As the election approaches on Nov. 6, not just seats in the White House and Congress are in play, but also control of congressional committees important to advisors and others in the financial services sector.
While Democrats currently control the Senate, holding a slim majority of 53-47, including two independents who caucus with them, 23 seats are up for grabs among Democratic members. Only 10 Senate Republicans face re-election battles this fall. However, if control of the Senate should pass from Democrats to Republicans, the influence of six committees over legislation could change drastically.
On the House side, Republicans sit in 242 seats but only need 218 for a majority. While it is unlikely that they would lose so many, according to analysts, stranger things have happened. Be that as it may, all 435 seats come up for re-election this year, and the effects could be profound both on the House itself and on its five committees even if Republicans retain control, thanks to Tea Party influence.
1) Senate Appropriations Committee
Chaired by Daniel Inouye, D-Hawaii, and with Thad Cochran, R-Miss., as vice chairman, the Senate Appropriations Committee can make or break bills. Inouye is not up for re-election until 2016, so he will remain in charge unless control of the Senate falls to Republicans. Cochran, who will face re-election in 2014, is regarded as somewhat moderate in his positions. He lacks a Tea Party endorsement.
Inouye was chosen by Majority Leader Harry Reid, D-Nev., in 2011 to be one of the negotiators in the ill-fated deficit reduction talks that resulted in the second failure of a “grand bargain.” His selection, according to The New York Times, was surprising in part because of Inouye’s hostility to the talks.
Both Inouye and Cochran are noted for their ability to bring home special projects for their districts. In fact, in August both were “honored” with “Porker of the Month” awards by Citizens Against Government Waste for their inclusion of an earmark for the Medium Extended Air Defense System (MEADS) in the Senate Appropriations Subcommittee’s version of the fiscal 2012 Department of Defense spending bill, to the tune of $380 million. They did so after the House Armed Services Committee, the House Defense Appropriations Subcommittee and the Senate Committee on Armed Services all rejected it.
2) Senate Banking Committee
Chaired by Tim Johnson, D-S.D., who is not up for re-election this year, the balance on this committee could tip if Republicans manage an upset. In that case, as the ranking member, Richard Shelby, R-Ala., would take over.
While Johnson has been called “the banks’ favorite Democrat” by those on the left, as cited in a Huffington Post story, he has proven to be an outspoken supporter of Dodd-Frank—something that has flown in the face of Republican opposition.
Shelby, on the other hand, has been highly critical of the Act both before and after its passage, and has previously spoken out in favor of repeal of the entire law. In particular, he has set himself against the current configuration of the Consumer Financial Protection Bureau (CFPB), saying in July that one of his 2013 priorities would be to replace its single director with a commission.
The makeup of the committee itself could change substantially, with majority members Sherrod Brown, D-Ohio; Robert Menendez, D-N.J.; and Jon Tester, D-Mont., all facing re-election battles. Two other majority members, Daniel Akaka, D-Hawaii, and Herb Kohl, D-Wis., are retiring. Republican member Bob Corker, R-Tenn., is also running for re-election.
Another potential jolt to the committee could be Elizabeth Warren, a Democrat. Should she win her race against Scott Brown, R-Mass., she could find herself on the committee—even though Brown is not. With Warren’s high-profile criticism of Wall Street, it could be a game-changer. Brown, for his part, was one of only three Republicans in the Senate to cast a vote in favor of Dodd-Frank. Despite that, the financial sector supports him—perhaps because he offers such a stark contrast to Warren.
3) Senate Budget Committee
Kent Conrad, D-N.D., who is not seeking re-election, currently chairs the committee. He’s been a fierce advocate for cutting the deficit and balancing the budget. He also sat on the Simpson-Bowles committee and has attempted to advance its recommendations. However, his efforts on both counts have met with obstruction on both sides of the aisle—from fellow Democrats because of their refusal to reform Medicare and Social Security, and from Republicans because of their unwillingness to consider an end to the Bush tax cuts for those in higher brackets.
If Democrats retain control of the Senate, he will probably be replaced by Patty Murray, D-Wash., who is likely to take a harder line with regard to those safety nets than Conrad has. In July, Murray spoke about the automatic cuts set to send the U.S. over the “fiscal cliff” in January if nothing is done, and came down heavily on the side of continuing tax cuts for those individuals making less than $200,000. She also spoke out against the automatic cuts, other than defense, mandated by the sequester.
