Republicans to take House majority, Democrats hold Senate

We know a lot more than we did at this time last week, even if a few of the 2022 election outcomes remain uncertain. Republicans will control next year’s House of Representatives, having secured 218 seats so far. Democrats have won 212 seats. The final count could be anywhere from 222R-213D to 218R-217D, as results are still pending in five districts (as of Friday afternoon):

• California’s Third, where Kevin Kiley (R) leads Kermit Jones (D) by less than 10,000 votes, with almost 40% of the vote remaining to be counted

• California’s Thirteenth, where John Duarte (R) holds a lead of just over 800 votes over Adam Gray (D), with approximately seven percent of the vote uncounted

• California’s Twenty-second, where incumbent Rep. David Valadao (R) has a 4,445-vote lead over Rudy Salas (D), with 25% of the vote still uncounted

• California’s Thirty-fourth, where the seat will remain in Democrat hands, as incumbent Rep. Jimmy Gomez (D) holds a 3,310-vote lead over another Democrat, David Kim

• Colorado’s Third, which is headed to a statutory recount as incumbent Rep. Lauren Boebert (R) holds a 551-vote lead over Adam Frisch (D)

On the other side of Capitol Hill, Nevada reported on Saturday that Senator Catherine Cortez Masto (D) had won her race against Adam Laxalt (R), bringing the party split to 50 Democrats and 49 Republicans, with a runoff scheduled in Georgia for December 6 between incumbent Senator Raphael Warnock (D) and Herschel Walker (R). Early voting in Georgia starts on November 28.

House Republicans choose leaders
House Republicans met earlier this week to choose their leaders for the 118th Congress, as Republican Leader Kevin McCarthy (R-CA) proclaimed the end of one-party rule in Washington. In officially secret ballots, they nominated Rep. McCarthy to be Speaker of the House and the current House Minority Whip, Rep. Steve Scalise (R-LA), to be Majority Leader. Rep. Tom Emmer (R-MN), who has chaired the National Republican Congressional Committee for the last two election cycles, won a contested election to be the Republican Whip, defeating Republican Study Committee Chair Rep. Jim Banks (R-IN) and Chief Deputy Whip Drew Ferguson (R-GA). Rep. Elise Stefanik (R-NY) will retain her position as Republican Conference Chair, with Rep. Lisa McClain (R-MI) as Conference Secretary. Rep. Richard Hudson (R-NC) will take over chairmanship of the National Republican Congressional Committee.

The full House will vote on the Speaker’s office when Congress reconvenes in January, meaning Rep. McCarthy must secure at least one more vote than whatever the total of Democratic House members winds up being.

Pelosi steps back, endorses new slate of Democratic leaders
Speaker of the House Nancy Pelosi (D-CA) announced yesterday that she will not seek another term as leader of the House Democrats, a position she has held since 2011. In a speech on the House floor, she reviewed her legislative accomplishments and said, “The hour has come for a new generation to lead the Democratic Caucus.” Majority Leader Steny Hoyer (D-MD) issued his own letter yesterday afternoon, announcing that he too would withdraw from the leadership. While Democrats will not elect their new leaders until November 30, Speaker Pelosi has endorsed the slate of Rep. Hakeem Jeffries (D-NY) as Democratic Leader, Rep. Katherine Clark (D-MD) as Democratic Whip, and Rep. Pete Aguilar (D-CA) as Democratic Caucus Chair. Jeffries currently chairs the Democratic Caucus, with Aguilar as vice chair, while Clark is Assistant Speaker.

Murray will be President Pro Tempore, seeks Appropriations chair
Senate Democratic Leader Chuck Schumer (D-NY) announced this week that Senator Patty Murray (D-WA) will be the Senate’s President Pro Tempore in the 118th Congress, succeeding Senator Patrick Leahy (D-VT), who is retiring. Murray, who currently chairs the Committee on Health, Education, Labor, and Pensions (HELP) and the Appropriations Subcommittee on Labor, Health and Human Services, and Education, is the most likely candidate to succeed Senator Leahy as chair of the full Appropriations Committee. Senator Susan Collins (R-ME) is considered most likely to succeed retiring Senator Richard Shelby (R-AL) as the committee’s ranking Republican.

Financial regulators face questions on capital, crypto
The federal prudential regulators — Federal Reserve Board Vice Chair Michael Barr, Acting FDIC Chair Martin Gruenberg, Acting Comptroller Michael Hsu, and National Credit Union Administration Chairman Todd Harper — spent a total of six hours on both sides of Capitol Hill this week, appearing at oversight hearings of the Senate Banking Committee and the House Financial Services Committee. The collapse of crypto exchange FTX was top-of-mind for many legislators, although FDIC Chair Gruenberg pointed out that bank and credit union regulators have no authority over nonbank digital asset businesses. Fed Vice Chair Barr emphasized the need to create a federal regulatory structure for stablecoins, but said that crypto activities generally fell under the authority of the market regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission. Republicans on both sides of the Hill were especially concerned about the possibility of higher capital requirements for the nations’ banks, arguing that these might restrict banks’ ability to lend. Barr said that he had undertaken a “holistic study” of bank capital requirements, but has no plans to propose a capital increase in the near term.

