Republicans have won majorities in the House and Senate. Results in some states have not yet been finalized, but Republican gains appear to be somewhat larger than most observers expected.
KEY POINTS:
1. Republicans have won a net seven seats in the Senate, giving them a majority of at least 52 seats. As of this writing, final results in Alaska, Louisiana, and Virginia have not yet been determined, but preliminary results suggest that Republicans will win another two seats in those states, for a total gain of nine seats. If so, this would lead to a final Senate composition of 54 Republicans and 46 Democrats (counting two independent senators who currently caucus with Democrats). Results in Alaska and Virginia should be settled soon, while the Louisiana contest will go to a runoff election to be held December 6.
2. Results in the House are not yet final but preliminary results show slightly greater Republican gains than many observers expected. Republicans currently hold 234 House seats and have won 12 additional seats so far, with results in several contests not yet finalized. Preliminary results in those other races indicate Republicans could end up with a roughly 15 seat overall gain, or just under 250 House seats.
3. Under a Republican congressional majority in both chambers, our expectation has been that the legislative agenda will be more active in 2015 than it has been over the last year, with a possibility of action on corporate tax reform and infrastructure funding, among other issues. We also see some risk of renewed uncertainty ahead of fiscal deadlines, at least until it becomes clear how issues such as the debt limit (likely necessary by October if not earlier) will be addressed.
4. The slightly larger than expected Republican gains should give Republicans more flexibility to get legislation to the President's desk, for two reasons:
- First, the budget process allows Senate passage of certain fiscal measures with only a simple 51-vote majority, rather than the 60 votes often required. This process would have been difficult to use with a very narrow Republican majority, since finding unanimous Republican support might be difficult in light of divisions within the party, but it could become more important if Republicans hold 54 seats.
- Second, some Republican-supported legislation would be closer to the 60 votes usually needed to pass the Senate. This could come into play regarding incremental policy changes where there is some Democratic support, such as approval of the Keystone pipeline, for example.
Source: Goldman Sachs
