2018 Midterm Election Analysis and Look Ahead

Yesterday Republicans expanded their majority in the Senate by two seats and Democrats flipped the House by a slim margin. President Donald Trump dove head first into this year’s midterm election, telling voters he was on the ticket, campaigning prolifically and aggressively, and repeatedly predicting a “red wave.” But with an approval rating of 44 percent, the historical connection between presidential approval ratings and a party’s midterm performance in the House proved itself out. The President’s party lost at least 27 seats in the House with Democrats up in eight still undecided races. Twenty-two House races are too close to call according to Bloomberg and the New York Times. Close races, ballots cast by mail that take longer to count, and varying state electoral procedures mean we may not know who will win in these races for several days or even weeks. In 2016, it took California a month to count its primary votes; Darrell Issa’s win that year was not declared until the Monday after Thanksgiving. That state’s extensive use of mail-in ballots could slow the count again. Democratic Senator Bill Nelson is calling for a recount in his Florida re-election race against Governor Rick Scott, automatically triggered by results within 0.5 percent. We outline below key takeaways, the results, what it means for House and Senate leadership elections, the lame duck session, changes coming to the Trump Administration, and the first 100 days of the 116th Congress. We also include an early look at the 2020 presidential campaign, key dates in the coming months, and a cheat sheet of who takes what committee leadership in the House and Senate.

KEY TAKEAWAYS Check on Trump. This election represents a course correction and counterpoint to the wave of voter disaffection with our government that helped sweep President Trump into the White House. President Trump’s well-documented gender gap with women in 2016, perhaps overshadowed by his overperformance with men, was exposed and on full display in congressional races where women tilted Democratic by nearly 20 percent. The long-term consequences of the widening gender gap between the parties is unclear but should concern Republicans. In addition, the election saw purple states become more blue on the coasts (House races in NY, NJ, PA, possibly CA) and solid red in middle America (ND, TN, IN). Year of the Woman, Part Two. Midterm voters sent a record number of women to Congress yesterday. There will be at least 100 women in the 116th Congress, easily surpassing the record 85 female Members of the 114th Congress. This follows the primary season’s record-setting 256 victorious female candidates for Congress. And the numbers do not tell the whole story: Massachusetts will send its first woman of color to Washington, Michigan and Minnesota will send the first Muslim women to Congress, and Kansas and New Mexico will send the first Native American women to Congress. Pennsylvania’s current all-male congressional delegation will include four women in the new Congress, as Democratic women there flipped three Republican-held seats and won an open seat.

Different Voices at the Polls. Early voting numbers indicate minority turnout went up in 2018, and that it was higher than usual for a midterm election, although the race-by-race impact of these demographic shifts will not be fully clear until all races are called. Historically, Hispanic voters turn out in lower numbers (27 percent of eligible Hispanics cast a ballot in 2014, as compared to 41 percent of black voters and 46 percent of white voters). But when the dust settles, minorities are likely to make up more than half of the House Democratic Caucus and could lead close to half of all House committees. Trump Solidifies Rural Appeal While Democrats Gain in (Sub)urban Districts. As predicted, House Democrats’ path to victory ran through suburban and urban districts around the country. Democrats picked up seats in Staten Island, Denver, the northern Virginia suburbs of Washington, Houston, Oklahoma City, and elsewhere. At the same time, voters in deep red, often rural, areas of Missouri, Indiana, Florida, and North Dakota responded to the President’s message and boosted the Republican margin in the Senate.

Kavanaugh Effect. The fallout from Justice Brett Kavanaugh’s bruising confirmation battle was real, particularly in the Senate. It appears to have played a role in the defeat of Heidi Heitkamp in North Dakota, Joe Donnelly in Indiana, Claire McCaskill in Missouri, and possibly Bill Nelson in Florida. In contrast, the sole Senate Democrat who voted for Kavanaugh – Joe Manchin of West Virginia – won his race. The President and Senate Republicans’ resumption of the drumbeat in the campaign’s final days that Kavanaugh was the victim of a coordinated smear campaign may have motivated Republicans to turn out and expand their Senate majority. Affordable Care Act on the Ballot. After four election cycles of Republicans running against the Affordable Care Act and Democrats playing defense, the tables were turned in 2018. Democrats – even those in red states – made the Affordable Care Act and its protections for individuals with pre-existing conditions a central campaign issue. Republicans struggled to respond. Despite voting to repeal the Affordable Care Act dozens of times and continuing to support legal challenges to the law, many Republican candidates touted their support for maintaining protections for pre-existing conditions. Even still, four incumbent Republicans on the Ways and Means Committee with ACA oversight lost. With Democrats taking the House, the long-term future of the Affordable Care Act is more secure. However, the Administration will continue to use its regulatory authority to roll back key provisions of the law. Rise of the Moderate. Despite media attention on the more liberal incoming members of the Democratic Caucus, victories by moderate Democratic candidates like Sharice Davids in Kansas, Jason Crow in Colorado, Max Rose on Staten Island, Chrissy Houlahan in Pennsylvania, Dean Phillips in Minnesota, and others indicate the New Democrat and Blue Dog Coalitions will have a louder voice in the new House Democratic Caucus than they did in the 115th Congress. House Democratic leadership will seek to thread the needle between these new Members and those in the Caucus eager for a more aggressive approach with the Administration.

$5.2 Billion. More and more money is flowing into federal congressional races. Pre-election day estimates pegged total midterm expenditures to top $5.2 billion, a total that would shatter

2016’s previous congressional record of $4.1 billion. This cycle saw a roughly $55 million special election House race (GA-06) and a Senate challenger raise $38 million in a quarter and lose (Beto O’Rourke, 3Q 2018). Nearly $3 billion was spent on TV and radio ads in the 2018 midterms, almost doubling the $1.5 billion spent in 2014.

