Summary

Going into the November 4 midterm elections, Democrats held a 55-45 (two Independents caucus with the Democrats) seat advantage in the Senate while Republicans held a 234-201 advantage in the House. With several races still to be decided, Republicans have taken control of the Senate and increased their majority in the House. As a result, Senate Republicans will now move into the chairmanship of all Senate committees and thus control the legislative agendas and priorities for those committees. House Republicans will continue to control the chairmanships of their committees, albeit in some cases with new chairmen due to retirements or term limits.

The 114th Congress will convene in January, but before then the House and Senate will meet for a “lame duck” session starting on November 12 to address funding for the federal government and additional priority issues. Currently, the federal government is being funded under a Continuing Resolution (CR) that expires on December 12. Congress will either extend that CR sometime into 2015 or pass a more ambitious comprehensive “Omnibus” Appropriations package. Additionally, the House will hold leadership elections and begin the process of committee assignments. In the Senate, that process will be slightly more complicated due to the December 6 Louisiana Senate runoff election (Sen. Mary Landrieu (D) vs. Rep. Bill Cassidy (R)).

Senate Elections

With two undecided elections (Alaska and Louisiana), Republicans currently have 52 seats, or a pickup of 7. Three incumbent Democratic Senators were defeated (Kay Hagan – NC, Mark Pryor – AR, and Mark Udall – CO) while no incumbent Republican was defeated.

House Elections

Few surprises came out of the midterm House elections. The majority of House incumbents who were in competitive races either held on by narrow margins or lost (or are too close to call). With several House races still undecided, Republicans will nonetheless increase their majority by no fewer than nine seats.

Incumbent House Defeats

Outlook for 114th Congress

With control of both houses of Congress in hand, Republicans are expected to chart a very bold course at the outset of the 114th Congress in January. Many of the newly elected Republican Senators and Congressmen ran on pledges to dismantle key components of the Obama administration’s policy victories, including the Affordable Care Act (ACA) and Dodd-Frank. The reality though is that Republicans – even with their Senate and House majorities – do not have a large enough majority to override likely Obama vetoes of those same policy victories.

But Republicans will have two other very important tools available to them to address key policy issues: appropriating money for the federal government and oversight of government programs. Republican appropriators can be expected to reduce or withhold funding for objectionable policies and programs and/or to attach conditional language that modifies action on those same policies and programs. How far they can push these appropriations “riders” without triggering a presidential veto remains to be seen.

Similar to their oversight responsibilities, House and now Senate Republicans can be expected to offer a steady stream of invitations to Obama administration officials to testify at congressional hearings on their respective policies and programs. Industries and companies closely tied to those policies and programs can expect to have the same opportunities to testify.

There are potential areas of agreement between the Obama administration and the Republican Congress: trade and infrastructure improvements have historically enjoyed high levels of bipartisan support. Tax reform, while contentious, could also be on the list. And while labor and environmental issues are probably beyond realistic hope, a comprehensive and balanced energy policy could achieve some bipartisan compromises.

HEALTH CARE ISSUES

The combination of voluntary retirements and election defeats will result in significant changes among the leadership of the various congressional committees exercising jurisdiction over healthcare issues. On the healthcare tax side, due to the retirement of Rep. Dave Camp (R-MI) the House Ways and Means Committee will have a new chairman – either Rep. Paul Ryan (R-WI) or Rep. Kevin Brady (R-TX) – while the Senate Finance Committee will be chaired by Sen. Orrin Hatch (R-UT). Both Committee chairmen will be under considerable pressure from their respective leaderships to pursue significant changes to – if not an outright repeal of – the ACA. This likely will set up an early confrontation with the President Obama, who will certainly veto any wholesale dismantling of the ACA.

In addition to the two tax-writing committees, several other congressional committees with varying degrees of authority over health care policy will also see changes. The biggest news affecting one of those committees - the House Energy and Commerce Committee (jurisdiction over HHS and CMS) – is the retirement of the committee’s top two Democrats. Rep. Henry Waxman (D-CA) and Rep. John Dingell (D-MI) have a combined 100 years of congressional experience and were major supporters – and defenders - of the ACA. Rep. Fred Upton (R-MI) will remain as chairman.

Similarly, the House Education and Workforce Committee (jurisdiction over the Department of Labor and employee benefits) will lose five of its top seven Democrats including Ranking member Rep. George Miller (D-CA), another strong supporter of the ACA. Rep. John Kline (R-MN) will continue as the Chairman (provided he obtains a waiver from the term limits rule). Finally, the Chairman of the House Appropriations Subcommittee overseeing the Departments of Labor and Health and Human Services (HHS), Rep. Jack Kingston (R-GA), is retiring. That subcommittee funds a significant portion of the implementation of the ACA.