Treasury calls for enhanced oversight of nonbank fintech companies
While the prudential regulators were testifying on Capitol Hill, the Treasury Department released a report on “Assessing Impacts of New Entrant Non-bank Firms on Competition in Consumer Finance Markets,” describing the growing competition traditional banks face from nonbank financial service providers. The report, issued in consultation with the White House Competition Council, is the last in a series of reports on competition mandated by a July 2021 executive order. It recommends that bank regulators apply a clear and consistent supervisory framework to bank-fintech relationships, and that regulators robustly supervise these relationships for compliance with consumer protection laws. The report also calls for regulators to support innovations in consumer credit underwriting that increase credit visibility, reduce bias, and make credit more available to qualified, underserved consumers.

Waters, McHenry announce hearing on FTX collapse
The House Committee on Financial Services will hold a bipartisan hearing next month on the collapse of cryptosecurity platform FTX, Chairwoman Maxine Waters (D-CA) and ranking member Rep. Patrick McHenry (R-NC) announced on Wednesday. Creating a regulatory framework for digital assets has been a bipartisan effort for the committee, with Waters and McHenry collaborating on draft legislation. In a joint statement, the lawmakers called for accountability and further work toward federal oversight and clear rules of the road. The Committee has not yet announced a date for this hearing. Separately, Rep. Raja Krishnamoorthi (D-CA), chair of the House Oversight Subcommittee on Economic and Consumer Policy, sent a letter to FTX’s past and current chief executive officers today to press for compliance with an August 30 request for documents about FTX’s operations.

President nominates Gruenberg to new term as FDIC Chair
Longtime Federal Deposit Insurance Corporation board member Martin J. Gruenberg, who has been serving as Acting Chair since the departure of Chairman Jelena McWilliams, has been nominated to another official term as Chair, along with a new six-year term on the FDIC Board. Gruenberg joined the FDIC Board as Vice Chairman in 2005, and became Chairman of the agency in 2012. At Tuesday’s Senate Banking Committee hearing, Chairman Sherrod Brown (D-OH) congratulated Gruenberg on his reappointment and said he would schedule a confirmation hearing before the end of the year. At Wednesday’s House Financial Services Committee hearing, Rep. Blaine Luetkemeyer (R-MO), ranking member of the Subcommittee on Consumer Protection and Financial Institutions, warned Gruenberg that he had not forgotten the FDIC’s participation in Operation Choke Point, a Justice Department effort to cut off the flow of funds to illicit businesses during the Obama administration.

The Week Ahead

Congress is out next week. GrayRobinson’s Washington office will be closed on Thursday, and The Golden Apple is taking next week off. We are, as always, grateful for each other and for all of you.

November 21 at 2:00 p.m. The Federal Housing Finance Agency continues its “FHLBank System at 100: Focusing on the Future” series of roundtables with a discussion of affordable housing and community development in the Mississippi Delta from Greenville, MS. A livestream will be available here.

November 30 at 10:00 a.m. Senate Committee on Environment & Public Works holds a hearing on “Putting the Bipartisan Infrastructure Law to Work: The Private Sector Perspective.”

November 30 at 10:00 a.m. FDIC and OCC host a joint webinar on “Expanding Access to Capital for Small Business through Innovative CDFI Collaboration,” specifically targeted to the Great Plains states.

The Ellis Insight - Jim Ellis on political news

PRESIDENT

Donald Trump: On Tuesday night from his home at Mar-a-Lago in Palm Beach, Florida, former President Donald Trump officially announced that he will again run for President in 2024. He becomes the first official candidate in the next presidential race.

With controversy surrounding him and being tagged as the prime Republican loser in the 2022 elections because candidates he endorsed, supported, and in some cases recruited, went onto to lose their general election bids, Mr. Trump begins his new quest in a more weakened political position than he would have otherwise. It is now clear that he will not move unencumbered through the Republican nomination process as several candidates will eventually step up to challenge him in a fight as to who will become the party standard bearer.

New Polling: Already we see a series of polls testing newly re-elected Florida Gov. Ron DeSantis (R) pitted against former President Donald Trump. The WPA Intelligence polling series finds the Florida Governor opening up big Republican primary leads against Mr. Trump in several important nomination states: Iowa (+11), New Hampshire (+15), Texas (+11), Georgia (+20), and of course, Florida (+20).

