Fall 2022 — Forethought Advisors, LLC

The Quarterly Newsletter of Forethought Advisors

Our quarterly newsletter provides perspective, framing and political insight as we interpret the direction and objectives of Congress and the Biden Administration for CEOS and their corporate government relations teams. As experienced, seasoned government relations professionals, Larry Parks and Tim Simons recognize that corporate America operates effectively and efficiently in environments where they know what’s coming next - certainty. With insight, analysis, and some forecasting, we help our clients accurately evaluate the risks and political advantages during their campaigns to achieve legislative and regulatory objectives. Forethought Advisors provides the strategic leadership that can help propel our clients to the next level.

1 UNPREDICTABLE MIDTERM ELECTION CAMPAIGN DRAWS TO A CLOSE

WASHINGTON – The 2022 midterm election nears with scores of races in flux and prognosticators unable to say with certainty which party will prevail. It has been an unpredictable midterm cycle, in part, because of surprising new trends emerging among voters and the dramatic impact that victory for one side or the other will have on the public as well as major industries and business sectors.

President Biden seems to grasp there would be transformational change if Republicans take over Congress, telling those at a recent reception: “If we lose control of the House and Senate, we have a different world. There’s so much at stake.”

On these pages, Forethought Advisors has looked into the crystal ball and projected which industries and business sectors would be impacted most by the various scenarios that could play out on Election Day. We project the winners and losers in each scenario. For this story, we tapped into our political networks to provide our followers with the score on the playing field at this moment and some unique insights, knowing the landscape may shift again before Election Day. In the House, put simply, Republicans have the same advantages they have had throughout – Biden unpopularity, volatile national economy, and rising crime, but haven’t put the House safely away. The Senate comes down to whether Republicans can flip seats in Georgia, Nevada, New Hampshire, or Arizona, while holding their seats in Pennsylvania, Wisconsin, and North Carolina. The GOP needs one additional seat for a Senate takeover.

But there are themes beyond wins and losses that voters will either confirm or contest on Election Day, with the answers telling us a lot about the America’s future.

On the Republican side, we will have further evidence of whether former President Donald Trump is a boom or a drag for his party. His endorsed candidates, some of whom have been deemed flawed even within the GOP, nevertheless won primaries in several states. Will it limit the GOP’s gains in the House or cost them control of the Senate? Will multiple investigations into Trump be a drag on Republican candidates? Trump’s messages to his base are divisive and essentially a veiled racial threat: If you do not vote, the American way of life will change.

For Democrats, their prospects hinge on whether support for a woman’s right to control her body can supersede President Biden’s unpopularity, spiking inflation and the Fed’s interest rate hikes. Of course, there are also a range of subplots just under the surface that will also influence the outcome. Which way will Latino voters sway in the key states of Nevada, Arizona, California, and Colorado? Will Black turnout boost Senate candidates in Ohio, Pennsylvania, Wisconsin and North Carolina? Will White women make the choice issue their top priority? Will Democrats benefit from the January 6th investigation? Will the vicious attack on House Speaker Nancy Pelosi’s husband, Paul, change races in anyway?

Meanwhile, redistricting after the 2020 census reconfigured congressional districts, but it is not clear who the eventual winners will be when the votes are tallied. Democrats may be bolstered in California congressional races, but Republicans are certainly poised to benefit big in Florida and Texas and are waging a spirited fight in New York.

By early summer, Republicans were poised for a traditional off-year election victory in which the President’s party historically loses, on average, 22 seats in the House. But on June 24, the ground shifted under the electorate with the Supreme Court’s 6-3 decision overturning Roe v. Wade, and a woman’s constitutional right to an abortion. Suddenly, Democrats had life. With their party energized and joined by independent and Republican women, a decisive victory for abortion rights was won in traditionally conservative Kansas, while Democrats won five special elections, all fueled by the rallying call for abortion rights.