On the Senate side, the retirement of Sen. Tom Harkin (D-IA) will open up the top Democratic position on the Senate Health, Education, Labor & Pensions (HELP) Committee, which likely will go to Sen. Patty Murray (D-WA). The new HELP Committee chairman will be Sen. Lamar Alexander (R-TN). Senator Harkin’s retirement also opens up the top Democratic position on the Appropriations Subcommittee on Labor and HHS.

EMPLOYEE BENEFITS ISSUES

There are four congressional committees with jurisdiction over employee benefits issues: Senate Finance, Senate Health, Education, Labor and Pensions (HELP), House Ways and Means, and House Education and Workforce. And of those four committees, the most dramatic leadership change in terms of political philosophy will be on the Senate HELP Committee, where newly reelected Sen. Lamar Alexander (R-TN) will take over the chairmanship from retiring Sen. Tom Harkin (D-IA). On the Senate Finance Committee, Sen. Orrin Hatch (R-UT) will take over from Sen. Ron Wyden (D-OR), who only recently became chairman when former Sen. Max Baucus left the Senate to become Ambassador to China. As previously mentioned, Rep. John Kline (R-MN) will continue as Chairman of the Education and Workforce Committee, but at the Ways and Means Committee there will be a competition between Rep. Paul Ryan (R-WI) and Rep. Kevin Brady (R-TX) to replace retiring Chairman David Camp (R-MI). The likely replacement of Rep. George Miller as the Ranking Democrat on the Education and Workforce Committee will be Rep. Bobby Scott (D-VA).

One of the most contentious issues left over from the 113th Congress is comprehensive tax reform and the treatment of employee benefits. The so-called “Camp” proposal for tax reform provided a blueprint for lowering individual and corporate rates but at the cost of potentially changing the tax treatment of employee benefits. That issue will remain as one of the more difficult problems to resolve on the road to enacting comprehensive tax reform.

LABOR ISSUES

The Senate HELP Committee has jurisdiction over all labor-management issues as well as oversight of the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC), and incoming Chairman Lamar Alexander will take a very different view toward both agencies than had former Chairman Tom Harkin. In fact, Senator Alexander, along with soon-to-be Senate Majority Leader Mitch McConnell (R-KY), introduced legislation (S. 2814) in October that would significantly curtail the authority of the NLRB to revise labor-management policy and attempt to “depoliticize” the agency’s activities. Not surprisingly, no action was taken on S. 2814 under Chairman Harkin but that will certainly change under Chairman Alexander.

On the House side, under the leadership of Chairman John Kline (R-MN), the House Education and Workforce Committee can be expected to continue its aggressive oversight of the Department of Labor, the NLRB and the EEOC. Over the past two years, the committee held numerous hearings on the activities of both the NLRB and the EEOC and approved legislation attempting to curtail the activities of both agencies. Those bills were passed by the Republican-controlled House but were never voted on by the Democratic-controlled Senate. Those same proposals will soon receive more favorable Senate consideration in the 114th Congress.

While the Obama administration will not support – and almost certainly veto – those proposals, Senate and House Republicans can utilize a second tactic to reign in those agencies: controlling the appropriations process. This would likely take the form of denying funding to the NLRB and the EEOC to carry out policies that the Republic-controlled Congress opposes.

ENERGY AND ENVIRONMENTAL ISSUES

There will be a dramatic change at the helm of the Senate committee with jurisdiction over environmental issues when Oklahoma Senator Jim Inhofe (R) takes over from California Senator Barbara Boxer (D) in January as chair of the Environment and Public Works Committee. The two lawmakers have very different views on environmental issues generally and specifically on the threat posed by climate change. A less dramatic change will occur at the Senate Energy Committee when Sen. Lisa Murkowski (R-AK) takes over from Sen. Mary Landrieu (D-LA), with both Senators representing oil and gas-producing states. Issues like the Keystone Pipeline, federal/state responsibilities over hydraulic fracturing, and oil and gas exports will move to the forefront of the Senate agenda.

In the House, the Energy and Commerce Committee will see one major change on the Democratic side due to the retirement of the Committee’s Ranking Democrat, Rep. Henry Waxman (D-CA). Rep. Anna Eshoo (D-CA) – backed by Minority Leader Nancy Pelosi – and Rep. Frank Pallone (D-NJ) – backed by Minority Whip Steny Hoyer (D-MD) are battling to replace Representative Waxman. As mentioned previously, Representative Fred Upton will remain Committee Chairman. Additionally, the House Natural Resources Committee (jurisdiction over public lands) will have a new chairman due to the retirement of Rep. Doc Hastings (R-WA). Over the last two years, the Republican-controlled House has considered and passed numerous bills to approve the Keystone Pipeline, encourage more oil and gas exploration (along with lifting the export ban), and limit EPA authority fossil fuel usage, but with no action in the Senate. Finally, the House has consistently supported the Yucca Mountain storage facility for nuclear waste material. That, along with the other energy initiatives, will likely receive more favorable treatment by the Senate in the 114th Congress.

