The Policy Resolution Group’s 2018 Post-Election Analysis Report

Insight - November 07, 2018

2018 MIDTERMS: The Power of Women, Possibility, and Partisan Rancor

By: Scott Segal and Dee Martin

The 2018 midterm elections showcased the power of women, both as candidates and as a key voting demographic. The elections represented a new political moment for women candidates who ran and were nominated in record numbers, particularly in the Democratic party. In total, 272 women ran for House, Senate, or Gubernatorial seats this year. This phenomenon is closely linked to the national gender gap of 25 points in favor of Democrats, which played a particularly key role in highly educated suburbs.

Tuesday’s results also illustrate the power of possibility, with voters siding against newly vulnerable incumbents and in favor of anti-establishment candidates across the country. While the ideological middle of both parties was well represented, progressive Democratic candidates like Beto O’Rourke and Andrew Gillum and anti-establishment Republicans Brian Kemp and Kris Kobach still managed to draw considerable attention and support, signaling increasingly credible challenges from the outer wings of both parties.

Additionally, the elections took place on—and in many ways helped stoke—a toxic and perilous political landscape characterized by negative and fear-inspiring advertisements, the long shadow of potential tampering by foreign states, ideologically motivated domestic terror threats, and tense developments with our allies abroad. The partisan rancor shows few signs of abating, especially as the establishment consensus of both parties continues to fray.

To read our full 2018 midterm overview analysis, click here.

You can stream the full audio of PRG's Post-Election Webinar below.

To view the slides that accompanied the webinar, click here.

ENERGY: Energy Dominance Meets Congressional Oversight

By: Scott Segal, Christine Wyman and Anna Burhop

Since the outset of the Trump administration, the executive branch has issued robust statements regarding energy policy—from regulatory reform and executive orders to recognizing the foreign policy implications of energy dominance and security. Look for a new Congress to examine the success of the administration in meeting its objectives, as well as the legality of the mechanisms it has deployed.

What Does this Mean for You?

Forces greater than the administration or Congress will continue to push for greater diversity in the U.S. energy mix—greater development and trade in natural gas; greater renewables; greater investment in diverse transportation fuels. Look for congressional Democrats to pick up on campaign themes supportive of change in the energy marketplace and to scrutinize closely proposed regulatory reforms, reliability initiatives, and key energy confirmations at FERC, Interior, and elsewhere.

To read our full energy analysis, click here.

ENVIRONMENT: Democrats to Articulate Environmental Priorities via Newly Robust Oversight

By: Scott Segal, Jeff Holmstead, Anna Burhop and Christine Wyman

Numerous changes taking place at the Environmental Protection Agency (EPA)—in the regulatory sphere as well as organizationally—provide the new Democratic House majority plenty of fodder for inquiries as they work to ramp up oversight of the Trump administration’s actions on the environment. In tandem with a likely pending effort to confirm Andrew Wheeler as the non-acting EPA Administrator, look for oversight hearings to draw sharp lines around the Democratic Party’s leading environmental priorities. 

What Does this Mean for You?

The appetite for regulatory reform will continue in the Trump administration, but will increasingly be met by oversight activities in the House of Representatives. The national conversation on climate change policy will also advance through hearings and proposed legislation. Companies in the energy and manufacturing space will be well-advised to analyze the effects of climate proposals, offer a supportive narrative for regulatory reform initiatives, and prepare for potential oversight and investigations.

To read our full environment analysis, click here.

INFRASTRUCTURE: A Perennial Priority in Search of Viable Funds

By: Anna Burhop

Despite longstanding bipartisan interest, numerous “Infrastructure Week” celebrations, and four existing proposals (including one from the White House), comprehensive infrastructure legislation failed to get off the ground in the 115th Congress. While a lack of urgency has been partly to blame—Congress in 2015 passed a five-year authorization bill, creating more than ample time to act—a lack of viable long-term funding mechanisms remain the primary roadblock to progress.

Nevertheless, advancing an infrastructure package is a must for the next Congress for the simple reason that the current program authorization is set to expire in the next two years. House Democrats have identified infrastructure as a top priority for the 116th Congress, and their new proposal will likely build off of the $1 trillion proposal that surfaced last year.

At the end of the day, authorization for the expenditure of funds is only helpful if the dollars are there to carry out that authorization. Discussions surrounding the need to fix the insolvency of the Highway Trust Fund—the underlying structure of which has lain unimproved for decades—are sure to reappear. Congress will need to make every dollar go further. Watch for a round of heated debate over providing money for a program that everybody agrees is needed, but few agree just how to fund.

What Does This Mean for You?

Shakeups in the key committees of jurisdiction, paired with the need to address a drained trust fund, make some form of action on an infrastructure package inevitable in the next Congress. The scope and scale of that action is the key question. Stakeholders invested in the possibility of a big-ticket infrastructure initiative should stay engaged with both parties, in both chambers, as the Democratic-ruled House and the Republican-ruled Senate grapple with their balance of power—and priorities.

To read our full infrastructure analysis, click here.

TAXES: Trump Tax Returns, TCJA Oversight, and Repeal & Replace 2.0

By: Liam Donovan

The Tax Cuts and Jobs Act (2017) is here to stay, but that won’t stop ascendant House Democrats from seeking to repeal and replace the legislation. Meanwhile, oversight of the President’s tax returns could lead to partisan fireworks that color the rest of the agenda.

What Does This Mean For You?

Companies, industries, and the business community as a whole must be prepared to defend the considerable gains achieved in the Tax Cuts and Jobs Act—both before Congress and the American people. The prospect of immediate policy changes is mitigated for the time being by the GOP Senate majority and (at least) two more years of a Trump White House. Yet if the law is not broadly seen as popular or effective, retrenchment is just a matter of time. A 21 percent corporate tax rate is only as permanent as the political will to preserve it.