RESULTS

House of Representatives

Heading into yesterday’s election, Republicans held a 235-to-193 seat advantage over Democrats (with seven vacant seats) but found themselves defending a wide battleground including many races where long-time Republican incumbents opted for retirement rather than running for re-election. Based on numbers by Bloomberg and the New York Times, Democrats seized on the broad map and leveraged the historical midterm trends to net 27 seats. While roughly 22 races remain too close to call as of 8:00 AM ET, Democrats’ majority sits at 220-to-193. While there were several reports of long lines at polling centers, bad weather, power outages, and technical difficulties, this did not stop increased voter turnout, and there are currently no reports of election interference. Several states will see significant changes to their delegations. Seven new Members will join Congress from Pennsylvania, including four women. Texas remains a Republican stronghold, but nine new Members will replace longtime incumbents.

Key States

• California: In the state with the greatest number of competitive races, seven remain too close to call to safely make predictions. It could be days or weeks until the races are decided as vote by mail and absentee ballots continue to be counted.

• Florida: Democrats picked up two additional seats in the state, capitalizing on open seats

and the national environment. After FL-27 backed Hillary Clinton by 19 points in 2016, the seat held by retiring Republican Representative Ileana Ros-Lehtinen went to Democratic former Health and Human Services Secretary and University of Miami president Donna Shalala over Republican former Univision journalist Maria Elvira Salazar. In FL-26, Republican Representative Carlos Curbelo narrowly lost his seat to Democratic challenger Debbie Mucarsel-Powell. Republican State Representative Ross Spano was able to keep the open FL-15 seat over Democratic attorney Kristen Carlson.

• Illinois: Democrats flipped two seats in the state. The high-profile target for Democrats

in IL-06, Republican Representative Peter Roskam, fell to Democratic energy executive Sean Casten. Democratic candidate Lauren Underwood narrowly won over incumbent Republican Representative Randy Hultgren in IL-14. Republican Representatives Mike Bost and Rodney Davis were able to fend off close challenges by Democratic candidates Brendan Kelly and Betsy Londrigan in IL-12 and IL-13, respectively.

• Iowa: Democrats will hold a three-to-one advantage in the delegation in January after flipping two seats. In IA-01, incumbent Republican Representative Rod Blum lost his seat to Democratic State Representative Abby Finkenauer. Incumbent Republican Representative David Young also narrowly lost his seat to Democratic first-time candidate Cindy Axne in IA-03. Even after waning support from national Republicans and corporate donors, Republican Representative Steve King was still able to secure a win over Democratic challenger J.D. Scholten in IA-04.

• Michigan: In MI-08, incumbent Republican Representative Mike Biship conceded to Democrat Elissa Slotkin earlier this morning even before the vote count was finalized. Democrat Haley Stevens also flipped the open MI-11, defeating Republican Lena Epstein. Republican Representatives Fred Upton and Tim Walberg held on in MI-06 and MI-07, respectively, after facing difficult re-election campaigns.

• Minnesota: The two parties will likely swap seats in the delegation with Republicans

picking up open seats in MN-08 and possibly MN-01, while Democrats took down incumbents in MN-02 and MN-03. Republican Pete Stauber won the open Democratic-held MN-08 seat over Democratic candidate Joe Randinovich. Democrat Angie Craig defeated Republican Representative Jason Lewis in MN-02, and businessman Dean Phillips prevailed over Republican Representative Erik Paulsen in the MN-03 seat. The race between Republican Jim Hagedorn and Democrat Dan Feehan in MN-01 is still too close to call – they are separated by less than 1500 votes.

• New Jersey: Jeff Van Drew and Mikie Sherrill were able to flip two open seats for

Democrats, NJ-02 and NJ-11, defeating Republican candidates Seth Grossman and Jay Webber, respectively. Democrats were also able to narrowly win over incumbent Republican Representative Leonard Lance in the well-educated, historically Republican suburban district of NJ-07 with Democratic former State Department official Tom Malinowski flipping the seat. In NJ-03, the race between Republican Representative Tom MacArthur and Democratic former national security advisor Andy Kim remains too close to call.

• New York: Democrats flipped two seats in the state. In NY-11, Democratic candidate Max Rose ousted incumbent Republican Representative Dan Donovan in a conservative district. Democratic challenger Antonio Delgado flipped NY-19 over incumbent Republican Representative John Faso. In NY-22, Democrat Anthony Brindisi narrowly leads incumbent Republican Representative Claudia Tenney, but after mail-in ballots are counted a recount could be needed. In NY-24, Republican Representative John Katko was able to hold on to his seat over Democratic challenger Dana Balter. Even after being indicted in August, Republican Representative Chris Collins narrowly leads in NY-27 over Democrat Nate McMurray. McMurray is asking for a recount after originally conceding the race.

• Ohio: After seeing his odds improve in the final days leading up to Election Day, incumbent Republican Representative Steve Chabot won another term over Democratic challenger Aftab Pureval in OH-01. In OH-12, Republican Representative Troy Balderson won a full term after winning a special election in August over Democratic candidate and strong fundraiser Danny O’Connor.

• Pennsylvania: After redistricting earlier this year, Democrats flipped four seats, including

the vacant PA-05 and PA-07 seats, open PA-06 seat, and Republican Representative Keith Rothfus’ PA-17 seat. Incumbent Republican Representatives Brian Fitzpatrick and Scott Perry narrowly won re-election in PA-01 and PA-10. Republicans were able to flip the Democratic-held PA-14 seat with Republican candidate Guy Reschenthaler.