We can expect to see a plethora of polling released into the public domain for the 2024 presidential contest, and much of it will conflict with other data. Already, such a pattern has begun.

YouGov, for the Economist periodical (11/13-15; 432 US adults; online) posts Gov. DeSantis to a seven-point, 46-39% advantage over the former President. A largely unfamiliar pollster, called Seven Letter Insight (11/10-15; 542 US likely Republican primary voters), sees a similar result, Gov. DeSantis topping Mr. Trump, 34-26%. Morning Consult, polling for Politico, sees a much different result. Their survey (11/10-14; 1,983 US registered voters) finds Mr. Trump holding a sizable 47-33-5% lead over Gov. DeSantis and former Vice President Mike Pence.

None of these polls should be taken particularly seriously. All are national polls, two of which have small samples and are not reflective of Republican primary voters casting ballots in state primaries.

VOTING

Exit Polling: Though exit polling has not proven particularly accurate in past elections, looking at the results of the organization’s data still has value. A quick glance at the CNN data brings forth a couple of key observations. First, the Independent vote, which polling suggested through most of the election cycle was moving toward the Republicans, came back to the Democrats at election time. Self-described moderates were breaking Democratic, 56-41%. Those describing themselves as Independents voted Democratic in a 49-47% split. Within the cell segment, Independent women moved toward the Democrats in a 54-42% clip.

On the other end of the spectrum, Republicans actually were making their marks with minority voters, at least according to this data. Republicans were able to attract 39% of the Hispanic vote, 40% among Asians, and 13% with black voters. All of these numbers are an improvement from immediate past elections.

Additionally, while all men break toward the Republicans 56-42%, all women prefer the Democrats, 53-45%. Still, CNN measures that the national vote went Republican in a 51.3 – 46.7% swing even though Democrats held the Senate majority and House control came down to a minimum number of seats.

SENATE

Montana: Just after making a political comeback with a 50-46% win in the state’s new western 1st Congressional District, viewed as an under-performance in a district that the FiveThirtyEight data organization rates a R+10, says he will make a decision about challenging Sen. Jon Tester (D) after the first of the year. Second District Rep. Matt Rosendale (R-Glendive) is also considered a potential candidate in the 2024 federal statewide race as is Gov. Greg Gianforte (R).

Mr. Zinke was originally elected to the at-large House seat in 2014 and re-elected in 2016. Shortly after winning a second term, then-President Trump tabbed Mr. Zinke as his Interior Department Secretary. He resigned under a cloud two years later, ethics charges that became part of the just-completed 2022 campaign.

West Virginia: West Virginia Rep. Alex Mooney (R-Charles Town) this week announced that he will challenge Sen. Joe Manchin (D) in the 2024 Senate race. He is the first such individual to declare for the next Senate election cycle. In the 2022 election cycle, Mr. Mooney was paired with Rep. David McKinley (R-Wheeling) because West Virginia lost one of its three congressional seats in national reapportionment. In a tough Republican primary campaign, Rep. Mooney defeated Rep. McKinley, 54-36%, and went onto win the general election with 65% of the vote.

Back in August, Triton Research ran early ballot test questions pairing Sen. Manchin with several potential Republican challengers, including Rep. Mooney. In that pairing, Mr. Mooney led the Senator, 45-38%. Another potential Manchin opponent, Attorney General Patrick Morrisey (R) who challenged him in 2008, indicates he is considering another Senate bid but said he is also looking at what will be an open Governor’s race, a potential bid for what will now be Rep. Mooney’s open congressional seat, or simply to seek re-election to his current position.

Majority: Though Nevada Republican Adam Laxalt clung to a small lead for most of the counting period, the post-election trends favored Sen. Catherine Cortez Masto (D-NV), thus yielding what is now her projected victory. With a projected turnout to exceed 1 million Nevada voters, Sen. Cortez Masto has at this point recorded a 48.9 to 48.0% victory, a current margin of just 8,926 votes.

With such an outcome, the Democrats reached the 50-mark regardless of what happens in the other outstanding race, Georgia, thus guaranteeing them the majority in the next Congress. The Georgia election will now be decided in a December 6th runoff election since no candidate reached the majority support plateau.

Turnout Stats: Now that we are seeing closer to final turnout numbers in many places, we have derived some interesting participation statistics from the most competitive US Senate states.

In Georgia, the turnout may fall just short of the 4.0 million voters who cast ballots in 2018. The Nevada turnout, projected to just exceed the 1 million mark, will be an approximate 4% increase over 2018. In Wisconsin, once the final turnout report is released will likely show the same relative participation rate as recorded in 2018.