To read our full tax analysis, click here.

TRADE POLICY: Complicated Power Dynamics, Blurred Party Lines

By: Paul Nathanson and Josh Zive

Trade policy has been a centerpiece of the Trump administration’s economic strategy, and in coming months the issues surrounding trade will only intensify. Both parties have deep internal divisions over the issue of free trade versus the protection of domestic industries, and the administration will try to use these divisions to advance its own trade agenda. Simultaneously, the new House Democratic leadership will try to build consensus within the caucus on trade issues and messaging strategies that rebuff the President and counter his policy goals.

The outcome of these debates will reverberate throughout the economy, and every company will have a reason to keep a close watch. For example, the NAFTA debate will shape the future of the North American free market, which has supported a robust energy industry in Canada, the U.S. and Mexico. The ability to reach an acceptable final agreement to modernize NAFTA will determine what sorts of protections investors in the energy sector receive from expropriation or mistreatment, which will in turn influence the value of past investments in the North American energy sector, and its prospects for continued growth and investment in the future. Similarly, the ongoing trade disputes regarding China and tariffs on products such as steel, aluminum, and automobiles will have direct implications for the cost of material inputs for manufacturers, as well on the prices and supply options for retailers in the U.S. 

What Does This Mean For You?

If you are in an industry sector that depends on efficient cross-border transactions to access raw materials or markets, such as the energy sector, expect more uncertainty.

If you are a manufacturer concerned about steel, aluminum, and other tariffs increasing expect the House to be more active in oversight, which may give you an opportunity to have your concerns heard, but do not expect much in the way of actual legislation.

If you are an industry sector with strong ties to European or Asian sources, such as autos and auto parts, look for President Trump to turn his attention to you in the coming months as he again seeks to use his delegated trade powers as a tool to apply pressure on U.S. trading partners to achieve his trade objectives.

To read our full trade policy analysis, click here.

CONSUMER PRODUCT SAFETY: Majority Republican Commission Forges Ahead with FY 2019 Agenda

By: Ed Krenik, Paul Nathanson and John Lee

Despite the change in control of the House, the newly cemented Republican majority at the Consumer Product Safety Commission (CPSC) will drive the agenda for Fiscal Year (FY) 2019 forward.

What Does This Mean For You?

Manufacturers and retailers should anticipate robust oversight of all ongoing CPSC actions. It is highly likely that the relevant House subcommittee will target pending rulemakings during its first round of oversight initiatives. Manufacturers of products subject to these rulemakings may find themselves called on to testify at these oversight hearings.

To read our full consumer product safety analysis, click here.

CONGRESSIONAL OVERSIGHT: Investigations, Inquiries, and Hearings

By: Dee Martin and Josh Zive

Democrats won control of the U.S. House of Representatives for the 116th Congress. Through the congressional oversight function, industry, the White House, and executive agencies can expect additional investigations, inquiries, and hearings. Without control of the Senate and thus little chance of enacting legislation, this oversight authority offers a primary avenue for Democrats eager to shape policy. 

What Does This Mean For You?

If you are in the energy sector, watch for inquiries on climate change, public land use, and oil and gas development, as well as collateral inquiries on ethics issues related to key agency officials.

If you are in the financial services sector, watch for inquiries related to CFPB and payday lending.

If you are in the pharmaceutical sector, watch for additional inquires related to drug pricing.

If you are a social media company, watch for inquiries related to election meddling and disinformation campaigns.

To read our full Congressional oversight analysis, click here.

APPROPRIATIONS: Bipartisanship Overshadowed by Budget Cap Showdown

By: Ed Krenik and John Lee

2018 was a banner year for bipartisanship among appropriators. Despite the political gridlock occurring in other areas of government, Congress managed to get five out of twelve appropriations bills for Fiscal Year (FY) 2019 to the President’s desk for signature, as well as a continuing resolution (CR) funding the government. Yet conflicting priorities between President and parties alike—made starker by an unexpectedly large budget deficit—suggest an end to cross-aisle cooperation on spending in the next Congress.

What Does This Mean For You?

If your business is impacted by federal funding still tied up in the CR, the chances of an agreement by December 7th remain lukewarm, meaning current uncertainty will continue.

For the lucky ones with appropriations priorities that made it across the finish line for FY 2019, FY 2020 will bring new challenges as House Democrats interested in more domestic spending battle the President’s desire for cuts. Look for FY 2020 appropriations work to flow significantly slower than FY 2019.

Lastly, there have been rumbles on Capitol Hill about the return of earmarks, or congressionally directed spending. While a deal would have to be reached between both parties to make that happen, a return of earmarks would allow members to advocate for individual projects in their district, reshaping the way industry interacts with the Appropriations Committee.

To read our full appropriations analysis, click here.

FINANCIAL SERVICES: A New Day for Democrats Spurs a Return to Dodd-Frank Priorities

By: Liam Donovan and Paul Maco

House Democrats shift the financial services agenda to aggressive oversight, pumping the brakes on the Trump administration’s deregulatory agenda.

What Does this Mean for You?

Large banks will find themselves the primary focus of increased scrutiny under a Financial Services Committee helmed by Rep. Waters. Nevertheless, the committee is also likely to focus on a suite of issues applicable to a far broader slice of corporate America than the financial services industry itself. Businesses should prepare for incoming scrutiny of corporate governance issues, including executive compensation; ESG practices; and composition of board membership. The two banking committees will also play an active role in any legislative push involving privacy, data security, and protection of consumer information, potentially affecting companies well outside the financial arena.

To read our full financial services analysis, click here.