• Texas: In the neck-and-neck race between eight-term incumbent Republican

Representative John Culberson and Democratic candidate Lizzie Fletcher in TX-07, Fletcher defeated Culberson to flip the seat. In TX-32, incumbent Republican Representative Pete Sessions lost his seat to Democratic lawyer and former NFL linebacker Colin Allred. The race between incumbent Republican Representative Will Hurd and Democrat Gina Ortiz Jones in TX-23 remains too close to call.

• Virginia: Democrats picked up an additional three seats in the state. Republican

Representative Barbara Comstock could not fight off another tough re-election. Comstock lost her seat to Democratic former State Senator Jennifer Wexton in VA-10. After a petition scandal earlier this year, Republican Representative Scott

Taylor was not able to hold on to his seat losing to Democrat Elaine Luria in VA-02. In VA-07, Democrat Abigail Spanberger succeeded in taking the seat from Republican Representative Dave Brat.

• Washington: In the race for retiring Republican Representative Dave Reichert’s seat

in WA-08, the vote difference between Democratic candidate Kim Schrier and Republican Dino Rossi remains too close to call. In WA-03, the race between Republican Representative Jaime Herrera Beutler and Democrat Carolyn Long is also too close to call. Incumbent Republican Representative Cathy McMorris Rodgers faced a tough re-election race in WA-05 but secured her position for another term over Democratic challenger Lisa Brown.

Senate

Democrats faced a challenging map this cycle, defending 24 seats to Republicans’ nine. In addition, 10 Democratic incumbents faced re-election in states that overwhelming voted for Trump in 2016. For the first time in history, Senators in the opposing party lost an election in a cycle immediately following a presidential election with Republicans flipping four seats. However, Democrats picked up at least one seat in Nevada and may limit their losses as too-close-to-call contests in Arizona and Montana remain outstanding. Key Changes

• Republicans will pick up seats in Indiana, Missouri, and North Dakota with Mike Braun, Josh Hawley, and Kevin Cramer winning those states respectively.

• Republican Senator Dean Heller lost a close re-election bid to Democrat Jacky Rosen. Key Holds

• Senator Joe Manchin survived a difficult re-election bid in West Virginia where national Republicans poured millions into the race.

• In Texas, Republican Senator Ted Cruz survived a close re-election campaign against popular Democrat Beto O’Rourke.

• Republicans held on to retiring Republican Senator Bob Corker’s seat in Tennessee with Representative Marsha Blackburn defeating popular former Governor Phil Bredesen.

Too Close to Call

• Senator Jon Tester trails Republican Matt Rosendale in Montana in a race that remains too close to call.

• Democratic Senator Bill Nelson is calling for a recount in his Florida re-election race against Governor Rick Scott, automatically triggered by results within 0.5 percent.

• The race to replace retiring Republican Senator Jeff Flake remains too close to call in Arizona between Republican Martha McSally and Democrat Kyrsten Sinema.

• Mississippi’s special election will head to a runoff in three weeks with incumbent Republican Senator Cindy Hyde-Smith and Democrat Mike Espy earning the top two spots. Conservative Chris McDaniel, who forced former Senator Thad Cochran into a runoff in 2014, failed to advance after most Republicans backed Hyde-Smith.

Looking Ahead to the 2020 Elections. Republicans must immediately pivot to the 2020 cycle where they are defending 21 seats to Democrats’ 12 as well as the special election in Arizona to fill the remainder of the late Senator John McCain’s (R-AZ) term. Incumbents such as Susan Collins (ME), Cory Gardner (CO), and Thom Tillis (NC) must contend with voters in their purple states. In addition, the rapidly shifting dynamics could also see Joni Ernst (IA), David Perdue (GA), and Pat Roberts (KS) face more challenging re-election campaigns. Meanwhile, Democrats must defend Doug Jones (AL) and could see Cory Booker (NJ) and others opt to run for president rather than re-election, creating open seats.

Governors

Thirty-six states held gubernatorial elections with Republicans defending 26 seats and Democrats defending 10. Democrats will pick up eight states in Connecticut, Illinois, Kansas, Maine, Michigan, Nevada, New Mexico, and Wisconsin, while protecting their open seats in Colorado and Minnesota. Representative Jared Polis’ win in Colorado makes him the first openly gay governor to serve, and nine women will now lead states across the country.

The Democratic winners will have significant input when state legislatures redraw boundaries for congressional districts after the 2020 Census. Governors can veto new congressional maps, which is advantageous for Democratic governors in red states to force a bipartisan compromise or refer the matter to the courts. Additionally, Democrats flipped seven state legislative chambers and 333 seats yesterday, adding six more states to the 13 where Democrats are in complete control of state government. Key Changes

• Democrats flipped crucial states for the 2020 elections in Michigan, Nevada, and Wisconsin. Democrats finally succeeded in defeating Republican Governor Scott Walker in Wisconsin.

• Democrats retake control in Illinois after Republican Bruce Rauner served one term in office, and Michelle Lujan Grisham will take over for term-limited Republican Governor Suzanne Martinez in New Mexico.

• Democrat Laura Kelly also won in deep-red Kansas, narrowly defeating controversial Secretary of State Kris Kobach.

• Democrat Janet Mills also defeated Republican Shawn Moody in Maine and will succeed term-limited Republican Governor Paul LePage.

Key Holds

• Republican Mike DeWine will succeed term-limited Republican Governor John Kasich in Ohio, holding onto a key state for President Trump’s re-election bid in 2020.

• Republican governors in Maryland, Massachusetts, New Hampshire, and Vermont also easily won re-election despite the national environment, potentially providing a playbook for moderate Republicans to emulate.