Surely, another factor in the Democratic victories were the surprising legislative accomplishments over the summer. President Biden and Democrats orchestrated a $700 billion climate and health care-pricing bill, including a $35 a month cap on Medicare co-pays for insulin. Moreover, legislative victories included improvements in veterans' health benefits, the CHIPS and Science Act - an industrial policy focusing on the semi-conductor industry, gun violence prevention, and Senate approval of Finland and Sweden to join NATO.

But by mid-September, Republicans regained their footing by aggressively blaming President Biden and Democrats for rising crime in the cities, spiking inflation and a flood of immigrants crossing the southern border. More recent polls indicate that Independent and Republican women grew more concerned about these Republican themes and now rate abortion policy as a secondary issue. This shift sparked the rapid GOP comeback, leaving the landscape muddled, but with Republicans with clearer paths to victory in the race to control the House, while the Senate remains largely a toss-up.

To respond, Democrats called a Hail Mary, enlisting former President Barack Obama into active duty. He swung into action with appearances and robocalls in several states, including Wisconsin, Michigan, Illinois, Pennsylvania and Georgia hoping to rebuild enthusiasm among minorities and younger voters, although they are older and with different concerns than when they propelled him to two presidential victories. Democrats hope the former president, along with President Biden’s student loan forgiveness program, can energize young voters and help get them to vote. Not to be overlooked is that the Obama organization has the best voter list in America – about 15 million people, mostly young, who supported his presidential campaigns and may not have voted since.

Former President Obama Campaigning with Georgia Democrats

Across the country, the national issues and themes are playing our for each party on the ground and on the saturated airwaves. Here are four House races to watch that will give early indications on how thing are going for each party on election night.

Democratic Rep. Susan Wild (PA-7)

PENNSYLVANIA 7

Two years ago, Democrat Susan Wild defeated former Lehigh County Commissioner Lisa Scheller by just 14,000 votes to continue representing this Lehigh Valley district in eastern Pennsylvania that includes Allentown, Bethlehem, Easton, Bangor and East Stroudsburg. The two face off again next Tuesday and it could be even tougher for Wild: in redistricting the district that Biden won by five points shifted to one that he would have only won by a half point. So, if Scheller wins the rematch, it could be a strong indication that other swing districts across the country are backing the Republican narrative on the economy and crime. The outcome will largely be decided by working-class White voters even though Blacks and Hispanics collectively make up just under 30% of the electorate. And, a sign of the uphill fight for Wild is that a recent Muhlenberg College/Morning Call poll found that 34% of likely voters ranked inflation as the most important issue, with abortion second with 28%. With many union households in the district, the contest will test whether union members are moved more by President Biden’s infrastructure bill and other legislation that has created and grown union jobs or inflation and the cultural issues championed by Republicans. These are the types of voters that Biden won in 2020 while carrying the state against President Donald Trump.

Republican Rep. Steve Chabot (OH-1)

OHIO 1

First elected to the House in 1994, Republican Rep. Steve Chabot has held the seat continuously except for 2008, when he was defeated in the Obama-led Democratic wave of 2008. Still, he reclaimed the seat two years later, and has held it since. The district includes Cincinnati, eastern Hamilton County and Warren County. But next Tuesday Rep. Chabot may face his toughest challenge since 2008. The newly configured Ohio 1 would have provided 53.5% of its votes to Biden in 2020 and only 45% to President Trump. And, his opponent, Democrat Greg Landsman is well funded and a popular Cincinnati City Councilor. A Democratic win here on Tuesday in a race rated as a toss-up or lean Republican by most forecasters would indicate that Democrats are having a good night. The district is 66% White, 21% Black, 4.4 % Asian and 4.3% Hispanic. This is another race where Democrats need strong support from suburban White women who back a woman’s right to an abortion.

