Some observers take the congressional Republicans more seriously than others do. With Biden in the White House and the Democrats still in control— albeit barely and with some members who could die at any moment— of the Senate, there isn’t much the Republicans can do in terms of some of their agenda. They can’t privatize Social Security or Medicare, two of their top goals. This morning, The Economist published a piece that both plays down what kind of damage the GOP can do and warns of… what kind of damage they will do. “Some of the consequences [of the GOP takeover of the House] will be more performative than substantive. The finances of Hunter Biden, Biden’s troubled son, are likely to be one target; America’s botched withdrawal from Afghanistan and the origins of covid-19 are also possibilities. The Trumpiest fringe of the House Republicans may push for the president’s impeachment. None of this is likely to amount to much of anything, since the Democrat-controlled Senate will, as a matter of course, reject it all. Still, the theatrics of divided government will have important repercussions, especially for the economy. The biggest concern is that Republicans will provoke a crisis by refusing to increase America’s debt ceiling.”
They’re certainly not going to pursue any kind of investigation of Trump’s attempted coup or any of his other criminal activities. Big surprise! Not.
The Wall Street Journal, of course, takes the GOP seriously and identifies with the party, even if not with the fascist wing. Early this morning, they tried to take a coherent look at how Republican control of the House impacts issues important to the country:
Taxes
The end of unified Democratic government will prevent Biden from following through on key 2020 campaign goals, including raising tax rates on corporations and high-income households.
After pushing significant tax laws through the current Congress, other Biden administration priorities, including new taxes on the wealthiest Americans’ unrealized capital gains, will be dead in a divided government. Meanwhile, Mr. Biden’s veto will prevent Republicans from repealing tax laws he signed. Republicans will conduct Internal Revenue Service oversight hearings and pursue restrictions on how the agency uses its new money.
Some tax legislation is still possible, thanks to bipartisan momentum for expanding tax breaks for retirement savings. There could be a deal to extend expired tax breaks and prevent some business-tax increases scheduled to take effect under a law passed in 2017.
Key provisions of the 2017 tax law— lower individual tax rates, a higher standard deduction and a 20% deduction for closely held businesses— are scheduled to expire after 2025. GOP lawmakers see the tax cuts as a success in spurring economic growth and say taxpayers deserve the certainty of knowing they will continue. Democrats say the cuts were too tilted toward high-income households. While the dispute probably won’t be resolved soon, lawmakers are likely to argue about it ahead of the 2024 election.
Markets
The nation’s borrowing limit and financial regulation will be closely watched issues on Wall Street in the next two years.
Some GOP lawmakers have signaled a willingness to use negotiations over raising or suspending the nation’s debt limit as a way to demand spending cuts. Those dynamics set up the potential for a high-stakes partisan conflict during the negotiations, which could come in the second half of 2023.
Once the debt limit of roughly $31.4 trillion is reached and the Treasury Department exhausts emergency measures, lawmakers would need to raise the limit or else the government would be forced to delay or suspend payments on its obligations, potentially causing a default on bond payments. Such a scenario would likely rattle financial markets and the U.S. economy, which faces heightened risk of recession.
Bank regulators in Washington, including at the Federal Reserve, are contemplating more stringent merger restrictions for big regional banks, regulatory requirements for large banks to build bigger financial buffers and revamped standards for lending in lower-income communities. The Consumer Financial Protection Bureau faces a legal challenge to the constitutionality of its funding that could reach the Supreme Court.
The Securities and Exchange Commission is pushing to implement an overhaul to the stock market’s plumbing. Also on the agency’s agenda are rules related to climate change and increased transparency requirements for hedge funds and private equity.
Inflation
The return of divided government means little when it comes to how Washington is likely to address high inflation because lawmakers in both parties largely agree that the Fed is responsible for taking action that will restrain demand to reduce high prices.
Even before losing control of the House, the White House had largely run out of room to push for higher spending because of resistance in the evenly divided Senate from Sen. Joe Manchin (D-WV), who argued that more spending would fuel higher inflation. Biden in August used executive authority to approve an estimated $400 billion in student-loan forgiveness that economists have said could contribute to higher inflation.
Republicans could seek to force spending curbs, as they did after taking control of Congress during the first term of the Obama administration. The Fed’s aggressive rate increases this year are likely to slow economic growth next year faster than any fiscal policy might achieve.
While some Democratic lawmakers have called on the central bank to slow down or pause its rate increases, there is little ability for Congress to influence the Fed directly. Mr. Biden this year appointed three new governors to the Fed’s seven-member board, which has no vacancies. The term of one of those new governors, Lisa Cook, expires in January 2024, and Mr. Biden would need to secure Senate support to reappoint Cook or nominate someone else to a full 14-year term.
Foreign policy
The war in Ukraine and competition with China are expected to dominate both parties’ foreign-policy agendas for the next two years. Republicans are likely to use their new platform to question U.S. spending on foreign conflicts and investigate the Biden administration’s decision-making on the global stage.
Support in Congress for pumping aid to Ukraine is starting to fracture as many Republicans in the House question whether the money would be better spent combating China and tackling economic problems facing the U.S., lawmakers and congressional staff from both parties have said. Polls show Republican voters are increasingly opposed to helping Ukraine. Calls to dial back the assistance are likely to continue.
Competition with China continues to be a theme that both Democrats and Republicans stress as a core national-security priority. Republicans could push for more confrontational policies by bolstering U.S.-Taiwan relations and for more trade barriers. They might try to draw parallels between job losses in the U.S. and competition from China ahead of the 2024 election.