• Republicans also hold onto the gubernatorial mansion in Iowa with Republican incumbent Governor Kim Reynolds winning her first full term, and Florida Republicans maintain the governor’s seat there with former Representative Ron DeSantis’ narrow victory over Tallahassee Mayor Andrew Gillum. Representative Kristi Noem also defeated a surprisingly strong challenge from Democrat Billie Sutton in South Dakota.

• Democrats hold onto open seats in Colorado and Minnesota with Representatives Jared Polis and Tim Walz respectively winning their bids for higher office.

Looking Ahead to the 2019 Elections. Three states will hold gubernatorial contests in 2019: Kentucky, Louisiana, and Mississippi. In Louisiana, first-term Democratic Governor John Bel Edwards will be a top Republican target with Senator John Kennedy reportedly considering a bid against him. Republicans must defend an open seat in Mississippi where term-limited Governor Phil Bryant cannot run for re-election. First-term Republican Governor Matt Bevin in Kentucky has already drawn a challenge from Democratic Attorney General Andy Beshear.

State Attorneys General There is increased attention on states’ attorneys general races after Republicans effectively used the positions to bring lawsuits against the Obama Administration following the 2010 wave election. Democrats and Republicans each won fourteen races, and four remain too close to call in Connecticut, Michigan, Nevada, and Wisconsin. Key Changes

• Democrats flipped open seats in Colorado and Nevada. Key Holds

• Republican David Yost will replace outgoing Republican Attorney General Mike DeWine in Ohio. Republican Ashley Moody will replace outgoing Republican Attorney General Pam Bondi in Florida.

• Democrat Keith Ellison narrowly won election in Minnesota after facing allegations of domestic abuse.

• Xavier Becerra and Letitia James will serve their first full terms in California and New York respectively and expect to be at the forefront of Democratic opposition to Trump Administration proposals. Becerra was appointed to replace former California Attorney General Kamala Harris while Letitia James won the competitive New York race, replacing Barbara Underwood, who declined to seek a full term in office.

LEADERSHIP

House of Representatives With a shakeup in the House of Representatives, all eyes are focused on leadership elections. Holding a slim margin, the Democratic Caucus is scheduled to vote on November 28 to decide whom to select for Speaker. Conventional wisdom says the race for Speaker is Nancy Pelosi’s to lose, but there are at least at least 10 Members-elect who declared while campaigning they will not vote for her. This is in addition to a handful of incumbent Members already strongly advocating for changes in leadership. The vote for Speaker is a voice vote and recorded by name. The winner is determined by who receives the majority vote of those present and voting by name. A “present” vote does not count in that total, meaning a candidate for Speaker does not necessarily have to get 218 votes to win. As of today, there is no one challenging Representative Steny Hoyer (D-MD) or Representative Jim Clyburn (D-SC) for Majority Leader and Majority Whip respectively, but it is too early to tell if that holds. Despite what happens at the top, some of the most interesting races are down-ballot where well-liked, younger, and highly-ambitious Members are pitted against each other. David Cicilline and Cheri Bustos are running for Assistant Leader, and Pete Aguilar and Katherine Clark are running for Caucus Vice Chair. We expect more names to be thrown into the hat for leadership elections on the Democratic side as the dust from yesterday settles. Republican leadership elections are scheduled for Wednesday, November 14 (but there are rumors it could slip to after December 7). All eyes are on Representative Kevin McCarthy (R-CA) and whether he can secure enough support to be elected Minority Leader in the wake of Speaker Paul Ryan’s retirement and the loss of the majority. While McCarthy failed to win the 218 votes necessary to ascend to Speaker in 2015, he should have an easier time winning a majority of the Conference despite the challenge from Representative Jim Jordan (R-OH) on behalf of the Freedom Caucus, who may be willing to make a deal for votes in exchange for a newly-created leadership slot or being named ranking member on the Judiciary or Oversight Committee. Representative Steve Scalise (R-LA) is expected to run for Minority Whip, however, if McCarthy decides not to run or falters, Scalise has laid the groundwork to run for that position as well. Others may unexpectedly put themselves in contention. Either way, expect to see a new face in leadership with current House Republican Conference Chair Cathy McMorris Rodgers (R-WA) vacating her position to seek a new role. Representative

Liz Cheney (R-WY) is running to succeed her. Current Deputy Whip Patrick McHenry (R-NC) must decide whether to seek a leadership position or pursue the ranking member position atop the House Financial Services Committee. National Republican Congressional Committee (NRCC) Chairman Steve Stivers (R-OH) is not expected to seek another term, and Representative Ann Wagner (R-MO) could be the early frontrunner to lead the committee heading into the 2020 cycle, although Representatives Tom Emmer (R-MN) and Mimi Walters (R-CA) and others could also throw their hats in the ring.

Senate Senate Republicans will solidify their leadership team in elections on November 14. Mitch McConnell (R-KY) will continue his role as Senate Majority Leader. McConnell’s number two, Majority Whip John Cornyn (R-TX), will step down because of term limits, but McConnell indicated he may appoint Cornyn to a non-elected position to keep him at the leadership table. Current Conference Chairman John Thune (R-SD) is likely to move up to Majority Whip. Current Republican Policy Committee Chairman John Barrasso (R-WY) is likely to move up to Conference Chair. Current Conference Vice-Chair Roy Blunt (R-MO) is likely to move up to Republican Policy Committee Chair, leaving the Vice Chair slot open. Senators Deb Fischer (R-NE) and Joni Ernst (R-IA) are frontrunners to succeed Blunt, and one will become the only female member of the leadership team. Senator Cory Gardner (R-CO) will step down as National Republican Senatorial Committee (NRSC) Chairman to focus on his 2020 reelection campaign, and Senator Todd Young (R-IN) is expected to run to succeed him. With no self-imposed term limits, Senate Democratic leadership will remain virtually unchanged in the 116th Congress. It is expected that Senator Chuck Schumer (D-NY) will continue as Democratic Leader with Senator Dick Durbin (D-IL) as Minority Whip and Senator Patty Murray as Assistant Democratic Leader. Senator Debbie Stabenow (D-MI) will likely return as chair of the Policy and Communications Committee. Senator Chris Van Hollen (D-MD) may yield his post as chairman of the Democratic Senatorial Campaign Committee (DSCC). With the 2020 map decidedly in Senate Democrats’ favor, look for several candidates to possibly replace Van Hollen, including Senator Catherine Cortez Masto (D-NV).

