Balance of Power 

Senate: 48 Democrats, 49 Republicans, 3 Independents Caucusing with Democrats

House: 220 Republicans, 213 Democrats, 2 Vacancies**

  • Rep. George Santos (R-NY) was expelled; his seat will be filled by a special election on February 13th. The DCCC and Dem aligned House Majority PAC have already announced nearly $6 million in expenditures to win the seat back. The redrawn NY-03 would have gone for Biden with 54% of the vote while George Santos garnered 53% in 2022.

  • Former Speaker Kevin McCarthy (R-CA) resigned effective January 1, Governor Newsom has until January 14th to set a special election date, this is a safe Republican seat.

  • Both Reps. Bill Johnson (R-OH) and Brian Higgins (D-NY) have said they will step down early to take jobs as president of Youngstown State University and Shea’s Performing Arts Center, respectively. Rep. Johnson will resign effective January 21st, while Rep. Higgins will resign February 2nd. Special elections for both seats are unlikely to change the balance of power with Johnson’s rural Ohio district heavily Republican and Higgins’ urban Buffalo, NY district strongly Democratic.

Top Line Take Aways: 

  • And Then There Was One: Paging Speaker Johnson (R-LA): When Rep. Bill Johnson resigns on January 21, House Republicans will have a three-seat majority, 219-213. In other words, Speaker Johnson can only lose the faith and trust of ONE Republican Member of Congress and keep the gavel should another effort materialize to vacate the chair.

  • Dual Deadlines Fast Approaching: A new year but an old problem, how to avoid a government shutdown? Under the “phased” appropriations strategy, the first deadline is January 19th, when funding for Agriculture, Transportation-HUD, Energy and Water and MilCon-VA expire. Everything else, including Department of Defense funding, expires two weeks later on February 2nd. Because it’s past January, and we have no long-term spending enacted, under provisions of the Fiscal Responsibility Act, defense and non-defense discretionary spending has been “temporarily” reduced to $850 billion and $736 billion, respectively. This “temporary” decrease will be enforced once OMB issues its sequestration report on April 30th detailing the amounts and accounts to be sequestered, giving Conservatives little incentive to cut a deal. Indeed, Speaker Johnson has already said that absent a deal he would put a year-long CR on the floor which would lock the cuts in place. All of that of course to turn around and do it all over again for FY2025. OMB’s issued a memo on how this will work and is attached.

  • New Demands: Because doing nothing will lead to spending cuts, expect to see House Republicans escalate their demands for making a deal. Rescinding money for the IRS and unspent COVID funds, along with House Republicans immigration package (H.R. 2) will all feature here.

  • Presidential Voting Starts Like…Right Now: We are officially in a Presidential election year. The GOP’s Iowa Caucus is in less than two weeks on January 15th(!). This means Congress is going to be short on serious legislating and long on posturing. Expect some fire drills but most of the products hitting the House floor are going to be designed to end up in a Senate trash can.  Traditionally, you have until Memorial Day in an election year to do anything that requires compromise leaving an extensive list of must pass items for an eventual lame duck session post-election.  

  • All The Upcoming Deadlines You Might Be Wondering About: The Committee for a Responsible Federal Budget this week updated their summary of the “Upcoming Congressional Fiscal Policy Deadlines”. This is one to save to your desktop! Chart attached.

  • Big Ticket Items Wither on the Vine?: FAA Reauthorization, Farm Bill, Data Privacy, Artificial Intelligence, Right to Repair, Coast Guard Reauthorization and Tax Extenders are just some of the normal churn and burn of Congress that are either behind serious roadblocks, lack a larger vehicle, or simply haven’t made enough progress for a realistic shot of passing in an election year. We expect a few of these, like FAA and Coast Guard, to ultimately make it through.

  • Impeachment, We Doing This?: House Republicans formally authorized an impeachment inquiry of President Biden before heading home for the Holidays. In some regards House Republicans have already won here. After two Trump impeachments, voters are treating this more as “politics as usual” than anything else and they’ve uncovered a substantial amount of evidence that money was flowing freely among the Biden family, including the President, although not while he was in the White House. This essentially allows former President Trump to neutralize any unsavory business dealings, including a potential conviction in a NY fraud trial, with the charge that everyone does this. One look at the polling and you get an idea that this has been effective. Still, some of the more partisan Members of the Republican Congress will be pushing for an impeachment vote, even if nothing else is uncovered.