Democratic Rep. Jennifer Wexton (VA-10)

VIRGINIA 10

The race for this seat, in which incumbent Democratic Rep. Jennifer Wexton faces a serious challenge from Republican Hung Cao, demonstrates how much slippage there may be among the party’s recent core voters. The district has one of the highest household incomes in the country at $132,276, and 55.8% of residents are college graduates. Professional and educated voters have largely backed Democrats during the Trump era, but Rep. Wexton has been unable to shake Cao in a district that President Biden won by a whopping 19%. Cao, a retired U.S. Navy Captain, is a smart, hard right conservative. Cao is anti-abortion and recently said he would not support more military aid to Ukraine. He has also questioned the treatment of suspects arrested in the Jan. 6 attack on the Capitol, saying they have been denied due process. Cao, a Vietnamese refugee, may benefit from support of other Asians, who make up 17.1% of the district. Rep. Wexton holds a spending advantage, but she has invested heavily in advertising and it shows on the ground: anecdotally, residential areas throughout Prince Williams and Loudon counties display far more Cao home signs than Wexton, a factor that may help him build momentum leading to Election Day. Cao is also helped by an influential movement, particularly in Loudon County, against admission policies perceived as anti-Asian at public magnet schools as well as strong opposition to Critical Race Theory. If Republicans take this seat from Democrats, it likely signals they are comfortably taking control of the House.

Republican Rep. Michelle Steel (CA-45)

CALIFORNIA 45

This race pits Republican Congresswoman Michelle Steel against Democratic challenger Jay Chen, a former Navy Reserve intelligence officer. This is a new district drawn to empower Asian American voters in parts of Los Angeles and Orange counties. The incumbent in the old 45th District, Democratic Rep. Katie Porter, is seeking election in the California's 47th Congressional District. But the intent to solidify Asian influence for those of Vietnamese, Chinese, Korean and Indian descent, has instead resulted in a divisive campaign between Steel, a Korean American, and Chen, who is Taiwanese American. Steel (48.2%) and Chen (43.1%) were the top vote getters in the non-partisan primary.

Some forecasters have the race listed as leaning Republican, but the demographics give the GOP reason to worry. College graduates are 56.1% of the population, and median household income is $111,197. Both those demographics have trended Democratic in recent elections. Asians make up 27.8% of the population and Hispanics are another 19.7%. In California, Hispanics and Asians historically support Democrats over Republicans. But the inter-Asian conflict may supplant previous voting trends. If Chen can pull an upset here, it could mean that Democratic candidates are surviving the national political currents that have put their control Congress in peril.

Quick Takes:

Both sides looking to California as a path towards control of the House. Eighty-six races are competitive nationwide, with 10 in California, mostly in the Central Valley and Orange County. California had 53 seats in this Congress (reduces to 52 in the next Congress), but Republicans held only 11 seats.
Surprisingly, New York, another Democratic stronghold, is also a major battleground. The state has eight competitive races, with Republicans trying to flip as many as five. Meanwhile, Democrats hope to pick up 4 seats.
A federal appeals court has put a hold on student loan forgiveness just as the program was to begin erasing debt. Will this motivate young voters?
In Pennsylvania, Democratic Senate candidate John Fetterman showed the effects of his stroke in his lone debate with Republican Dr. Oz. But the dynamics of this race have not changed: the Democrat will win if there is an overwhelming Black turnout in Philadelphia and Pittsburgh.
Fetterman vs. Oz in Pennsylvania Showdown
Recent poll by the National Association of Latino Elected and Appointed Officials Educational Fund found Hispanic support for Democrats at a seven-week high, with 57% of Latino voters supporting Democrats for the House and 64 percent with favorable views of President Biden. Support for Republicans remained steady and above 2018 levels, with 31% supporting Republican candidates for the U.S. House -- compared to 21% percent at the same point in 2018.
The clout of Latino voters will be tested in the new Colorado’s 8^th district, north of Denver, which is 39% Latino. Democrat Yadira Caraveo, a Latino pediatrician, represents the area in the State Legislature, while her opponent, Republican Barbara Kirkmeyer, serves in the State Senate. When it comes to Latino voters, there are two main questions: will they come out to vote, and are they Republican or Democratic votes?
Much to the surprise of many, the Senate race in red-state Ohio is a toss-up, with Democrat Tim Ryan hanging tough against JD Vance. Democrats have already branded Ryan a winner regardless of the outcome because the competitive race has drawn millions of GOP dollars to support Vance that could have been used in other races.
Democrats raised eyebrows by continuing to spend on Black Senate candidates in Florida, North Carolina and Wisconsin who are running competitive races, but any victories would be major upsets. Some argue the money could be better spent on races where Democrats have better chances to win, but the party is showing loyalty to its base.
In Nevada, Republicans have taken a slight lead in a bid to flip the Senate seat of Democratic Sen. Catherine Cortez Masto. The incumbent, a Latino woman, needs to rally her Hispanic base and get a large Black turnout to triumph.