LAME DUCK AGENDA Congress reconvenes on November 13 for a post-election lame duck session with as few as 16 working days until the end of this Congress and a loaded legislative agenda. Legislating was tough before House Democrats won yesterday, and it won’t be any easier after the election. Members of Congress who won’t be back next year need to forfeit their offices by November 30. Included in a long list of legislative priorities are the seven remaining appropriations bills (whose continuing resolution expires on December 7) that could be weighed down by a partisan fight over President Trump’s funding request for the construction of a wall along the U.S.-Mexico border. Here’s what has bipartisan support and might get done.

Farm Bill. The Farm Bill expired on September 30 with no resolution in sight despite bipartisan interest in passing a permanent five-year reauthorization. House and Senate Agriculture Committee leadership on both sides of the aisle support reauthorization, but disagreements remain on work requirements for food stamp recipients and which types of conservation programs to continue. The program can hobble along until early January when commodity programs start to reach a crisis if not reauthorized, making a year-end temporary extension likely if negotiators cannot reach an agreement. NAFTA 2.0. Parties to NAFTA’s successor, the United States-Mexico-Canada Agreement (USMCA), are expected to sign at the end of the month. The agreement requires congressional approval, but that vote will not take place until next year. National Flood Insurance Program (NFIP). The NFIP expires on November 30. With Members of Congress from coastal areas continuing to push for a long-term solution in the aftermath of the recent hurricanes, Congress may look to finalize significant changes to the program. Violence Against Women Act (VAWA). The extension of VAWA is set to expire with the continuing resolution on December 7. Action on this bill is a priority on both sides of the aisle, however, there are contentious issues that may prohibit an agreement. If lawmakers are unable to find a compromise, a short-term extension to next year may be likely. Hurricane Supplemental. In the wake of Hurricanes Michael and Florence, lawmakers may look to negotiate additional disaster relief funding for states impacted by the hurricanes. While FEMA currently has sufficient funds to deal with the destruction from Hurricane Michael, it is unlikely the funding will last through the year. Lawmakers from the affected states will likely push House and Senate leadership to pass a supplemental disaster relief package during the lame duck session. Lawmakers from Western states may push to include additional funding to address the recent wildfires. Taxes. The House passed “Tax Reform 2.0” in September, which includes provisions making permanent the individual tax rates in the Tax Cuts and Jobs Act, addressing retirement savings vehicles and universal savings accounts, and expanding tax deductions for startup businesses. While Democrats are unlikely to support tax cuts and 60 votes are required for passage in the Senate, there is optimism the retirement pieces could be advanced. Congressional Republican leadership and the Administration are also considering options palatable to both sides of the aisle for a technical corrections package and potentially addressing expiring tax provisions known as tax extenders. The energy tax extenders are of particular interest to congressional Democrats and could be added to a technical or lame duck package before Congress heads home for the holidays.

Health Care. There are outstanding health care issues that could be addressed during the lame duck session. Over 40 health care bills passed either the House or Senate but have not become law. For example, the Pandemic and All-Hazards Preparedness Reauthorization Act passed the

House and is awaiting Senate action. There are also proposed changes to the Affordable Care Act taxes – such as the 2.3 percent tax on medical devices (passed the House), the Cadillac tax, and the health insurance tax – that all enjoy bipartisan support. Additionally, expect the battle over the prescription drug “doughnut hole” for seniors and efforts to increase the utilization of generic drugs by reducing prices and increasing competitiveness to continue, as the drug industry looks to change the doughnut hole closure. Nominations. Senate Republicans will continue to confirm as many nominees as possible. Including judicial nominations, there are 130 civilian nominations pending on the Senate calendar and 188 pending in committees. Mueller Wild Card. Special Counsel Bob Mueller followed Department of Justice tradition as he did not announce any new indictments or other overt steps in the months leading up to yesterday’s midterm election. Given the regular cadence of investigative steps in the Russia investigation earlier this year, look for public announcements from the Special Counsel to now resume. We expect the question of the extent to which the President provides information to Mueller’s investigation to be resolved soon, either through an agreement to answer questions or through litigation. If Mueller then reports his findings to the Department of Justice, and if the then-leadership of DOJ does not make that report public, we expect the new House leadership to use the tools at its disposal to compel the report’s release next year. While any “Mueller Report” may not include the salacious details of the 211-page Starr Report that led to President Clinton’s impeachment by the House in 1998, its contents will likely determine what, if any, next steps are taken by the House Judiciary Committee under expected Chairman Jerry Nadler (D-NY).

TRUMP ADMINISTRATION Washington’s new faces won’t be limited to Capitol Hill. The Trump Administration’s Cabinet and senior White House staff turnover is already historic. We expect that trend to accelerate over the coming weeks and months. With four Cabinet secretaries and a chief of staff resigning during the first two years of his term, the President will likely continue to fill vacancies as his team evolves. U.N. Ambassador Nikki Haley will step down at the end of this year. The President recently hinted he will nominate Andrew Wheeler to lead the Environmental Protection Agency (EPA); Wheeler took over as Acting Administrator when Scott Pruitt resigned in July. Leadership shifts are possible at the Departments of Justice, Interior, Commerce, and Homeland Security, and possibly Defense as well. Such changes could leave key agencies with acting heads through much of 2019. Senate Democrats will continue to closely scrutinize the President’s picks, particularly as the presidential nomination process plays out on the Senate floor.

