Washington Weekly: Path to 270

The Senate and House passed legislation to extend current government funding to December 20 (see below). The Senate also approved various Biden administration judicial nominees. The House passed a bill to address wildfire management and a resolution condemning Biden administration officials for their role in the withdrawal of US troops and diplomats from Afghanistan in 2021.

Both the Senate and House will be out of session to campaign in their home states and districts and return to Washington after the election on November 12.

Government Funding Extension to December.

Both the Senate and House this week passed legislation to extend current government funding through December 20. President Biden then signed the measure into law. The extension averts a government shutdown, which would have occurred if Congress hadn’t acted by October 1. Congress now has another three months to find agreement on a longer-term funding bill that would span the rest of the fiscal year (through September of next year). We can expect plenty of partisan bickering and drama over funding levels leading up to December 20. Most federal agencies and departments will see flat budgets into next year, though the latest extension did include some extra funding for the VA ($3 billion) and Secret Service ($247 million). The big takeaway: no government shutdown until at least December 20.

1996.

Congress has not met its deadline (September 30) to pass government funding in full for the following year since 1996. This bad habit has over the years become the norm. Government shutdowns in an election year are politically risky and never popular with voters. The last one occurred in 1984, although that specific shutdown lasted only two days. Some lawmakers threaten shutdowns as leverage to try to get their way on certain funding measures. However, that rarely works as an effective legislative tactic. A shutdown was avoided this week, but the threat will return in December.

Secret Service Woes.

A Senate committee released a scathing, bipartisan report on the Secret Service’s actions during and around the time of the attempted assassination of former President Trump in July. The report identifies various agency missteps. It undermines the credibility of the Secret Service at a time when other revered US institutions, such as the Supreme Court, FBI and Department of Justice, have also come under reputational attack from many citizens and lawmakers. The Secret Service woes will be under the spotlight throughout the election, especially as the two major presidential candidates campaign at large public events. There will also be a years-long scrutiny of the agency by Congress and reforms ultimately made to many of its operations. Add the Secret Service woes to the long list of challenges facing lawmakers that will be subject to public debate over the next few years.

Estate Taxes.

As the election nears, we have received a number of questions about the future of the estate tax. Without action by Congress next year, the current exemption level of $14 million (for individuals) will be cut in half to roughly $7 million ($14 million for married couples) in 2026. The fate of the estate tax will depend largely on the outcome of the elections. If Republicans sweep the election, they will seek to keep the higher estate tax exemption level. A sweep by Democrats likely would result in a return to a lower exemption amount. Some Democrats also will seek to increase the tax rate. A divided government scenario would pose the biggest unknown. A bipartisan compromise would have to be crafted, and it is difficult to know how the estate tax would be negotiated. Given that both parties will have bigger priorities at stake in the negotiations on a tax bill, a final resolution could result in a less generous estate tax structure than exists today. We will have a better projection after we know the outcome of the elections.

East Coast Port Strikes.

There is growing concern about the possibility of a strike on October 1 by the International Longshoreman Association, a union representing 45,000 dockworkers on the east coast and along the Gulf of Mexico. The union has made several demands that have not been met. Negotiations will continue over this weekend with the hope that an agreement can be struck or that the strike could be delayed until after the election. The Biden administration has said it will not take action (by invoking the Taft-Hartley Act) to force union members to return to work if a strike occurs. However, it is well aware of the possible political and economic ramifications of a prolonged strike. One financial firm estimated that there would be a $5 billion per day hit to the US economy if the strike occurs. We are often asked whether there will be an unexpected surprise late in the campaign that may affect its outcome, and this strike could be that issue.

Path to 270.

While both the Harris and Trump campaigns have a common goal of reaching 270 electoral votes to win in November, they’re taking different paths to reach it. Former President Trump and his team have determined that their most probable path to victory runs through Georgia, North Carolina and Pennsylvania. Should he win those three battleground states (and the other states he won in 2020), he would have exactly 270 electoral votes. Polling aggregates currently have him up 2% in GA, tied in NC and down 1% in PA. Vice President Harris believes that her best pathway to victory is to win the traditional Democratic “blue wall” of Michigan, PA, and Wisconsin (she leads by 3% in MI, 1% in PA and 2% in WI in polling aggregates). Those three states, combined with a single electoral vote in Nebraska's second congressional district (which Biden won in 2020), gets her to exactly 270. Both candidates have other avenues to winning the White House but watch those states on election night (particularly PA, which they both deem as essential).

Improbable Senate Seats?

Most of the attention for the Senate has been focused on races in seven seats currently held by Democrats (AZ, NV, MI, MT, PA, OH and WI). However, there are a few others also worthy of attention. Florida is a state that has trended away from Democrats in recent years, but current Senator Rick Scott (R) has won three statewide elections, all with less than 51% of the vote. Texas has been Democrats’ white whale for the past decade. While it’s highly unlikely to vote Democratic at the presidential level, the polls between Senator Ted Cruz (R) and his challenger, Congressman Colin Allred (D), have continued to tighten. Both races will be incredibly expensive, which helps the incumbents. Republicans, meanwhile, also are eyeing the open Maryland Senate seat, where popular former Governor Larry Hogan (R) is facing off against county executive Angela Alsobrooks (D). Ordinarily this would be a safe Democratic seat, but with the lack of an incumbent and Hogan’s popularity and strong name identification, the race has been closer than expected. We don’t expect any Senate seats to flip outside of the battlegrounds, but in the event one party wins in a landslide, these seats will be in play.

Nebraska in the Spotlight.

Senator Lindsey Graham (R-SC) raised eyebrows last week when he missed votes in Washington to appear in Nebraska to advocate for the state’s Republican leadership to change how its state awards electoral votes. Currently, NE is one of only two states (Maine is the other) that award their electoral votes based on congressional districts. While NE is a reliably red state, its suburban second district has trended toward Democrats over the years and was easily won by President Biden in 2020. Republicans in the state legislature made a play earlier this year to change the state to a “winner-take-all” arrangement (like 48 other states), but the effort didn’t muster enough votes. While a single electoral vote may not seem like a lot (each congressional district awards one electoral vote to the winner in NE), it could be pivotal in 2024. The Harris campaign has prioritized (see above) the traditionally “blue wall” states of Pennsylvania, Michigan and Wisconsin as its easiest path to 270 electoral votes and victory in November. However, if she was to win those three states and lose the other battleground states (AZ, GA, NC and NV), that would require her to win NE-2’s single electoral vote to secure 270. If she lost it or Nebraska changed how it allocates the votes, that map would result in a 269-269 tie. Republican efforts in the legislature to become a winner-take-all state seem to have stalled as of now, but it bears monitoring as that single electoral vote could play an outsized role.