2 What Republican Control of Congress Would Bring

WASHINGTON – At noon on January 3, 2023, House Speaker Kevin McCarthy launches his reign with announcements of committee investigations into the Biden Administration, vows to overturn environment laws and regulations, assurances to corporate America that environmental, social, and governance (ESG) investing and pursuing racial equity will no longer be priorities and offers hints of a new tax cut for businesses and middle-class Americans.

Amongst the Republican leadership, with Rep. McCarthy installed as Speaker, his current #2, House Republican Whip Rep. Steve Scalise (R-LA), will serve as Majority Leader. This would create a vacancy in the Whip position where candidates would likely include Rep. Tom Emmer (R-MN) and Rep. Drew Ferguson (R-GA).

With Republicans only needing a swing of five votes in the House of Representatives to take over the chamber, this scenario is not only possible, but most pollsters consider a Republican majority in the House to be the most likely election outcome. What is remarkable is that there remains doubt as to whether the GOP can pull it off, even though the average number of seats loss by a president’s party in midterm elections is 22 and the GOP is benefiting from favorable redistricting maps in several states.

In early summer, the political winds had turned decidedly against Republican candidates as Democrats were bolstered by a modest uptick in President Biden’s approval ratings, a powerful backlash against the Supreme Court overturning Roe v. Wade and its right to an abortion, lower gas prices and an array of troubled Republican candidates stumbling in states and districts that Republicans were favored to win. But more recently, polls show voters paying attention again to the concerns cited by Republican candidates - gas prices trending upwards, inflation remaining stubbornly high, and the Federal Reserve continuing to raise interest rates. The looming question is whether the abortion issue overcomes these economic anxieties and boosts the fortunes of Democrats at the finish line.

Republicans winning, even narrowly, in the House means the GOP rules that kingdom. The majority party controls the levers of governance, including setting priorities and votes, running all the committees, holding committee hearings, and launching investigations – it is very much the ruling party’s domain. For instance, Speaker Pelosi’s House has been prolific in getting major legislation passed with its five-vote majority. A Republican House majority, however, is far less likely to get legislation enacted. Moreover, if Republicans control both branches of Congress after the Midterms, they may opt to spend their time positioning for the Presidential election of 2024.

Nevertheless, anticipate a swift return to the nasty budget wars that disrupt government operations and shut down government functions. In this polarized environment, the most fiscally conservative Republicans, such as members of the Freedom Caucus, may return to their tactics of 10 years ago when they wielded their influence to close the government. This round their influence could be used to reduce spending for Biden’s prized accomplishments – the Inflation Reduction Act, the Bipartisan Infrastructure legislation, and the Cares Act. But score a big victory for Biden – using his decades of experience on Capitol Hill, the President’s initiatives were frontloaded with huge pay-outs in the first year when Democrats are in control.

Still, President Biden may be forced to resort to some dealmaking, such as accepting some reduced spending for his pet projects, to keep the government operating on full cylinders. Democratic House and Senate members may direct agency action through letters to agencies, town halls, and agency-directed field round tables. On the other hand, Inspector Generals, (IGs) may play an outsized role in the roll out of federal spending from the three major spending bills. This may prove problematic for Democrats: the Administration has not replaced all the Republican IGs, allowing these offices space to disrupt the impact of enacted legislation and be used to impede Agency actions.