The Pennsylvania turnout looks to be up 5% from 2018. Florida, where Sen. Marco Rubio won an impressive 58-41% victory over US Rep. Val Demings (D-Orlando), who was clearly one of the strongest Democratic candidates in the nation, looks to be 6% under 2018’s total. In Iowa and Ohio, where Sen. Chuck Grassley (R) won an eighth term and Republican J.D. Vance held the open seat over US Rep. Tim Ryan (D-Warren/Youngstown), turnout appears to be down just under 9% when compared to the 2018 participation rate in both states.

HOUSE

Leadership: Democratic House Speaker Nancy Pelosi (D-CA) yesterday announced that she will not run for a party leadership position after the Republicans secured a small majority in the next Congress. She indicated that she will remain a member of the House, but speculation is rampant that President Biden will appoint her to a key ambassadorship. Just after her announcement, Majority Leader Steny Hoyer (D-MD) made a similar declaration, indicating that he also will not run for a leadership position. Both he and Speaker Pelosi have been in top leadership positions since 2003.

Majority Whip Jim Clyburn (D-SC) also may follow suit and not seek re-election as the conference Whip. He may, however, reportedly run for the Assistant Minority Leader position. The moves pave the way for Rep. Hakeem Jeffries (D-NY), currently the Democratic Conference Chairman to become Minority Leader. Reps. Katherine Clark (D-MA) and Pete Aguilar (D-CA) could be the in line for the Minority Whip and Conference Chairman positions, respectively.

Majority: Late Wednesday afternoon Pacific time, California US Rep. Mike Garcia (R-Santa Clarita) was projected the winner of his 27th District congressional race, which was enough to officially clinch the US House majority for the Republicans. The Garcia victory became the 218th GOP seat and with this result four consecutive years of Democratic control comes to an end.

Rep. Garcia had led consistently throughout the 2022 race, and the size of his lead was somewhat surprising. Running for his second full term after winning a special election in early 2020 and being re-elected by a razor-thin margin in the regular election later that same year, Rep. Garcia was viewed as a highly vulnerable incumbent in heavily Democratic California.

In this current election, however, Mr. Garcia was projected the winner when holding a 54.2% preference factor with 78% of the vote tabulated. Obviously, his margin of 13,846 votes was enough to sustain even a late influx of Democratic votes.

Party Division: Currently, with seven races remaining outstanding the overall House count now stands at 218R – 210D. In addition to Rep. Mike Garcia’s (R-CA) victory that clinched the Republican House majority, Reps. Mike Levin (D-CA), Jared Golden (D-ME), and state Rep. Andrea Salinas (D) in the new OR-6 seat were all projected as winners.

In the seven outstanding districts, both parties lead in three races, with the CA-13 contest headed to a potential seesaw ending where both candidates, state Assemblyman Adam Gray (D-Merced) and agribusinessman John Duarte (R), both have legitimate chances to win.

The three Republican advantage races are the CA-3 open seat, CA-22 (Rep. David Valadao), and CO-3 (Rep. Lauren Boebert). Democrats lead in AK-AL (Rep. Mary Peltola), CA-47 (Rep. Katie Porter), and the open CO-8 new district. CA-13 is too close to call.

IL-4: Two days after being re-elected to the House, US Rep. Jesus “Chuy” Garcia (D-Chicago) announced his candidacy for the Chicago Mayor’s office, opposing incumbent Lori Lightfoot and eight others in an early jungle primary election scheduled for February 28th. If no one receives 50% of the vote, a runoff between the top two finishers will be held on April 4th.

Mr. Garcia ran for Mayor in 2015, forcing then-Mayor Rahm Emanuel (D) into a runoff election. Prior to his service in Congress, Rep. Garcia was a member of the Chicago City Council, the Illinois Senate, and the Cook County Board of Commissioners. Several other prominent local elected officials such as Cook County Commissioner Brand on Johnson, state Rep. Kam Buckner (D-Chicago), and three sitting members of the Chicago City Council are also announced candidates. Former Gov. Pat Quinn (D), a rumored mayoral candidate, announced that he would not enter the race.

GOVERNOR

Louisiana: Armed with a fresh six years in the Senate with his 62% re-election vote against nine opponents, Sen. John Kennedy (R) is now admitting he is considering a run for Governor next year when incumbent John Bel Edwards (D) will be ineligible to seek a third term. He then released a Torchlight Strategies poll (11/9-12; 800 LA likely 2023 jungle primary voters; live interview & text) that posted him to a 22-18-13-7-6% lead over state Transportation Secretary Shawn Wilson (D), Attorney General and former Congressman Jeff Landry (R), Lt. Gov. Billy Nungesser (R), and fellow US Sen. Bill Cassidy (R), respectively.