BANKING, FINANCIAL SERVICES, AND TAX POLICY ISSUES

In the Senate’s version of committee chairman “musical chairs”, Alabama Senator Richard Shelby (R) will likely move back as the Chairman of the Banking Committee (he currently is the Ranking Republican on the Appropriations Committee but likely will bow to Sen. Thad Cochran (R-MS) to retake the chairmanship). The Ranking Democratic position is likely to fall to Sen. Sherrod Brown (D-OH) (Brown ranks fourth in Democratic seniority but those above him all have, or are likely to have, ranking positions on other Senate committees). On the House side, Rep. Jeb Hensarling (R-TX) will remain as Chairman and Rep. Maxine Waters (D-CA) as Ranking Democrat of the Financial Services Committee. Senate Banking and House Financial Services have legislative oversight over Dodd-Frank, housing, financial institutions, and Government Sponsored Enterprises (Fannie Mae and Freddie Mac). Their agendas will be full in the 114th Congress.

Sen. Orrin Hatch (R-UT) will be the incoming chairman of the Senate Finance Committee and Sen. Ron Wyden (D-OR) will be the Ranking Democrat (switching their current positions). Rep. Sandy Levin (D-MI) will remain the Ranking Democrat on the Ways and Means Committee. Senator Hatch and both candidates to replace Rep. Dave Camp (R-MI) as chairman of the House Ways and Means Committee (Rep. Paul Ryan (R-WI) and Rep. Kevin Brady (R-TX)) have pledged to act on comprehensive tax reform. Both committees will also be tasked with dealing with key portions of the Affordable Care Act, infrastructure financing, and retirement security issues. Additionally, both committees will need to resolve the Tax Extenders legislation either in the upcoming lame-duck session or early on in the 114th Congress. Finally, both committees have jurisdiction over trade issues, one area where the Republican Congress and the Obama administration may achieve common ground.

JUDICIARY AND OVERSIGHT ISSUES

The Senate Judiciary Committee will see a switch of positions with Sen. Chuck Grassley (R-IA) taking over as Chairman and Sen. Patrick Leahy (D-VT) moving to the Ranking Democratic position. No other committee members lost. On the House side, Rep. Bob Goodlatte (R-VA) will remain as Chairman and Rep. John Conyers (D-MI) will return as the Ranking Democrat of the House Judiciary Committee. Of note, Rep. Howard Coble (R-NC), chair of the Intellectual Property Subcommittee, retired, which will result in a new subcommittee chair. More significant change will occur at the House Oversight and Government Reform Committee where the current chair, Rep. Darrell Issa (R-CA), is term-limited and there is a potential four way contest to succeed him. During his tenure as chairman, Representative Issa aggressively pursued oversight review of the Obama administration and its policies.

TRANSPORTATION AND INFRASTRUCTURE

The Chairman of the House Transportation and Infrastructure Committee, Rep. Bill Shuster (R-PA) easily won reelection but the top Democrat, 38-year transportation veteran Rep. Nick Joe Rahall (D-WV) was defeated. Consequently, the Ranking Democratic position will likely go to Rep. Peter DeFazio (D-OR). Additionally, the Chairman of the Highways and Transit Subcommittee, Rep. Tom Petri (R-WI) did not seek reelection, so that coveted chairmanship will likely go to Rep. Sam Graves (R-MO). In the Senate where transportation and infrastructure policy is shared among several committees, the primary highway committee – Environment and Public Works – will have a new chairman, Sen. Jim Inhofe (R-OK), with Sen. Barbara Boxer (D-CA) becoming the Ranking Democrat. While Senators Inhofe and Boxer have very different views on environmental issues, they are very close in their support for infrastructure expansion. In the Senate, transportation safety issues are within the jurisdiction of the Senate Commerce Committee where South Dakota Senator John Thune (R) will become chairman and Sen. Bill Nelson (D-FL) will likely move up as the Ranking Democrat. The committee has oversight responsibility for the National Highway Traffic Safety Administration (NHTSA) and criticism of the agency’s handling of automobile recalls garnered bipartisan cooperation that should continue into the 114th Congress.

The transportation-related committees will have a full agenda in the 114th Congress with the following: highway and transit reauthorization, FAA reauthorization, Amtrak reauthorization, railroad safety, and water resources reauthorization.