Also in the economic mix will be efforts to extend the Trump Tax Cuts, some of which expire for individuals in 2025. Republicans may also move to make permanent tax credits under the Tax Cuts and Jobs Act. These tax issues will prompt a messaging battle with Democrats as Republicans are sure to maintain that their moves support working families, while Democrats peg the measures as giveaways to corporations and the wealthy.

As companies scramble to comply with new rules and regulations imposed by the Biden Administration including expansion of ESG, Republican members of Congress may propose legislation and support court challenges that create confusing environments for corporate leaders. Already, companies face a complicated environment in places like Texas and Florida, where Republican state leaders denounce ESG investments. In Florida, Gov. Ron DeSantis has panned ESG investing as a danger to economic freedom and denounced CEOs who consider it in their business strategies as “corporate cartel elites.” With Congress as a platform, Republicans may strike even harder, putting businesses in the middle of partisan warfare.

Expect Republican lawmakers from oil producing states, such as Texas and Louisiana, to prioritize derailing Biden’s stricter environmental policies, which pose obstacles for energy producers and possibly threaten jobs in some states. Funding for clean energy initiatives may be targeted. With the backing of the energy industry, Republicans could go all in for a deregulatory agenda and play offense with proposals to expand drilling on federal lands, more hydropower and boosting domestic energy production. This will be welcomed by the powerful natural gas lobby that is already searching for ways to delay or avoid the Biden Administration’s “anti-fossil-fuel” agenda. Republican lawmakers are preparing for oversight hearings that can slow the Administration’s energy priorities.

But Republicans may find themselves in a pickle over the actions of Buy Now, Pay Later industry. Delinquencies are rising for these non-conventional lenders as low-income Americans turn to them in desperation for credit as prices rise, traditional lending is slowed and credit cards companies lower credit lines and tighten approvals. At some point, consumers and their advocates may press the Administration and Congress to come to their rescue. Those most impacted will be young people and low-income Americans, key demographics whose clout in elections will increase as the Baby Boomers age. But while Democrats might press to limit the connections between these last-resort lenders and established financial institutions, Republicans will be far less likely to make more regulation a priority.

Biden’s equity agenda, which includes a push to increase homeownership among Blacks and Hispanics, will certainly face new obstacles. HUD Secretary Marcia Fudge and Sandra L. Thompson, the Director of the Federal Housing Finance Agency (FHFA), may take up residence on Capitol Hill as their progressive policies come under fire at hearings. Both Black women have pursued policies and practices to increase homeownership for families and individuals in under-resourced communities, a priority that will not be popular with Republicans. Specifically, expect Fannie Mae and Freddie Mac to be targeted for consumer-friendly initiatives that include down payment assistance, lower mortgage insurance premiums and a credit reporting system factoring in rent payment history.

Further, rising mortgage rates are already slowing the housing market, while the volatility of the stock market wreaks havoc with 401k funds – concerns for middle-class families, retirees and soon-to-be retires. All of whom are key voting blocks. Meanwhile, the Community Reinvestment Act (CRA), which forces financial institutions to lend in the communities where they are located, is always a popular target when Republicans are in power. Expect efforts to limit its scope. And the Securities Exchange Commission will be scrutinized because of its forcefulness in pursuing ESG with registered corporations.

Historically, Republicans have shown amazing discipline – even more than Democrats – in getting legislation passed with slim majorities in the House and/or Senate. But the path to enacting legislation will be blocked, at least for the next two years. President Biden will be forced to wield his veto power to block the Republican agenda.

Thus, it is possible that Republican leadership focuses on messaging and exposing perceived Democratic ‘corruption’ versus a legislative agenda. A wild card over the next year or so, is the economy and whether federal action beyond the Fed Reserve’s rate hikes will be necessary to tame inflation or support families. At the core is a central question of whether the American people will tolerate a recession that takes away working-class wage gains. How would a Republican-controlled Congress respond to a need for an expanded safety net during a Fed-induced recession? Especially since former President Donald Trump’s popularity among working-class families in critical states was due in part to his expansion of the safety net (e.g., PPP loans, unemployment insurance expansion and free Covid test/treatments). A return to traditional GOP austerity may have consequences for this important voter base.