Should Republicans take over the Senate, ranking minority member Jeff Sessions, R-Ala., would chair the committee instead. Sessions has been outspoken in his support of the budget proposed by Rep. Paul Ryan, R-Wis., the vice-presidential candidate, and has voted against raising taxes on those with high incomes.
4) Senate Finance Committee
Chairman Max Baucus, D-Mont., does not face re-election till 2014. He has spoken out in favor of reform of the tax code and eliminating a number of tax breaks, but has also suggested lowering overall tax rates—in particular the corporate tax rate.
Orrin Hatch, R-Utah, is the ranking Republican and faces re-election this fall after successfully overcoming a Tea Party primary challenge earlier in the year. While he had said during that campaign that his defeat would pave the way for more moderate Olympia Snowe, R-Maine, to take over the committee in the event of a Republican majority, when Snowe announced her retirement the argument became moot.
Should Hatch lose his bid for re-election and Republicans gain the Senate, Baucus would likely be succeeded by Mike Crapo, R-Idaho. Crapo is regarded as one of the Senate’s most conservative members.
Hatch is an opponent of the Affordable Care Act and has discussed ways to repeal it. In August, Hatch and Baucus together engineered a deal on extending billions in longstanding provisions of the “tax extenders” package, such as the research and development tax credit. These business and personal tax breaks have been the focus of numerous lobbying groups seeking to preserve them.
5) Senate Health, Education, Labor and Pensions
Chairman Tom Harkin, D-Iowa, doesn’t face re-election till 2014. In the meantime, he has taken a look at, among other things, the business of buying and selling pensions. Viatical-type arrangements in which veterans and others look to raise immediate cash by selling some of their future pension income to investors offer the potential for abuse, he has said. As previously reported by AdvisorOne, Harkin said that such arrangements “deserve careful scrutiny” and that he would be examining them more closely in an effort to forestall consumer abuse by unscrupulous middlemen.
Another area of concern for the senator has been for-profit colleges, which he blasted in a report issued at the end of July. A number of the institutions, many of them publicly traded, have been blasted by Democrats for capitalizing on student financial aid provided by the government while failing to provide students with either marketable degrees or manageable debt. Republicans generally view them as a free-market alternative to community colleges, which are often overcrowded.
Yet another area Harkin has expressed support for, related not to his service on this committee but rather to his presence on the Joint Select Committee on Deficit Reduction, is the financial transaction tax. AdvisorOne reported that, according to the committee’s analysis, the Wall Street Trading and Speculators Tax Act introduced Nov. 2 of last year would raise $353 billion from January 2013 through 2021.
Mike Enzi, R-Wyo., ranking Republican on the committee, would probably replace Harkin should control of the Senate pass to Republicans. He stands for re-election in 2014. Enzi has attacked the Affordable Care Act and advocates its repeal, saying that, despite the results of a Health and Human Services study that says otherwise, it is causing families to pay more for coverage.
He and Sen. Herb Kohl, D-Wis., as reported by AdvisorOne, also submitted a bill that would reduce the number of loans that participants could take from their 401(k)s. The bill would provide them more time to pay back the loans.
6) Senate Small Business and Entrepreneurship
Mary Landrieu, D-La., chairs this committee, and is not up for re-election till 2014. Among the more conservative of Democrats, she has supported drilling in the Alaska National Wildlife Refuge. She has been outspoken in her disapproval of extending the Bush tax cuts to those with high incomes, although she voted for them the first time out when there was a budget surplus.
Ranking member Olympia Snowe, R-Maine, is retiring at the end of this year. While Mike Enzi, R-Wyo., is senior after Snowe, he is already the ranking Republican on the Senate Health, Education, Labor and Pensions Committee, so it is unlikely that he would take over her position as either ranking member or chairman in the event of a Republican takeover. A likely successor to Snowe, at least from a seniority viewpoint, would be David Vitter, R-La., who is not up for re-election till 2016.
Vitter has opposed the Affordable Care Act and supported the Ryan budget, as well as advocating that the Bush tax cuts become permanent and favoring a permanent repeal of the estate tax.