Election results in the Senate runoff in Georgia are now coming in and U.S. Democrats are getting closer to flipping control of the chamber, giving President-elect Joe Biden and the Democratic Party an expected Blue Wave win for the first time in 10 years.
Democrat Raphael Warnock is the projected winner in one race, defeating Republican incumbent Sen. Kelly Loeffler. The GOP still has a 50-49 lead, but control could change if Democratic challenger Jon Ossoff can beat Republican incumbent Sen. David Perdue. As of Wednesday morning, that race was still deemed too close to call. So far, Ossoff leads by 16,000 votes, according to media reports, and he would need a lead of over 0.5 percent of the votes to avoid a recount.
A win for Ossoff will put the balance at 50-50. Vice President-elect Kamala Harris would then provide the tie-breaking vote in the Senate, giving the Democratic Party essentially a much sought-after Blue Wave majority gaining control of the White House and Congress. It already has kept its majority in the House of Representatives, although only by four seats.
What would a Blue Wave mean for Biden? The expectation is that it would give the president-elect more solid ground to move forward on some much-needed economic policy changes. That’s by no means a guarantee as the majorities in both chambers are thin, and one or two Democratic senators or a handful of Democratic House members can easily upset the apple cart in any vote, Michael Pugliese, economist at Wells Fargo Securities, said. He cited the intraparty squabbles that erupted when Republicans failed to fully repeal the Affordable Care Act in 2017.
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First up will likely be more support to small businesses, states and Americans in the form of another coronavirus stimulus package. That could mean at the very least higher direct payments to Americans and further unemployment insurance extensions.
“Bottom line [is that] if Democrats secure both Georgia Senate seats, it increases the likelihood of some additional moderate Covid fiscal relief,” Pugliese noted. “It also likely creates the circumstances under which a significantly scaled back version of Biden’s broader economic policy platform could become law through bipartisanship or budget reconciliation. But, our expectation at this time is that these changes would not be a complete rewrite of the nation’s tax and spend policies.”
While a Blue Wave win will make things slightly easier for Biden, it won’t be smooth sailing. Pugliese noted that the 60-vote filibuster threshold in the Senate looms large. While another Covid relief deal would require 10 Republicans to join 50 Democrats to end a Senate filibuster, something that’s entirely possible, the economist said that getting those votes from the other side of the aisle could easily mean a limit to the size of the relief package. One workaround to a Senate filibuster could be a budget reconciliation tool, but restrictions connected with the process could limit this option, he added. However, it has been used in the past to fast-track legislation, such as ObamaCare and Trump’s tax cuts.
One benefit of a Blue Wave victory would be that current Senate majority leader Mitch McConnell will no longer have the power to decide which bills will be put to a vote. That becomes the job of Senator Chuck Schumer (D-N.Y.), who will take on the role of majority leader for the chamber.
Other policy changes from Biden’s campaign platform that could have a better shot of moving forward include the expansion of Medicare and promotion of clean energy, while a measure to increase the mass Covid-19 vaccination effort is also a possibility. These fiscal spending programs enhance public welfare and don’t involve a rewrite of the tax structure.
Cowen & Co.’s WRG Washington Strategist Chris Krueger said Wednesday that a Blue Wave win would give Biden his Cabinet, sub-Cabinet, regulators and judges. Biden has picked former Federal Reserve chairwoman Janet Yellen for Treasury Secretary and Katherine Tai, who currently serves as chief lawyer on trade to the chairman and Democratic Members of the House Ways and Means Committee, as the next U.S. Trade Representative.
Krueger expects that the Build Back Better Plan, Biden’s economic recovery platform for working families, could serve as the basis for the next phase of a relief package as early as February, both as a stimulus and tax raise. The overall framework, in part, advances racial equality, invests in infrastructure and manufacturing, supports education and training connected to jobs of the future, and spurs public-private investment through a new small business opportunity plan, according to the Biden-Harris campaign site.