Things To Look Out For, That Won’t Happen in Congress 

  • Trumps Legal Woes: 91 felony counts across four cases, plus various civil actions, all winding their way through court. Some key dates (subject to change with subsequent legal filings):

    • Letitia James NY Civil Trail: Closing arguments January 11th, with a decision likely by the end of January. Trump will surely appeal if he loses.  

    • Special Prosecutor Jack Smith’s DC Case: Set to begin March 4th, but this date has moved a lot with legal jockeying.

    • Alvin Bragg “Hush Money” Case: March 25th

    • Mar-A-Lago Classified Docs Case: May 20th 

    • Georgia Racketeering Case: August 5th

  • No Labels Third Party Ticket?: No Labels, the self-described group for politically homeless centrists that has a Congressional Caucus known as the Problem Solvers Caucus, is openly discussing a “Unity Ticket” of a prominent Democrat and Republican. They face numerous challenges, namely the entrenchment of the major political parties, organizational structure, money, and the logistical efforts required to qualify for the ballot. This of course if they can even attract nominees. Retiring Senators Mitt Romney (R-UT) and Joe Manchin (D-WV) are consistently mentioned as potential options. The nascent third party effort is looking to nominate candidates in March or April.

  • Is The Fed Done:? Anyone reading this who is “handcuffed” to a 3% mortgage (first world problems right?) is surely going to be watching this. Beyond anyone’s personal interest, if the Fed cuts rates at its next few Federal Open Market Committee (FOMC) meetings it would generate an enormous amount of positive press for the President as media would hail it as a sign that the economy is strong and high inflation may, finally, be behind us. FOMC next meetings January 30/31st.

  • Supreme Court Surprises?: The Supreme Court upended the electoral landscape in 2022 when it repealed Roe v Wade. The Court typically saves its major or controversial opinions for the end of the term which is slated to wrap up on June 20th. Notable decisions on the docket include:

    • Alexander v. South Carolina State Conference of the NAACP: Challenging the State’s Voter ID laws.

    • Loper Bright Enterprises v. Raimondo: The long-awaited challenge to Chevron (significant deference to most federal agency interpretations of laws). Energy companies and environmental activists will be waiting anxiously for this decision that will surely engender another wave of attacks on the Supreme Court should the Chevron precedent fall.

    • Moody v. NetChoice and NetChoice v. Paxton: Relating to States abilities to regulate social media content.

    • United States v. Rahimi: A 2nd Amendment case testing laws denying gun ownership to individuals while under a domestic violence restraining order. 

    • Garland v. Cargill: Another 2nd Amendment case on whether a “bump stock” qualifies a weapon as fully automatic.

    • Moore vs United States: Whether the 16th amendment allows States to tax unrealized gains, without apportionment among the states. Stemming from the repatriation tax included in the Tax Cuts and Jobs Act, this case not only considers the constitutionality of a “wealth tax” but has significant ramifications for the overall tax code.

    • Murthy vs Missouri: This is the big free speech case initiated by then Attorney General (now Senator) Eric Schmitt (R-MO) regarding whether the Federal Government violated First Amendment rights by pressuring social media companies to regulate speech it found objectionable.

    • O’Connor-Ratcliff v. Garnier: You may not think this one is important but every Member of Congress will be watching to see if the Supreme Court rules on whether or not it’s a First Amendment violation to block unruly social media users from their official accounts.

  • Super Tuesday, March 5th: Barring something truly bizarre happening, March 5th will likely be the day former President Trump wraps up the GOP nomination when 15 States hold Republican primaries.  

Israel/Ukraine/Border/Taiwan Funding  

We told you last month that if we were squinting, we’d see a deal that provides money to Ukraine (but not as much as Dems want) with some transparency and accountability measures, money to Israel (but not as much as GOP wants) with some “restriction” language that is so weak it’s basically meaningless, money to Taiwan (nobody will talk about this part of the deal, but it’s still important) with very specific caveats on what it can be spent on to avoid sparking a larger regional conflict in the South China Sea, AND some changes to “Catch and Release” and what qualifies for asylum plus some cash for more “border security”.

