Congress returns today after a six-week election hiatus with a ton of economic policy questions looming.
How the likely Republican trifecta next year will transform the worlds of tax and financial services policy is coming into focus.
We’re still not convinced the lame duck will be productive for tax, trade and finserv efforts that have been in the mix, as we covered in the Sunday Vault. But there’s at least going to be a whole lot going on that’ll set up dynamics in the next Congress. Here’s what we’re watching.
Tax world: As we first reported back in the summer, Republicans have been optimistically preparing for a big reconciliation push for months. The first order of business now will be figuring out what they’ve got to work with.
Reconciliation rules — which will allow the GOP to dodge a Senate filibuster — require lawmakers to agree on instructions for various committees they want to be involved in crafting the legislation, dictating their allowed budget impacts. The House GOP in particular is one to watch for how much of a deficit hit members are willing to swallow and add to the Trump tax cuts that expire next year.
We’re expecting a whole lot of reconciliation and tax meetings during the lame duck as the GOP readies to try to deliver their tax bill in the early months of the new Trump administration.
Crypto victory lap: The digital asset sector is riding high on the 2024 election. The industry has seen near-universal success with crypto-backed candidates this month, and a second Trump administration ensures the industry will see significant regulatory support over the next four years.
In the lame duck, though, it’s hard for us to imagine a world where this Congress could advance major crypto legislation with President Joe Biden leaving office and President-elect Donald Trump on his way in. Biden has been broadly hostile to crypto, and Trump has made his friendliness clear. It’s not obvious to us why the industry would push for a win before Inauguration Day.
But we could see some groundwork get laid for action on crypto when Republicans have control.
Gavel(s) watch: The race to be the next top Republican on the House Financial Services Committee will kick off in earnest this week. Reps. French Hill (R-Ark.), Andy Barr (R-Ky.), Bill Huizenga (R-Mich.) and Frank Lucas (R-Okla.) have all declared their interest in the job.
The Senate will also be worth watching. The Senate’s Banking Committee is set to be chaired by Sen. Tim Scott (R-S.C.). The South Carolina Republican is interested in capital markets and housing policy, but we believe much of the committee’s work will be dictated by the Trump administration’s early priorities.
With Sen. Sherrod Brown (D-Ohio) defeated, Democratic leadership of the Senate Banking Committee will almost certainly fall to Sen. Elizabeth Warren (D-Mass.). Sens. Jack Reed (D-R.I.) and Mark Warner (D-Va.) are more senior than Warren but aren’t expected to challenge her for the job.
