate for the 117th Congress. The agreement was adopted by unanimous consent by all senators on Feb. 3, 2021. It was modeled on a power-sharing agreement the Senate had used 20 years earlier when there was a 50-50 party split and when Vice President Dick Cheney was the tie-breaking Senate vote. (That 50-50 split, by comparison, lasted only five months, until Sen. Jim Jeffords of Vermont changed his affiliation from Republican to independent and began caucusing with Democrats, giving them the majority.)

      The agreement for the 117th Congress as it pertained to committees and subcommittees meant:

      • If there was a tie vote in a subcommittee, the full committee chair needed to make a petition to put in on the full committee’s agenda, which required a vote by the full committee. (When there is a clear vote in favor of a bill, it just advances automatically.)
      • If there was a tie vote in the full committee, the committee chair need to send a notice to the Senate secretary and then either Majority Leader Chuck Schumer (D-N.Y.) or Minority Leader Mitch McConnell (R-Ky.), after consulting with the chair and ranking member of the committee, could make a motion to discharge the measure or matter. That motion was subject to a vote by the full Senate.

      In a chamber where floor time is the single most valuable asset the majority has, each of these steps was time consuming. As one local news outlet explained, when a Senate panel deadlocked on advancing a bill to protect roughly 400,000 acres of public lands in Colorado, Senate Majority Leader Schumer would have needed “to file a discharge motion which, if approved, would absolve the Senate Committee on Energy and Natural Resources of its duty to recommend the bill for a vote of the full Senate.”

      Amidst all of the other Democratic legislative priorities in the Senate, that didn’t happen. Do last month President Biden used his executive powers to protect the land.

      The power-sharing agreement also made it easier for Republicans to hold up President Joe Biden’s executive branch and judicial nominations. According to Holland & Knight, “any one member can wield considerable power, particularly at the committee level” meaning  committee chairs would “have a strong incentive to work with members across the aisle to develop legislation with broad support.”

      “Without that,” Holland & Knight experts warned, committees and subcommittees could find themselves “held hostage by a single strong-willed member of their own party.”

      As CNN explained, Republicans used this power-sharing agreement to slow down nominations in the Senate. Republicans, for example, prevented a vote from even taking place in the Senate Banking Committee on the nomination of Sarah Bloom Raskin to be vice chair of supervision for the Federal Reserve. By boycotting committee sessions, GOP lawmakers ultimately forced President Joe Biden to withdraw that nomination.

      Republicans also had considered boycotting hearings for now-Supreme Court Justice Ketanji Brown Jackson, but ultimately did not take that radical step. But GOP senators did use their committee power to block the nomination of President Joe Biden’s choice to be deputy administrator of the U.S. Small Business Administration, and they blocked nominations for the Federal Trade Commission and the Federal Communications Commission using their significant leverage in committee.

       

      How the Georgia Runoff Results Help Democrats

      If Sen. Warnock had lost his reelection bid, the power-sharing agreement from the 117th Congress likely would have been carried over to the next Congress.

      Instead, Democrats will have more breathing room on committees and subcommittees. Specifically, according to CNN, for committee work the new 51 to 49 margin in the Senate means:

      • No more discharge petitions. Democrats will clear hold majorities in each committee, allowing them to process legislation and nominations much faster. Or, as The Washington Post said, “High-priority nominations, such as for cabinet secretaries and appellate judges, will get confirmed regardless of Republican foot-dragging.” 
      • Democrats will have larger staffs and budgets on committees and subcommittees.
      • Democrats will no longer need bipartisan support to issue subpoenas, which “could increase the power and number of Democratic-led investigations.”

      Which explains Senate Majority Leader Schumer’s response to a question before yesterday’s runoff election, about what a win by Sen. Warnock would mean for Democrats.

      He said, “The truth is it’s not a one percent difference … it’s world of difference.” On the floor — and especially in the committees and subcommittees — that could not be more true.

      View Disclosure

      Steve Boms is the founder and President of Allon Advocacy, LLC, a Washington, D.C.-based public policy consulting firm. Steve has spent his career focused on complex financial services public policy issues, having worked in the United States Congress on the committee with jurisdiction over banking. He has led advocacy efforts and public policy teams globally for equity options exchanges, large U.S.-based financial institutions, and leading fintech firms. In addition to working directly with Allon's clients, he is a frequent conference panelist and his perspective is solicited by reporters on the technology, financial services, and regulatory beats.

      Disclosures 

      The content and opinions expressed herein are provided by a third party, Allon Advocacy, LLC. This commentary is provided for informational purposes only and does not necessarily reflect the views of Envestnet. The information, analysis and opinions expressed herein reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. It is not intended to constitute legal, tax, securities or investment advice.

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