FIRST 100 DAYS OF THE 116TH CONGRESS Elections have consequences. Committee leadership will change in the House (see attached appendix) and set a new legislative agenda for the 116th Congress. Committee membership ratios will shift and leave returning Members and Members-elect on both sides of the aisle jockeying for preferred committee assignments. It remains to be seen whether divided government, particularly in this political climate, can find common legislative ground.

House of Representatives By design, Democrats will use the month of January to organize. Committee assignments and staffing choices will be the first order of business. While the Constitution requires Congress to convene at noon on the third day of January unless otherwise appointed, there is precedent in moving the start of a session to a more convenient date. There is talk of moving the start of the 116th Congress from Thursday, January 3 to Tuesday, January 8. The committees will quickly get to work on hearings and oversight. Regular order and Pay As You Go (PAYGO) rules will apply to the new majority. Rank and file Members have demanded both. Nearly half of the Democrats have not served in the majority, and they will want to put their own stamp on legislation without adding to the nation’s debt. One thing is clear – this will all take A LOT longer than anyone is anticipating. Expect legislative activity to take twice as long to pass the House floor. Legislatively, the new House majority will take up ethics reform first. This bill will encompass campaign finance reform, voting rights, ethics, and accountability. On deck next is lowering prescription drug prices and an infrastructure package. It remains to be seen how Democrats will take on the Administration’s trade agenda, including review and oversight of the Section 232 investigations and tariffs, as well as consideration of the United States-Mexico-Canada Agreement (USMCA), which could be introduced as early as the first quarter in 2019.

Senate With Republicans maintaining Senate control, expect to see Majority Leader Mitch McConnell (R-KY) double down on the chamber’s focus on nominations. There are a few areas where the House and Senate could work together on bipartisan legislation, including drug pricing, a broad infrastructure package, and criminal justice reform. Senators may also push to pass legislation to address digital issues, including data privacy and data breach notification requirements. If the Administration stays the course with its current trade agenda, there could also be increased oversight as the tariffs and other measures begin to take center stage. One of President Trump's top priorities will be passing the implementing bill to finalize USMCA.

President Trump will likely look for additional avenues and policy areas he can pursue via executive order, and it remains to be seen the degree to which the Senate challenges that authority. McConnell and Senate Democratic Leader Chuck Schumer (D-NY) will have a narrow window in which to operate before the 2020 presidential campaign consumes the oxygen.

2020 STARTS NOW Only 726 days to Election Day 2020. Today marks the first official day of the 2020 presidential campaign season, but for many of the likely Democratic candidates the election has long been underway. Senator Cory Booker (D-NJ) cleared a major hurdle last week when Governor Phil Murphy (D-NJ) signed a bill to allow a New Jersey Member of Congress to appear on the primary and general election ballots for Congress as well as for the presidency. Over the last month, former Vice President Joe Biden reminded voters of his star power as he crisscrossed the country in support of 2018 candidates. Surrogate campaigners in Iowa included Senators Kamala Harris (D-CA), Bernie Sanders (I-VT), and Cory Booker (D-NJ); Representatives John Delaney (D-MD) and Eric Swalwell (D-CA); and Governors John Hickenlooper (D-CO) and Jay Inslee (D-WA). Other possible candidates focused on raising money and helping drive turnout in key midterm races, while still others – Senators Mark Warner (D-VA), Kirsten Gillibrand (D-NY), and Amy Klobuchar (D-MN) – remained in their own states this cycle winning re-election. The next four months will be a pivotal period in the race, with the first Democratic primary debate likely to be held in the early spring. With expectations of a crowded primary, candidates will need to secure a 15 percent polling threshold to get an invite to the first debate. In 2016, only one Republican candidate in a 17-candidate field, Carly Fiorina, managed to move from the undercard to the main stage after the first debate. President Trump is expected to run for re-election in 2020 and may face a primary challenger.

Key Dates Early Spring 2019 First Democratic Primary Debate February 3, 2020 Iowa Caucus February 11, 2020 New Hampshire Primary February 15, 2020 Nevada Caucus February 22, 2020 South Carolina Primary March 3, 2020 Super Tuesday (including California) July 13-16, 2020 Democratic Convention (city tbd) August 24-27, 2020 Republican Convention (Charlotte)

KEY DATES November 11 POTUS in France to mark the 100th anniversary of the end of WWI November 12 Veterans Day (Observed)

November 13 House and Senate reconvene/lame duck starts

November 14 House and Senate Republican Conference leadership elections

November 19-23 House and Senate in recess

November 22 Thanksgiving Day

November 27 Mississippi Senate runoff election

November 28 House Democratic Caucus leadership elections

November 30 POTUS expected to sign USMCA National Flood Insurance Program expires

Budget process and multi-employer pension plans recommendations due G20 in Argentina– POTUS attending, meetings planned with China and Russia

December 2 Hanukkah begins at sundown

December 4 Georgia Governor runoff election (if necessary)

December 7 Continuing Resolution (CR) expires

December 13 Target House adjournment sine die

December 14 Target Senate adjournment sine die

December 25 Christmas

December 31 Expiration of the suspension of medical device tax and health insurer fee

January 1 Tariffs rise to 25% on $200 billion in Chinese imports

January 3 116th Congress expected to convene (could move to January 8)

January 21 Martin Luther King, Jr. Day

January 29 State of the Union Address (tentative)

February 4 President’s budget due

February 18 Presidents’ Day

March 1 Debt limit extension expires

HOUSE COMMITTEE LEADERSHIP For committee leadership posts, Democrats generally choose committee chairs based on seniority and Republicans operate under term limits. However, party leadership elections, along with term limits, could lead to disruption to both committees and subcommittees. Tri-caucus members (CBC, CHC, CAPAC) are expected to lead eight committees. Democrats must also fill numerous slots as they take the majority, creating opportunities for Members to move up to Appropriations, Energy and Commerce, Financial Services, or Ways and Means.