A sleeper event is the likely Lame Duck Session if Congress flips to Republican control. The key will be whether there is an Omnibus Appropriations bill to fund the government through September 2023 or will Congress pass a Continuing Resolution for a shorter period. If the former, then the GOP leaders will have de facto decided not to focus on fiscal policy going forward but emphasize messaging and framing for the 2024 presidential election.

Stay tuned.

3 What Happens if Democrats Keep Control of Congress

WASHINGTON - With Democrats in the House and Senate operating on very thin majorities the last two years, enacting legislation has required a delicate balancing act between the party’s moderate and progressive members, even with President Biden in the White House. If Democrats pull an upset in the midterm elections and resume control of both chambers of Congress, this sometimes-messy legislative process will still create big winners and losers in major industries and sectors across the country.

The normal pattern over the past 24 years in midterms elections is for the President’s party to lose an average of 22 seats. President Obama lost 61 seats in 2012 following the bitter debate over Obamacare and President Trump lost 41 seats in 2018. But this election is less predictable. Although Republicans are on the upswing towards Election Day, there are scenarios where Democrats could prevail by the slimmest of margins in the House and Senate.

Democratic victories would intensify their work on the party’s priorities, which include emboldening the middle-class, advancing private sector environmental, social, and governance (ESG) investing, enacting initiatives to advance racial equity and coercing financial institutions toward consumer-friendly practices. In fact, the housing, banking, and mortgage finance industries are among the sectors that could experience the most change with Democrats in control.

A Democratic upset would be welcome news to the childcare, daycare, and eldercare industries, as well as manufacturers, all of which had anticipated federal dollars flowing their way from provisions in the Build Back Better legislation that were shuttered.

In fact, the entire housing sector, especially homebuilders and mortgage lenders, could benefit from federal subsidies and policies aiming to stabilize the marketplace, and help them grow – the housing sector and mortgage industry have been devastated by the Fed’s interest rate increases. Similarly, rental housing developers would be boosted by increases in rental subsidies. And, the Consumer Financial Protection Bureau, which would be targeted for extinction by Republicans, would get a new lease on life. Another winner would be the clean energy industry, which received substantial funding from the Inflation Reduction Act and would likely see more funding directed their way.

Meanwhile, the biggest loser would be in the energy sector. Led by President Biden, Democrats have sought to limit expansion of natural gas and fossil fuel industries. The buy now and pay later companies may also be impacted. With Democrats seeking to increase financial security for working families, there would be less demand for these services. Overall, the C-suites anticipating a wave of deregulation from Republicans, will be jolted because Democrats would seek more, rather than less, regulation from the Securities and Exchange Commission and other government regulators.

Already, Democrats have a comprehensive housing program in waiting – a number of initiatives slated for the Build Back Better legislation never made it into the Inflation Reduction Act that passed in August, leaving many programs in the House waiting for a green light to be moved forward. Policies that help consumers and boost the housing market in a high interest rate environment would be a priority for Democrats as they seek to sustain construction jobs, limit fallout in the real estate industry and increase the supply of housing to moderate prices.

To-be-sure, with mortgage rates pricing families out of the market, Democrats will seek to ease the burden on middle-class and moderate-income homebuyers. There could be interest rate buy downs and other programs aimed directly at making home purchases more affordable. With experts citing the lack of starter homes on the market as a problem for working families, Democrats may seek innovative ways to spur construction of affordable homes.

Moreover, the Democratic blueprint for fixing housing would enable the construction, rehabilitation, and improvement of more than one million affordable homes. By increasing the supply of housing, Democrats say it would reduce the inflationary pressures that lead to higher prices for renters and homeowners. Their plan would also address the capital needs of the public housing in big cities and rural communities. There would also be significant investments in rental assistance, expanding vouchers to hundreds of thousands of additional families.

