The Republicans have won back the House of Representatives. Buckle up for some turbulence ahead.
The GOP is pledging to rein in spending, extend former President Donald Trump’s tax cuts and investigate the Biden administration, putting Republicans on a potentially nasty collision course with the Democratic president and the Democratic-controlled Senate.
Read: Republicans clinch slim majority in House, likely signaling gridlock ahead
Republicans clinched the House on Wednesday night, according to the Associated Press, more than a week after the midterm elections. Biden said in a statement that he “will work with anyone — Republican or Democrat — willing to work with me to deliver results.”
Several challenges await when the next Congress opens. Here’s a brief guide about what to expect from a Republican-run House — including some possible areas of compromise.
Washington analysts have warned for months about a fight between Republicans and the Biden White House over the U.S.’s borrowing limit, and have sounded the alarm about what default would mean. Should default occur, “the effects would be devastating for the economy and capital markets,” budget expert Maya MacGuineas told MarketWatch a few weeks ago.
Market Extra: Debt-ceiling showdown could shake up markets after midterm-election results, analysts say
MacGuineas is hoping for a “drama-free debt-ceiling increase,” but comments by would-be Speaker Kevin McCarthy — and pushback from Biden — suggest a tense fight. The U.S. is expected to hit the borrowing limit next year. Democrats in Congress are considering trying to raise the debt limit before year’s end. However, the Biden White House has largely given up hope of Congress raising the nation’s debt limit during the lame-duck session, according a Politico report on Wednesday.
Opinion: Why won’t Republicans rule out attacking Social Security?
Extending the Trump tax cuts
Any tax increases are almost certainly a dead letter in a Republican House. But the GOP’s plans go bigger: Even faced with a Democratic president who’s bound to resist extending them, Republican lawmakers are pushing to continue some of the Trump-era tax cuts.
Henrietta Treyz, director of economic policy research at Veda Partners, recently called making the 2017 tax cuts permanent “the crux” of the GOP’s economic argument against Biden and his fellow Democrats. But Treyz and other observers have warned that doing so could be counterproductive to fighting inflation, which is at a 40-year high.
Read more inflation coverage from MarketWatch.
Still, expect to hear plenty about “pro-growth tax and deregulatory policies,” as the House Republicans’ “Commitment to America,” a collection of campaign proposals, states.
Also read: IRS should brace for ‘broad and deep’ scrutiny if Republicans win the midterms
Biden investigations, and possible impeachment
Republican House members like Marjorie Taylor Greene of Georgia and Bob Good of Virginia have introduced impeachment articles against Biden in the current Congress. But with Republicans having won the House, those same moves could take on extra weight.
The question is, does House leadership go along? McCarthy has distanced himself from the impeach-Biden drive, last month telling Punchbowl News: “I think the country doesn’t like impeachment used for political purposes at all.” The California Republican didn’t rule out impeachment “if anyone ever rises to that occasion,” but focused his reply on national healing and a system “that actually works.”
See: Kevin McCarthy vows to restore Marjorie Taylor Greene’s committee assignments, secure border if he becomes House speaker
Short of a full-on move to impeach Biden over his southern-border or other policies, House Republicans could instead hone in on Alejandro Mayorkas, who heads Biden’s Department of Homeland Security, or another official. At minimum, the GOP House appears poised to probe Biden’s withdrawal from Afghanistan and how COVID-19 spread from China.
The Commitment to America promises that Republicans will “conduct rigorous oversight to rein in government abuse of power and corruption, provide real transparency, and require the White House to answer for its incompetence at home and abroad.”
As MarketWatch’s Rachel Koning Beals has reported, observers expect a previously advanced GOP energy platform to get another look in a new Congress. Republicans in that platform sought to keep alive U.S. natural gas
production, among other measures, as they cast themselves as champions of domestic production.
Read: Republicans’ energy and climate plan targets rising gas prices ahead of midterms
While Republicans’ wins will translate into tougher roadblocks for future green energy
and climate-change legislation, they likely won’t mean a wholesale reversal of tax-friendly incentives targeting home solar, electric vehicles and other items in the newly enacted Inflation Reduction Act, MarketWatch has reported.
See: Will midterm-election results kill the EV and home-energy tax breaks just approved?
Defense spending could provide common ground
Washington isn’t exclusively in for two years of clashes, says Kim Wallace of 22V Research.
“We think that for political reasons and geopolitical reasons, defense spending is likely to continue to bounce,” Wallace said during a recent Barron’s Roundtable, citing research and development spending as well as procurement.
What’s more, members of both parties are keenly interested in the implosion of cryptocurrency exchange FTX. On Wednesday, the Democratic chairwoman and top Republican on the House Financial Services Committee announced a December hearing on “the collapse of FTX and the broader consequences for the digital-asset ecosystem.”
Also Wednesday, Treasury Secretary Janet Yellen said Congress and the federal government must “move quickly to fill the regulatory gaps the Biden administration has identified” where existing rules don’t offer enough protection to crypto investors.
Read on: A GOP takeover of the House could be a boon for crypto legislation