Agriculture

Ranking Member Collin Peterson (D-MN) is projected to retake the gavel he held from 2007 to 2010. Current Chairman Mike Conaway (R-TX) could become ranking member.

Appropriations Current Ranking Member Nita Lowey (D-NY) will take the gavel of the powerful committee. Democrats must also fill several openings as they gain the majority. Current Chairman Rodney Frelinghuysen (R-NJ) is retiring, creating a race for the top Republican spot between Defense Subcommittee Chairman Kay Granger (R-TX) and Financial Services Subcommittee Chairman Tom Graves (R-GA). Representative Kevin Yoder’s (R-KS) loss creates an opening for the top Republican slot on the Homeland Security Subcommittee, and several other top slots could shuffle.

Armed Services

Current Chairman Mac Thornberry (R-TX) and Ranking Member Adam Smith (D-WA) will likely swap positions atop the committee in 2019.

Budget

Current Ranking Member John Yarmuth (D-KY) is expected to lead the committee after serving one term as ranking member.

Current Chairman Steve Womack (R-AR) would become the new ranking member.

Education and Workforce Current Ranking Member Bobby Scott (D-VA) is slated to take over the committee with Democrats in the majority. Current Chairman Virginia Foxx (R-NC) will likely become the new ranking member.

Energy and Commerce Current Ranking Member Frank Pallone (D-NJ) will likely become chairman while Rep. Greg Walden (R-OR) is lined up to serve as ranking member, barring any potential leadership positions. Rep. Gene Green’s (D-TX) retirement frees up the gavel for the Health Subcommittee, which could go to Reps. Anna Eshoo (D-CA) or Diana DeGette (D-CO). Meanwhile, Reps. Gregg Harper’s (R-MS) and Marsha Blackburn’s (R-TN) departures leave vacancies for Republicans atop the Oversight Subcommittee and Communications and Technology Subcommittee.

Financial Services

Ranking Member Maxine Waters (D-CA) is projected to take the gavel; however, Chairman Jeb Hensarling’s (R-TX) retirement leaves an opening on the Republican side. Financial Institutions and Consumer Credit Subcommittee Chairman Blaine Luetkemeyer (R-MO) is the early frontrunner, but Reps. Patrick McHenry (R-NC), Bill Huizenga (R-MI), and Sean Duffy (R-WI) could challenge for the position, impacting subcommittee ranking member slots.

Foreign Affairs Ranking Member Eliot Engel (D-NY) will likely lead the committee, taking over for retiring Chairman Ed Royce (R-CA). Rep. Michael McCaul (R-TX) could take the top Republican slot, freeing up the position atop the House Homeland Security Committee.

House Administration

Both Chairman Gregg Harper (R-MS) and Ranking Member Bob Brady (D-PA) are retiring, leaving vacancies for each party atop the committee. Unlike other committees, the House Administration Committee’s chairman is nominated by the Speaker of the House, subject to approval by the House Democratic Caucus. Rep. Zoe Lofgren (D-CA) is the likely frontrunner for the slot, while Rep. Rodney Davis (R-IL) is lined up to serve as ranking member.

Homeland Security

Ranking Member Bennie Thompson (D-MS) returns to chair the committee. If current Chairman Michael McCaul (R-TX) opts for the top Republican position on Foreign Affairs, Reps. Mike Rogers (R-AL) or John Katko (R-NY) could take his place here.

Intelligence Ranking Member Adam Schiff (D-CA) and Chairman Devin Nunes (R-CA) will swap positions atop the panel. The Intelligence Committee chairman and ranking member are selected by the House Speaker and Minority Leader respectively.

Judiciary Chairman Bob Goodlatte (R-VA) is retiring after reaching his term limits atop the committee. Ranking Member Jerry Nadler (D-NY), who replaced former Rep. John Conyers (D-MI) midway through the 115th Congress, will lead the committee. Rep. Doug Collins (R-GA) is the favorite to serve as ranking member, but Rep. Steve Chabot (R-OH) could also seek the position.

Natural Resources Ranking Member Raul Grijalva (D-AZ) and Chairman Rob Bishop (R-UT) will continue to lead the committee, albeit serving in opposite roles.

Oversight Ranking Member Elijah Cummings (D-MD) will take the gavel of this powerful committee where he will lead House Democrats’ oversight of the Trump Administration. Current Chairman Trey Gowdy (R-SC) is retiring, creating a shuffle atop the dais for Republicans. It remains to be seen who could emerge as the ranking member, and the position may be used as a bargaining chip in the leadership race.

Rules Like the House Administration and Intelligence Committees, the House Rules Committee chairman is nominated by the Speaker of the House. Ranking Member Jim McGovern (D-MA) will likely take the gavel. With Chairman Pete Session’s (R-TX) loss, Rep. Doug Collins (R-GA) could become ranking member.

Science Chairman Lamar Smith (R-TX) is retiring after reaching his term limits atop the committee. Ranking Member Eddie Bernice Johnson (D-TX) is expected to take control of the panel, becoming the third Texan in a row to chair the committee. Rep. Frank Lucas (R-OK) is the most senior Republican but must decide between leading Financial Services and Science.