The Biden administration’s tumultuous and deadly withdrawal from Afghanistan in 2021 could be the focus of new investigations. Republicans have accused the administration of failing to act fast enough to evacuate U.S. personnel and Afghan partners. Biden has defended his administration’s evacuation efforts and said he didn’t want to continue what he has criticized as a “forever war.”
Abortion
Divided government means bipartisan clashes over abortion and contraception access are likely to continue. Federal legislative change is unlikely, as state lawmakers move to either codify abortion access or further restrict it.
GOP lawmakers will continue to block efforts by Democrats to ensure that abortion is legal throughout the U.S. Such efforts, passed twice in the House, have failed to garner sufficient Senate support.
Senate Democrats and Mr. Biden will likely be able to block any Republican push for a broader national ban. Sen. Lindsey Graham (R-SC) has proposed banning abortions after 15 weeks nationwide, with some exemptions, though some in his party said the issue should be left to states. The Republican Study Committee, the most influential conservative caucus in the House, has backed legislation from Rep. Mike Kelly (R-PA) that would ban abortions after the detection of a fetal heartbeat.
Republicans could seek to block other administration efforts such as a federal fund that Biden supports for women who need to take time off work or find child care as they prepare to have an abortion, and they are likely to try to block abortion providers such as Planned Parenthood Federation of America from getting federal family-planning grants.
Healthcare
Democrats and Republicans are gearing up for fights over entitlement programs such as Medicare and a drug-pricing provision passed in 2022. Major legislation is unlikely, but Republicans could seek to attach some changes to must-pass bills to force Democrats to negotiate.
House Republicans have proposed raising the Medicare eligibility age and adding means-testing. Biden has said he would block any cuts to entitlement programs.
Republicans are expected to investigate the administration’s Covid-19 response, how pandemic relief funds have been deployed and the origins of the virus.
Gridlock in Congress will likely mean more health-policy actions will occur at the state level. Nevada lawmakers are moving ahead with a state public health insurance option that is set to launch in 2026, joining Colorado and Washington state.
Energy and climate
Divided government could slow the pace of climate-focused initiatives that Biden has rolled out since entering the White House. Republicans are expected to dial up pressure on the Biden administration to look more favorably on fossil fuels and try to increase domestic oil-and-gas production in response to Russia’s invasion of Ukraine.
Biden and Democrats in Congress have tried to curb greenhouse-gas emissions and meet global climate goals by passing a $1 trillion infrastructure plan with measures to help communities endure extreme weather and a separate $370 billion of climate-focused provisions, mostly in the form of tax breaks for major wind and solar project developers. Republicans are unlikely to back more spending on climate initiatives and plan to push for more development of American energy sources.
Republicans and Democrats could work together on changing the laws that govern the U.S. permitting process for major infrastructure projects. Republicans say speeding up new oil-and-gas production would eventually bring down energy prices for consumers. Democrats who support the permitting changes say they would ease the path for new renewable-energy projects. Permitting changes were blocked in the last Congress in the midst of opposition from lawmakers on both sides of the aisle, but they are likely to come up again.
Republicans could launch investigations and hold hearings to slow down new regulations. More stringent requirements from the Biden administration for vehicle tailpipe emissions haven’t taken effect, for example. Republicans could also push for budget cuts for federal agencies that are charged with implementing environmental regulations.
Gun control
Biden has repeatedly called on Congress to pass major gun-control measures such as reinstating the federal ban on certain semiautomatic weapons, but such efforts have stalled even with Democratic majorities in both chambers. Congress passed a modest bipartisan gun package after the Uvalde, Texas, massacre, which included funding for states to implement and enforce red-flag laws to remove guns from people deemed dangerous; expanding background checks for gun buyers under 21 to include juvenile records; and tougher sentences for gun traffickers.
Divided government likely snuffs out Biden’s hopes of passing significant gun-control measures in Congress. No major gun-control bills have ever passed with a Republican-led House.
The GOP will have trouble advancing a gun-rights agenda with a Democrat in the White House. Only under Republican presidents have major pro-gun laws been enacted, such as the 2005 law signed by George W. Bush that limited liability for gun manufacturers when their weapons are used in crimes.
Biden could advance gun-control measures through executive orders, as he did in ordering the Bureau of Alcohol, Tobacco, Firearms and Explosives to craft new restrictions on homemade firearm kits.
Investigations
Republicans plan to initiate an aggressive series of investigations aimed at Biden and his administration. House Republicans spent much of the past year issuing document-preservation requests to various departments to lay the groundwork for the probes.
Republicans expect to focus on Biden and his family. At least one likely committee chairman has said he wants to determine whether the business dealings of Biden’s son Hunter Biden compromise national security. Both Bidens have denied wrongdoing. The Wall Street Journal, reporting on Hunter Biden’s business dealings, didn’t find President Biden to have been involved in his son’s efforts.
Republicans are likely to dig into the Justice Department and the Federal Bureau of Investigation. Some in the GOP say the Justice Department has become politicized. Among other things, Republicans were infuriated when Attorney General Merrick Garland authorized the application for a warrant to seize records with more than 700 pages of classified material that former President Donald Trump took to his Florida home. Garland has said that he is focused on upholding the rule of law fairly.
House Minority Leader Kevin McCarthy (R-CA), who will become speaker if his party stays united behind him, has been weighing whether to continue the select committee investigating the Jan. 6, 2021, riot at the Capitol. The committee is supposed to dissolve 30 days after the issuance of a final report, which is slated to be released soon. Reinstating the panel would allow Republicans to reframe the probe, but it would also keep the issue in the spotlight.