Update on the Political and Legislative Landscape
For the past 18 months polling has consistently shown that 70% of the voters believe that the country is headed in the wrong direction. The combination of COVID, soaring inflation, and a lack of faith in our political leaders has clearly taken its toll on the public’s confidence, but there are signs that the mood has begun to brighten with a strong labor market, rising wages, easing inflation and a significant reduction in crime. The stock market is at its highest level since the beginning of last year. These trends are reflected in the July consumer confidence numbers, now at nearly a two-year high.
Currently, there are 39 states where one party controls the governorship and the state legislature.
Forty states have voted for the same party in the last four presidential elections. We are at the point where there are at most eight competitive states left in the country. As we get closer to the election, it is only the polling in these states, not at the national level, that will paint the most accurate picture of the state of the race. In the recently released Cook Political Report, the Democrats are projected to start the campaign leading with 247 electoral votes, while the Republicans are favored to win 235 electoral votes. Only four states: Arizona, Georgia, Pennsylvania, and Wisconsin, are rated toss-ups.
The Democrats hold a two-seat majority in the Senate and are defending a very difficult map in 2024. They hold all the eight seats considered competitive and Trump carried three of the competitive states: Montana, Ohio, and West Virginia, by overwhelming margins in 2020, while President Biden narrowly carried the remaining five: Arizona, Michigan, Nevada, Pennsylvania, Wisconsin.
In the House, the GOP took a narrow five-seat majority after picking up nine seats in 2022. They are defending 18 districts carried by President Biden in 2020 (compared to only five Democratically held seats carried by Trump). These Republican incumbents will be particularly vulnerable if they are forced to vote on symbolic right-wing measures pushed by the Freedom Caucus that have zero chance of ever becoming law over the president’s objections. In the most recent Cook Political report the Republicans are defending 21 of the most competitive districts compared to 24 held by the Democrats. Ten of these Republican-held seats are in California and New York, while there are 10 Democratic seats at risk in North Carolina, Ohio, and Pennsylvania.
With Congress in recess until after Labor Day, September promises to be tumultuous, with a possible government shutdown. Complicating matters further, several additional must-pass pieces of legislation have September 30th deadlines, including the reauthorization of the Federal Aviation Administration and the extension of the Farm Bill. There are also several defense-related fights that do not appear anywhere near resolution, including passage of the National Defense Authorization Authority (NDAA) and additional funding for Ukraine. The differences between the Republicans in the House and Senate are primarily around spending and putting anti-woke policy riders on spending bills.
The recently passed bipartisan debt-limit bill suspends the debt ceiling for two years and caps the amount of money that the government is allowed to borrow during that period while establishing spending targets. A significant number of Republicans in the House view this agreement as a ceiling not a floor and want to go back to 2022 spending levels, with cuts totaling $115 billion dollars. The narrowly controlled Republican House has only approved one of the 12 government-funding bills for Military Construction and Veterans affairs, but it will almost certainly be blocked in the Senate. While the Senate has passed all 12 appropriations bills in committee with near unanimous bipartisan support, none of these bills has passed the full Senate.
If there is no deal on funding for next year, the government could shut down for the first time since 2018.