An Uncivil War

December 1, 2020

While the rubble and the dust generated by the last election have far from settled, there are some important implications that already can be discerned. First, the upcoming runoff elections for the two undecided Senate seats in Georgia will and will not have a profound impact on next year’s political environment. If the Democrats defy conventional wisdom and win both seats, they will hit the trifecta — controlling every branch of government for the first time since 2009. This will vault Senators Cantwell (Senate Commerce), Wyden (Senate Finance), and Murray (the HELP committee) into leadership positions and provide substantially more leverage to President Biden, Senator Schumer, and Speaker Nancy Pelosi. This could have significant impacts on privacy and ad tax issues, two areas of critical concern to advertisers. 

A Democrat-controlled Congress is likely to support a more restrictive approach to privacy than a Congress where Majority Leader Mitch McConnell and the Republicans run the Senate. In particular, the Republicans so far generally have demonstrated opposition to imposing private rights of action and have favored federal preemption in regard to national privacy proposals, while Democrat privacy leaders have tended in the opposite direction. With the expected explosive growth of highly inconsistent and consequently marketplace-disruptive state privacy proposals, the pressure for national privacy laws is certain to escalate substantially. Therefore, privacy concerns are going to increase.

President-elect Biden also has strongly signaled that he wants to roll back the 2018 Tax Reform Act’s substantial cuts in corporate tax rates. A Democrat-led Congress is likely to move this type of proposal forward, while a Republican-controlled Senate would likely block such action if taken by the House of Representatives. Major tax reform legislation could resurface efforts to limit advertising tax deductions that we were able to bury in 2018.

Whether the Democrats prevail or fall short in the Georgia runoffs, however, this is certain to be one of the most contentious and difficult political environments for both parties’ political leaders. Clearly, this was one of the most acrimonious elections. The President and many of his party’s supporters continue to claim the election was won by theft and fraud, but their challenges are being consistently rejected by the courts. In addition, the unprecedented combination of the worst health threat in U.S. history since the flu pandemic of 1918 coupled with the worst economic downturn since the Great Depression confronts the Nation with extraordinarily complex political tests for policy development and consensus building.

A 50-50 Senate party split with the Vice President breaking ties has been extraordinarily rare in the U.S.; Politico says this has happened only three times in our nation’s history (1881, 1953 and 2001). Under these circumstances, the defection of a single Senator can change a political outcome, providing each Senator enormous political leverage.

However, even when the Senate has been closely but not evenly divided, there have been 268 instances of tie votes that needed to be broken by 36 different Vice Presidents. If the Senate Republicans continue to hold a narrow majority, this will mean that Senators like Romney, Collins, and Murkowski, who have demonstrated a willingness to cross party lines, could play a pivotal role on key votes. This has already been demonstrated when the vote to nominate Judy Shelton to the Federal Reserve Board was blocked, as Republican Senators Romney, Collins, and Lamar Alexander opposed her and Senators Rick Scott and Chuck Grassley were absent because they were quarantined due to COVID-19 exposure.

Add to all this the fact that, because several retiring Senators leave vacancies at key committees (i.e., HELP [Health, Education, Labor and Pensions], Budget and Agriculture), starting on January 3 the current Republican majority cannot transact any business in those committees until the Georgia election results are clear and majority status is determined. This leaves in abeyance any new Cabinet nominations that would be considered by those committees, or other significant business they must conduct.

The House majority also has substantially narrowed. The Democrats as of now hold 222 seats, the Republicans 209, with four seats still in contention. This small margin has only been equaled or surpassed four times since 1940. Further complicating this picture is the division on the House Democrat side between the moderate and progressive wings of the party.

Clearly all the key political leaders at the Federal level will be dancing on a razor’s edge attempting to maintain party cohesion and political momentum at a time when society seems more divided than at any time since the Civil War. We will soon know whether this leads to gridlock, or whether legislators find a modicum of bipartisanship to meet the serious health and economic challenges we face.

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