Another major investment would be down payment assistance for first-time homebuyers, which would enable hundreds of thousands of first-generation homebuyers to purchase a home and build wealth. As a centerpiece in the President’s equity agenda, the housing plans also call for investments in community-led redevelopments projects in under-resourced neighborhoods, removing lead paint from hundreds of thousands of homes, and incentivizing state and local zoning reforms that enable more families to reside in higher opportunity neighborhoods. And progressives want more corporations engaging on the “S” in ESG, referring to ethical and socially conscious themes including diversity, inclusion, community-focus, social justice, and corporate ethics, in addition to fighting against racial, gender, and sexual discrimination.

Other legislation ready to be rolled out includes universal and free preschool for all 3- and 4-year-olds, which would be the largest expansion of universal and free education since communities and states established public high schools 100 years ago; extending the expanded child tax credit for 39 million households; permanently improving Medicaid coverage for home care services for seniors and people with disabilities.

While it has not drawn much attention on the campaign trail, Democrats have legislation prepared that would address crime and violence by implementing workplace development programs that train idle teens and young adults for quality jobs. One piece of legislation, the Break the Cycle of Violence Act, proposes a combination of community-oriented intervention programs and commonsense gun violence prevention policies that experts say can cut gun violence rates in urban cities in half in as little as two years.

What is surprising is that as Republicans hammer the opposition on urban crime, Democrats have not broadly promoted their strategies aimed at rehabilitating teens and young adults before they turn to crime. If Democrats lose one, or both, chambers of Congress, it may be seen as a missed opportunity.

4 What Happens if Congress Splits Between Democratic and Republican Control

WASHINGTON - If the midterm election leaves mixed control of Congress, it would likely be with Democrats leading the Senate, while the House flips to Republican leadership. The result would be a Congress filling the airwaves with rhetoric, as both sides build their messaging for the 2024 presidential race, but there would be few legislative achievements.

However, the divided Congress could cause some shifts on major policy, including the country’s unwavering support for Ukraine in the war against Russia.

House Minority Leader Kevin McCarthy (R-CA) has recently signaled that under his guidance Republicans may not support more aid to Ukraine. While support has been bipartisan thus far, Rep. McCarthy, who is likely to be House Speaker if the GOP takes control, said there could be a policy shift in the cards. Since 2021, the U.S. has authorized more than $60 billion in aid to Ukraine, and more than $18.2 billion in security assistance. But turning off the faucet could carry political risks: Last month, a Pew Research poll found that most Republicans and Democrats believe that that the U.S. is providing the right amount of support.

Rep. McCarthy has released the party’s legislative agenda and named it “Commitment to America.” But it is short on details, while calling broadly for border security, fighting crime and repealing proxy voting in the House, a measure both parties had supported during the height of the COVID-19 pandemic.

Holding the Senate would be a significant accomplishment for Democrats, especially coming in a midterm election where they were expected to be annihilated because of rising interest rates, high inflation, gas prices and crime. Further, it would bolster President Biden’s judiciary strategy of appointing more judges, which has quietly been a major accomplishment for the President.

In his first year in office, President Biden appointed the most federal judges since President Reagan in 1981. His appointments include Associate Justice Ketanji Brown Jackson, the first Black woman appointed to the U.S. Supreme Court, 25 judges to the U. S. Courts of Appeals and 58 judges to District courts. Meanwhile, 57 judicial nominees await Senate action, and another 83 vacancies need to be filled.

We can also expect that two key banking regulatory posts would be filled – the Comptroller of the Currency (OCC) and Chair of the Federal Deposit Insurance Corporation (FDIC). Filling those positions, which need Senate approval, would provide Democrats with high profile leaders to engage with the financial services sector on a wide range of issues. These posts could become critically important, especially if the Federal Reserve continues to raise interest rates and non-depository institutions continue contracting their lending in the consumer finance and mortgage sectors. A tight money environment may push Democrats to seek relief for middle-class and low-income families, and the financial services sector would be key to that effort.

Senate leaders could also wield additional influence: with Biden in the White House, they could collaborate with the President to use his powers to issue executive orders on issues where the Senate cannot get legislation through a Republican-led House.