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January 6, 2021

This report is from your government affairs team at The Council. 

Good morning everyone. We were up (too) late with Georgia results last night; pro-Trump demonstrations are expected to swarm our office’s area on Pennsylvania Avenue today; Vice President Pence is going to be very interesting to watch today; and it’s looking like Vice President-elect Harris is going to be spending a lot more time than previously expected on Capitol Hill. Not your usual sleepy pre-inaugural calm.

You can get plenty of breathless reporting on the Georgia Senate race results by turning on the television, so we won’t be repetitive, but did want to give you our initial thoughts on the potential brokerage impact of potential (apparent?) full upcoming Democratic control of the executive and legislative branches.

We’re accepting the declaration of Raphael Warnock over Sen. Kelly Loeffler for the two-year term. For purposes of this memo, we are also contemplating the election of Jon Ossoff over Sen. David Perdue for a full six-year term. At this writing, Ossoff was up 16,000 votes. While upwards of 17,000 military and overseas ballots have yet to be counted, most of the remaining votes, according to news accounts, are in Democratic strongholds.

There is no diminishing the disappointment (devastation, even?) among Republicans about losing control of the Senate. It can be argued with accuracy that Majority Leader Schumer will not have the votes for a progressive dream agenda – statehood for DC and Puerto Rico, a bigger Supreme Court, or importantly, ditching the legislative filibuster. It is also unlikely that the votes exist for a Medicare-rate-pegged “public option” inside ACA exchanges that we would fiercely oppose. (What the Biden Administration can do through executive action, however, is another matter.)

The power of the Majority Leader, however, is absolute in terms of scheduling legislation to be considered by the Senate. Assuming Democrats stick together, they will be able to confirm an entire Biden cabinet and judicial nominees for at least the next two years. There is a pervasive belief in Washington this morning that the Georgia results will more likely result in a more progressive candidate to be advanced, for example, for the Labor Department.

As you may know, 60 votes are required in the Senate to “invoke cloture” and avoid a filibuster, and Democrats are considerably short of the 60-vote margin (which they last held briefly after President Obama was elected, until the death of Sen. Ted Kennedy). However, we will all be hearing much about “budget reconciliation” being utilized as the mechanism for Democrats to advance their agenda. In reconciliation, only 51 votes are needed to prevail, however there are limitations on what can be moved through the reconciliation (namely, everything has to have a direct impact on federal spending). You will recall that both the ACA in 2009 and tax reform in 2017 were approved using the reconciliation process.

Thus, it is possible that a significant tax bill (that could significantly alter the 2017 reforms) could be run through reconciliation. This assumes, again, that Democrats ranging from Joe Manchin of West Virginia to Bernie Sanders of Vermont would be able to unite, and assumes lockstep GOP opposition. Reconciliation, likewise, could be used to advance infrastructure or climate legislation, and creative ways to re-interpret the rules of the Senate may well be deployed. It is frankly too early to anticipate what this may mean for the commercial brokerage industry, however we can anticipate that these changes will keep us extremely busy on the employee benefits front.

To the extent that another COVID relief package is advanced early, Sen. McConnell’s “red line” on liability relief for businesses would be highly unlikely under Democratic control.

Some good observations this morning from Mike Allen of Axios:

“It’d be tough to go big with a 50-50 Senate, so don’t assume a substantial shift. But Democratic control would be a massive blow to Republican hopes of blocking anything they truly loathe. Biden sources tell me he now can go more progressive on remaining Cabinet picks, notably attorney general and secretary of Labor.

A big winner: Stacey Abrams, who narrowly lost her 2018 race for Georgia governor, galvanized Black voters and became the face of yesterday’s massive Democratic turnout.

The big loser: Top Republicans blame Trump for sabotaging what should have been two easy wins — turning off suburban voters with his chaos and craziness, and sowing distrust of the Peach State election machinery with base voters.”

Also, good commentary from Anna Palmer of the (newly launched) Punchbowl:

Here are some big Democrat priorities and achievables: 

Stimulus checks: If Democrats want to pass $2,000 checks, they can. It’ll be interesting to see how fast the incoming Biden administration wants to move on this. Will three be enough Republicans to back such a move to ensure quick action?

Another Covid rescue bill: This will be a Democratic priority in the first quarter of this year. But a Covid relief bill will have to be a negotiated settlement between the Four Corners — Pelosi, Schumer, McConnell and McCarthy. You should be thinking somewhere in the $1 trillion neighborhood.

A tax/health care bill: One would have to guess that some large-scale tax and health care bill will be a huge Biden priority. If Dems don’t blow up the filibuster, this could only get through the Hill as part of budget reconciliation, which requires a majority threshold for passage.

If they are smart, infrastructure: If Biden can learn anything from Trump it’s this: should start off by pushing a legislative priority that’s very, very popular. Infrastructure it is. Trump tackled health care first, and came to regret it. Infrastructure is not nearly as easy the talkers would like you to believe, however. There are questions about funding — raise the gas tax? — and details on how to spend money. But government spending is in vogue, and with all the levers of power, Democrats can push this.

You know who is probably feeling good this morning? McCarthy. When one party controls all the levers of power in government, the opposition party usually wins the House.”

We at The Council feel well-prepared politically for the challenges of 2021. It could be that the deeply polarized animus between the parties continues and chaos will reign with little making it to the legislative finish line. Or it could be that moderates in both chambers are able to drive toward consensus. All eyes, to that end, are on Democratic Sens. Manchin, Jon Tester of Montana and Kyrsten Sinema of Arizona; and on Republican Sens. Ben Sasse of Nebraska, Mitt Romney of Utah, Susan Collins of Maine, and Lisa Murkowski of Alaska. We consider ourselves to have strong relationships with all of them.

Two of our major committees in the Senate – Banking, and Health Education Labor and Pensions (HELP) – will be chaired, respectively, by Sens. Sherrod Brown of Ohio and Patty Murray of Washington. Again, we have good relationships there and would look forward to working cooperatively across the philosophical spectrum on issues of concern to commercial insurance brokerage, assuming the trend line in favor of Ossoff continues.

We will continue to keep you apprised of developments through the brokerage/benefits lens, and hope you and your team have a good 2021.