It looked like they were close to that deal, but then nothing happened. We constantly get asked some version of ‘why can’t this get done, it’s so obvious?’ so we wanted to take a minute and explain the incentive structures at play here, and why the chances of a deal are slimmer now that the calendar says 2024.

Ukraine Funding: A high priority for the White House and the highly educated liberal/progressive base that dominates the Democrat party’s donor base. Additionally, there are enough senior Senate Republicans who support continued aid and come from States that won’t punish them at the ballot box. The problem here is House Republicans. While it’s true that upwards of 100 House Republicans would vote for additional funding, it’s more true that these Members are hearing the opposite from their base when they go home. For these Members spending more money on foreign wars – without getting anything in return – doesn’t make political sense. It’s our view that Ukraine funding will never pass as a standalone without significant policy concessions to House Republicans.

Israel Funding: A priority (but more of a political priority) for House Republicans, a priority (but not a public one) for the White House, and certainly a priority for Leaders Schumer and McConnell. House Democrats are more of the hold up here. A small, but very loud, portion of the Caucus oppose any additional funding for Israel without conditions, which differ depending on who you talk to. “Ceasefire” politics has emerged in Democrat primaries in both the House and Senate. The simple fact is that the longer the war goes on and the higher the death toll becomes, the harder it will be for the White House and Democratic leadership to keep their more liberal members on-side. The White House seems to already be acting on this reality, bypassing Congress while you were ringing in the new year to get weapons to Israel, a move that will surely bring loud denunciations from members of his own party.

Congressional Republicans are well aware of the divide at play, and the more cynical among us might say that they’re using this fissure to drive a wedge between the progressive base and more moderate Democrats. Republicans won’t get blamed for failing here by their voters. All you have to do is turn on the TV to find activists blocking a freeway or marching through Times Square calling for the destruction of Israel. A lot of people who are paid to know better loudly expressed bewilderment at the House Republicans’ bill offsetting Israel spending with IRS cuts. The point of that bill was to get Democrats to vote no, anticipating this very scenario. In an election year House Republicans will have even more incentives for these types of messaging bills.  

Taiwan/South China Sea Funding: A lot of people probably missed this due to the holiday, but Chinese President Xi Jinping told President Biden at last month’s summit in San Francisco that China would re-unify with Taiwan, peacefully if possible. Taiwan enjoys broad bipartisan support in Congress, and combating the Chinese Communist Party is just about the only high-profile bipartisan activity happening on the Hill these days. Your average voter, however, doesn’t rank the island’s independence in their top 100 issues. Xi likely knows this and is assuming American voters aren’t willing to go to war with China over a country our own government doesn’t officially recognize. Any funding package will ride along quietly, the Administration can also sell or transfer weapons systems either to Taiwan or allies in the region. With all the focus on the Middle East, the South China Sea is often overlooked as one of the most dangerous spans of ocean on earth. Things could very easily escalate fast.

Border Package: House Republicans have every incentive to be extremely hawkish on immigration. Senate Republicans are split between hardline immigration members and those more interested in the art of the possible. House and Senate Democrats are stuck between the reality that there is clearly a problem and the young, progressive element of the party’s base who oppose stricter border measures. The White House here is one to watch, immigration is a clear vulnerability for President Biden in a rematch with former President Trump. Remember the White House about-face on blocking Washington D.C.’s crime bill? A similar situation could play out here, and President Biden’s political team is surely telling him that he needs a win on immigration. Watch this clip of Chicago Mayor Brandon Johnson and you get a clear idea of why the NRCC and NRSC are salivating at the prospect of campaigning on this issue. Democrats in swing seats will also be eager to vote on something, anything, to show that they’re taking the issue seriously. Because of this, we expect a deal at some point between the Senate negotiators and the White House; What House Republicans do at that point will set the stage for whether any of these items end up on the President’s desk.

Get Smart – What Happens if the Presidential Election Needs to be Decided by the House of Representatives? 

How Does This Become a House Party?: If no Presidential candidate receives an outright majority of Electoral College votes, the election is decided by the House of Representatives. There are a total of 538 Electors, meaning a candidate is required to have 270 to be elected President. If more than two candidates receive votes in the Electoral College, it is not enough to have a simple majority, 270 votes are required regardless of how many candidates are receiving votes.

