By NGA Government Relations Team
If you woke up this morning shocked that a Republican red wave didn’t materialize, you are not alone. A bad night for Democrats seemed inevitable due to record inflation, a looming recession, a deeply unpopular President, strong polling for Republicans, and a historic record of midterm election defeats for the party in power. To our surprise, Democrats appear more likely to hold the Senate and Republicans are likely to take the House with a razor thin majority.
So how did this happen? The answer is we don’t really know yet, but we’ll certainly learn more in the coming days about what was on voters’ minds when they went to the ballot box yesterday. Some current theories circulating this morning include the following:
- Trump – Trump weighed in heavily in Republican primaries and hand-picked candidates who agreed with his view that the 2020 election was rigged. Could Trump-backed candidates be a bridge too far for independent voters who tend to sway elections? Possibly. Republican Senate Leader Mitch McConnell warned this would be a problem months ago.
- Abortion Rights – Many political pundits believed that Democratic momentum created after the Dobbs decision overturning Roe v. Wade flared out and yielded to economic concerns and increasing rates of crime. The Dobbs momentum may have held strong and propelled turnout of Democratic voters.
- Biden Legislative Victories – A spate of Democratic legislative victories before election season demonstrated to base voters that it’s worth it to show up on election day. Climate change policy, lower drug costs, student loan forgiveness are all animating issues for Democratic voters.
- Threats to Democracy – Polling has shown increasing angst among voters about threats to Democracy, including restrictive election policies, election denialism, and the January 6th Capitol insurrection. Apparent threats to democratic institutions could have motivated some voters to get to the polls to make sure their vote was counted.
Now that we know Democrats will keep more power than expected, what does it portend for the new Congress and what can grocers expect? Well, we have mixed news, and we’ll dissect each of NGA’s top issues.
- Swipe Fees – If a red wave did materialize, efforts to rein in credit card swipe fees through legislation like the Credit Card Competition Act would be a heavy lift. Most Republicans are friends with merchants and banks, so Republican leadership would try to avoid a vote that splits two large business constituencies. Democrats controlling the Senate floor schedule would mean a greater likelihood of a vote on credit card legislation and a stronger negotiating posture for merchant advocates in Congress.
- Antitrust Reforms – With a thin Republican majority in the House, factions within the Republican caucus will hold outsized power over their party’s governing agenda. NGA has cultivated a strong cross-section of Republicans who support our efforts to revive and reform the Robinson-Patman Act. These figures could extract concessions from Republican leadership, especially with issues that share strong support across the aisle.
- Labor and Employment – Organized labor has few legislative prospects no matter who is in charge, but that is why we expect a strong effort by the Biden Administration to use its executive branch power to accomplish Big Labor priorities through regulations what it could not do through Congress. Union election streamlining, updating the overtime threshold, increased employer liability for labor infractions, and a stiffer posture from OSHA (Occupational Safety and Health Administration) are all expected no matter what happens.
- Taxes – The more Democrats in power, the more risk to the possibility of increasing taxes on independent business owners. Republicans will have some leverage to rein in government spending, which they blame for inflation. But Democrats could have the ability to extract concessions from Republicans on revenue measures, especially as we expect a raft of business-friendly tax policies, like the pass-through deduction and 100 percent bonus depreciation, set to expire over the coming years. LIFO accounting, cap gains rates, individual income tax rates, estate tax threshold, are all at increased risk with the more leverage that Democrats wield over fiscal policy.
- SNAP and Nutrition Programs – The 2018 Farm Bill, which authorizes nearly all USDA spending including SNAP, expires next year. Republicans are on a mission to cut government spending, including SNAP benefits, but their ability to do so becomes more constrained if Democrats hold on to power. Expect a Farm Bill process where Democrats have a strong upper-hand to extend gains in SNAP spending and reinvest in programs like nutrition incentives. Likewise, Democrats in power also increases the likelihood that we could see important reforms to WIC.
- Regulations and the Federal Judiciary – If Democrats hold the Senate as they seem increasingly likely to do, Biden will have an easier time nominating progressive political appointees and federal judges who are more hostile to the business community. Republicans would force Biden to appoint more moderate figures if they held Senate power or stop the nominations process altogether like they did in 2020.
We will have more clarity in the coming weeks on who will lead each Chamber of Congress as votes are counted over the next few days. Control over the Senate could come down to a runoff in Georgia if Democrats lose Nevada (less likely) or Arizona (more likely). The Georgia runoff will be held on December 6th.
NGA will keep you updated on the state of the races and their implications for independent grocers.