Could the Senate Switch?

With one of Georgia’s two U.S. Senate races called so far, Democrats are now just one seat away from control of that chamber.

Democrat Raphael Warnock has been projected to win Georgia’s U.S. Senate runoff election against Sen. Kelly Loeffler (R), who was appointed to the seat in December 2019 to replace the ailing Sen. Johnny Isakson (R). However, the race between incumbent Senator ?David Perdue (R), whose Senate term expired Sunday, and Democrat Jon Ossoff is still too close to call. 

The outcome of Georgia races will ultimately determine majority control of the Senate, where Republicans currently hold a 50-to-49 advantage following Warnock’s victory. If Democrats win both seats, Vice President-elect Kamala D. Harris would be the tie-breaking vote. 

If that plays out, not only would Democrats control the Senate’s agenda, but they would also gain control of all the committees—and with control of both the Senate and the House (Democrats held on to a narrow majority there, though it’s the slimmest in two decades), they would be able to utilize the budget reconciliation process—and that would make it much easier to pass significant legislation—including retirement policy. 

While it takes 60 votes to end a filibuster to move most legislation through the Senate there is, however, a special “budget reconciliation” process that Congress can use to implement key tax and spending proposals under expedited procedures that only take a simple majority to pass. The catch is that every proposal must have a budgetary impact and the provisions can’t be effective beyond the budget’s 10-year window. This is the process that was used to pass the Tax Cuts & Jobs Act (by Republican majorities) and parts of the Affordable Care Act (by Democratic majorities). 

In sum, under single-party control of Congress by Democrats, it’s more likely that we’ll see a bolder agenda, particularly on taxes, health care and retirement. This could include not only Biden’s proposal to increase the capital gains tax, but also the proposal to eliminate the 401(k) deduction and replace it with a tax credit. 

More precisely, as Brian Graff, CEO of the American Retirement Association observed, “Things will get even more busy here in DC—if that’s possible.”