The race for president remains close and uncertain. Seven battleground states will determine its outcome. The party that wins the White House will likely take control of the House of Representatives. The Republicans are clear favorites to retake the Senate where the GOP needs a net gain of two seats to win the majority. The stakes are high for American business leaders: The Senate has the power to confirm or reject presidential nominations for critical positions, approve long-term tax policy, and help regulate international trade.
No first-term president since Richard Nixon in 1969 assumed office without their party controlling the Senate. A Republican Senate overseeing presidential nominations would severely limit the latitude of a Harris presidency, directly impacting and moderating the administration’s personnel and policy choices. Likewise, a Republican Senate would be vital to the expeditious confirmation of a Trump Cabinet and execution of a Trump economic agenda.
A Senate Republican majority would help ensure that cabinet members, senior administration officials, and federal judges are committed to principles of free enterprise, federalism, and limited government. For business leaders, a Senate Republican majority would have a major impact on economic regulatory agencies. Prospective commissioners at the Securities and Exchange Commission would be questioned for their views on the role of government in mandating environmental and social actions in corporate governance. Nominees for the Commodities Futures Trading Commission would be questioned about their positions on the regulation digital assets as a commodity. Similarly, the Senate would closely examine the competition and antitrust views of Federal Trade Commission (FTC) nominees. The FTC under current Democratic chair Lina Khan has unnerved the business community with what many perceive as overzealous regulatory efforts.
The Senate will play a key role in tax policy next year. Whoever is president will have to deal with extension of the Tax Cuts and Jobs Act of 2017, a crown jewel of President Trump’s first term that expires at the end of 2025. The ensuing full resumption of the deduction for state and local tax payments (SALT) at the end of next year will complicate negotiations between the White House and Capitol Hill. Trump is calling for the removal of the $10,000 SALT-cap.
The Senate passed the TCJA via “reconciliation,” a special procedure that enables a bill to clear the Senate with a simple majority. A Republican Senate would offset the progressive instincts of a Democratic White House by standing firm in defending the current set of individual and corporate tax rates. If the Republicans sweep the White House and both houses of Congress, expect a push using reconciliation to cut corporate tax rates and simplify the tax code while fulfilling Trump campaign pledges to make tips, overtime pay, and Social Security tax-free. These are all tasks that will inevitably create friction between Congress and the White House.
A Republican Senate would be an important voice in international trade. Business leaders should expect Senate Republicans to exercise their independence from both Harris and Trump on certain trade matters. The Biden administration has retained and built on the tariffs and technology restrictions that the Trump administration placed on trade with China. Former President Trump also has proposed further measures to encourage relocation to the U.S. of manufacturing and production. Tariff policy, the role of China in U.S. supply chains, and the future of globalization will receive continued scrutiny from Congress regardless of who prevails on Election Day.
It is not too soon for business leaders to focus on the day after the election. While the presidential race remains up-for-grabs, the contours of what comes next are already becoming clear. A Republican Senate appears likely. It would serve as a check on a Harris presidency or an ally of a President Trump. Presidential nominations, taxes, and trade will be among the top Senate issues for the busy, upcoming session of Congress.
Joseph Lai served as a special assistant to President Trump for legislative affairs from 2017 to 2019. He is a principal at the BGR Group, a government affairs and communications firm based in Washington, D.C., with offices in Austin, Atlanta and London.
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