Has This Ever Happened Before?: Yes, and it was memorialized as a “corrupt bargain.” In 1824, John Quincy Adams was elected by the House of Representatives after coming in 2nd place in the Electoral College. In the initial balloting Andrew Jackson received 99 votes, Adams 84, Crawford 41, and Henry Clay 37. 131 were required to win. Only the top three vote getters are eligible for the House election; Clay won the House vote with 13 states to Jackson’s 7 even though Jackson carried more States in the general election. Crawford was 3rd with 4 States.

How Does the House Vote, Does Every Member Get One Vote?: No, each state gets one vote. The 12th Amendment to the Constitution states:

“…if no person have such majority, … the House of Representatives shall choose immediately, by ballot, the President. But in choosing the President, the votes shall be taken by states, the representation from each state having one vote; a quorum for this purpose shall consist of a member or members from two-thirds of the states, and a majority of all the states shall be necessary to a choice.” 

There is nothing requiring a State’s Congressional delegation to cast its vote for the candidate who carried the State in the election. As an example, President Biden won the State of Arizona in 2020, but the Arizona Congressional Delegation is 6-3 in favor of the Republicans. In this instance it would be likely that Arizona’s vote would go to the Republican candidate, even if the Democrat carried the State.

What Would the Tally Be If This Happened Today?: 26 States have more Rs than Ds in their delegations and two states – Minnesota and North Carolina – are split evenly though North Carolina will have heavy redistricting and will be controlled by Republicans. Assuming every member voted for the candidate of their own party, a House vote would be 27-23 in favor of the Republican. For reference, in 2020, even though Trump lost the election, he won 26 States to Biden’s 24. Under the current iteration of the national electorate, an election that is tossed to the House would favor the Republican candidate.

Do You Really Think This Will Happen?: No, but there’s a greater than 0% chance it could happen, and it wouldn’t take a whole lot. The 2020 election was a lot closer than the final electoral college tally. If roughly 82,000 votes went the other way, we’d be in our 8th year of a Trump Presidency. Robert Kennedy Jr. is already running as an independent (though has yet to qualify for more than one State ballot; if the nascent No Labels movement to draft a well-funded third-party ticket takes off, running against two historically unpopular nominees, all it would take would be for one key state to be won by the third-party and it would happen. But a third-party candidate doesn’t have to win a State to alter the election…

So It’s Not Totally Out of the Question?: A lot of people forget that Governor Bill Clinton was elected President in 1992 when Independent third-party candidate Ross Perot won 19% of the vote. Perot didn’t carry any states, but his nearly 20 million votes were enough to deny H.W. Bush re-election. Clinton won with 43% of the popular vote. This is the scenario national Democrat officials desperately want to avoid, and why they’re so hostile to a third-party ticket. 1968, the Democrat Governor of Alabama, George Wallace, won five states and 46 Electoral College votes. Nixon likely would have won regardless, carrying 32 states and 301 Electoral College votes but Wallace carried five States that at the time were solidly Democrat States. We point this out to note that large portions of the electorate have been alive to see third party candidates alter an election.

What Should I Watch For? In Bret’s opinion, not necessarily shared by the entire Elevate Team, this whole intellectual exercise hinges on a scenario where it looks certain that Trump is going to run away with the general election, and President Biden remains the Democrats’ nominee. Something that technically isn’t guaranteed until August 19th when the Democrat’s gather in Chicago for their Convention. Few prominent Democrats want to talk about this publicly, but some Obama era operatives have gone public with concerns about the President’s age. Major news outlets have also started raising the possibility of President Biden withdrawing from the election rather than risk a return of President Trump.

The first thing to be on the lookout for is if there’s any movement among Dem operatives after President Biden’s State of the Union speech. Namely any reaction to how he looks and sounds. After that watch for national polls at the end of April/May, when several of Trump’s numerous civil and criminal trials will be in full swing and he will have likely wrapped up the nomination. If Trump’s legal woes don’t affect his polling numbers, and President Biden can’t reassure the public about his age, some national Democrats could look to find an exit ramp for President Biden to ward off a third-party spoiler.