Small Business Ranking Member Nydia Velazquez (D-NY) will retake the gavel with Democrats in control. Chairman Steve Chabot (R-OH) survived a difficult re-election and will become ranking member, unless he seeks the top slot on the Judiciary Committee.

Transportation and Infrastructure With Chairman Bill Shuster’s (R-PA) retirement, Rep. Sam Graves (R-MO) and Rep. Jeff Denham (R-CA) (whose race remains too close to call) are the potential favorites to serve as ranking member alongside current Ranking Member Pete DeFazio (D-OR), who is in line to become chairman. Rep. Michael Capuano’s (D-MA) primary loss leaves a vacancy atop the Railroads Subcommittee. Retirements and election losses create numerous openings on both sides.

Veterans’ Affairs Ranking Member Tim Walz (D-MN) will leave Congress in December to begin his term as Minnesota Governor, leaving Rep. Mark Takano (D-CA) as the likely chairman of the panel. Current Chairman Phil Roe (R-TN) will continue as the top Republican on the panel.

Ways and Means Ranking Member Richard Neal (D-MA) will lead the panel with Chairman Kevin Brady (R-TX) swapping slots atop the dais. In addition to the slots created by taking the majority, Democrats must fill two additional slots with Reps. Sander Levin (D-MI) and Joe Crowley’s (D-NY) departures. Republicans may also have numerous vacancies to fill as 4 incumbents lost re-election.

SENATE COMMITTEE LEADERSHIP

With Republicans expanding control of the Senate, several committees will change leadership as chairmen reach their conference-imposed term limits or move into leadership positions. For Democrats, Senator Claire McCaskill’s (D-MO) loss opens up the ranking member position at Senate Homeland Security and Government Affairs.

Agriculture Chairman Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI) will continue atop the committee.

Appropriations Chairman Richard Shelby (R-AL) begins his first full term as chairman after taking over for retired Senator Thad Cochran (R-MS). Ranking Member Patrick Leahy (D-VT) remains the top Democrat.

Armed Services

Chairman James Inhofe (R-OK) will remain chair after replacing the late Senator John McCain (R-AZ) earlier this year. Ranking Member Jack Reed (D-RI) is expected to remain. There are two vacancies on the Democratic side with Senator Claire McCaskill (D-MO) and Senator Joe Donnelly’s (D-IN) losses.

Banking Chairman Mike Crapo (R-ID) can lead the panel for one final term. If he decides to move on, Senator Pat Toomey (R-PA) could take over. Ranking Member Sherrod Brown (D-OH) will continue to serve.

Budget Chairman Mike Enzi (R-WY) and Ranking Member Bernie Sanders (I-VT) will continue to lead the panel.

Commerce Chairman John Thune’s (R-SD) likely promotion to Majority Whip leaves an opening atop the committee with Senator Roger Wicker (R-MS) the early favorite to replace him. If Ranking Member Bill Nelson (D-FL) fails to win re-election, Sen. Maria Cantwell (D-WA) could look to move into the top slot.

Energy and Natural Resources Chairman Lisa Murkowski (R-AK) will finish her final term as chairman of this important committee to her state. Ranking Member Maria Cantwell (D-WA) could shift over to take the top slot on the Senate Commerce Committee. Senator Bernie Sanders (I-VT) is next in seniority.

Environment and Public Works Chairman John Barrasso (R-WY) and Ranking Member Tom Carper (D-DE) are expected to remain in place. Republican committee chairmen aren’t required to give up the gavel unless elected Leader or Whip.

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Finance

Ranking Member Ron Wyden (D-OR) remains the panel’s top Democrat, but Chairman Orrin Hatch’s (R-UT) retirement leaves room for a promotion. Senator Chuck Grassley (R-IA) could seek the gavel as could Senator Mike Crapo (R-ID). In addition, there are multiple vacancies on both sides with Hatch’s retirement and Senators Dean Heller (D-NV) and McCaskill’s (D-MO) losses.

Foreign Relations Senator James Risch (R-ID) is in line to replace retiring Chairman Bob Corker (R-TN). Ranking Member Bob Menendez (D-NJ) returns as the top Democrat.

Health, Education, Labor, and Pensions (HELP) Chairman Lamar Alexander (R-TN) will serve his final term atop the panel alongside Ranking Member Patty Murray (D-WA).

Homeland Security and Government Affairs Chairman Ron Johnson (R-WI) remains the top Republican, while Senator Gary Peters (D-MI) is lined up for the ranking member position.

Indian Affairs Chairman John Hoeven (R-ND) and Ranking Member Tom Udall (D-NM) are expected to remain atop the panel.

Intelligence Chairman Richard Burr (R-NC) and Ranking Member Mark Warner (D-VA) will likely continue to lead the panel after receiving bipartisan praise for their handling of the committee’s investigation of the 2016 election.

Judiciary If Chairman Chuck Grassley (R-IA) seeks the Finance Committee gavel, Senator Lindsey Graham (R-SC) would be in line to replace him. Senator Jeff Flake’s (R-AZ) retirement creates an additional vacancy on the Republican side. Senator Dianne Feinstein (D-CA) will likely remain ranking member.

Rules and Administration Chairman Roy Blunt (R-MO) and Ranking Member Amy Klobuchar (D-MN) will continue to oversee the committee.

Small Business With Chairman James Risch (R-ID) expected to seek the Foreign Relations gavel, Senator Marco Rubio (R-FL) could be next in line. Ranking Member Ben Cardin (D-MD) is expected to remain.

Veterans Affairs Chairman Johnny Isakson (R-GA) will continue to lead the committee. Ranking Member Jon Tester’s (D-MT) race remains too close to call, and if he loses, Sen. Richard Blumenthal (D-CT) could move into the top position.