Tackling the few remaining must-pass items before the end of the year
Welcome back to the Golden Apple. After a weeklong recess for Thanksgiving, Congress returns this week in hopes of tackling the few remaining must-pass items before the end of the year. It will be a busy week, and expect a lot of shifting deadlines as negotiations shake out.
Financial Services and Banking Updates
FSC Closes Out Year with FinTech: Financial Services Chair Patrick McHenry is holding his last full committee hearing before he leaves Congress. A familiar topic for McHenry, the hearing will focus on innovation’s impact in the financial services industry and will focus on topics including blockchain, digital assets, artificial intelligence, and innovation-friendly regulation. Prior rumors of a hearing with CFPB Director Rohit Chopra yet to come will not pan off, so cross that off your calendars.
Congressional Updates
Must Pass Legislation In Focus:
Appropriations: Congress faces a December 20th deadline on appropriations, and hopes of an omnibus continue to shrink. Members are feeling optimistic about avoiding a government shutdown, but the question of how long to extend a CR remains. Pushing the funding deadline out past the 100-day mark would spare incoming President Trump an early test as the administration focuses on reconciliation and confirming nominees. However, some Republicans will balk at the delayed opportunity to put their stamp on funding priorities.
NDAA: The Armed Services four corners expect a manager’s amendment to pass by mid-December. The big ticket items include whether to raise the overall funding amount by $25 billion, as well as potential policy riders including water infrastructure.
Disaster Aid: Following Hurricane Helene’s devastation of the southeast, members from those states are eager to boost dwindling recovery resources. As in past years, disaster aid packages frequently ride with a CR vote and will likely do so again, provided members can reach a deal on the total funding amount prior to December 20th.
Committee Chair Rotation: This week and next, the Republican Conference and Democratic Caucus will be internally sorting out Committee leadership for the next Congress. Republicans will be choosing new chairs for several high-profile committees including Energy & Commerce, Financial Services, Foreign Affairs, and Rules. Democrats don’t have any open leadership seats, though sitting Ranking Members for Agriculture and Natural Resources are facing challenges from younger members. And, in light of the challenge from Jared Huffman (D-CO), Natural Resources Ranking Member Raul Grijalva just this morning has dropped his bid to continue in his role. These two challenges are a significant departure from the caucus’ longstanding deference to seniority. In terms of timing, the Republican Steering Committee has decided to push Chair presentations and votes to next week, and this week will only be considering T&I Chair Sam Graves’ waiver request. Democrats will be voting on the A committees (FSC, W&C, Appropriations, and Ways & Means) this week and will be deciding on the smaller and contested races next week.
Transition Updates
The Trump Transition is well underway. We reported last week on a number of appointments to head various agencies. The steady stream of nominations has continued, and the outgoing and incoming administration have also reached an agreement on transition terms.
Reconciliation Already Taking Shape: Although it is still technically the 118th Congress, lawmakers and the incoming administration are already heavily focused on the anticipated tax package. A number of provision from the 2017 Tax Cuts and Jobs Act are expiring, and the reconciliation bill will provide opportunity for several policy changes. Items to watch include:
SALT Cap: Blue state Republicans will fight to block an extension of the $10,000 cap on state and local tax deductions in this bill. This coalition has been bitterly vocal about this provision sever since its passage in 2017.
No Tax on Tips: President-elect Trump campaigned on this and is interested in making good on this promise.
More Corporate Cuts: President-elect Trump has also promised even deeper corporate rate cuts, although it is unclear if his push for a 15% rate will be possible given the legislation’s already hefty price tag.
Weekly Political Synopsis
SENATE
Louisiana: Term-limited Louisiana Public Service Commissioner Eric Skrmetta is confirming that he is considering launching a 2026 Republican primary challenge to two-term Sen. Bill Cassidy (R). Rumors of others also testing the political waters, including outgoing US Rep. Garret Graves (R-Baton Rouge) and state Treasurer and former Congressman John Fleming (R), are also surfacing.
Louisiana is changing its primary system. Gone is the jungle primary that places all candidates on the same ballot irrespective of political party affiliation and the top two finishers advance into the general election, and in its place, a return to the partisan primary and runoff system.
Therefore, Sen. Cassidy, who may not be as conservative as his potential opponents, could find himself in a more competitive campaign in a partisan primary, rather than the jungle primary under which the incumbent has excelled.
HOUSE
CA-13: As the slow vote counting process in northern California’s 13th District moves along at a snail’s pace, the latest vote drop has now put ex-state Assemblyman Adam Gray (D) ahead of freshman Rep. John Duarte (R-Modesto) by a slim 227 vote margin.
Though Mr. Gray is now likely to come out on top, his margin will be very small. This means going to a recount will be a virtual certainty.
CA-45: With Democratic challenger Derek Tran now posting a lead of 633 votes with almost all of the ballots tabulated, two-term Congresswoman Michelle Steel (R-Orange County) will lose her seat and she conceded the contest. It also appears that Ms. Steel will return for a re-match. Even though counting is still incomplete, the Congresswoman has already filed to run again in 2026.
With this race final and looking at the likelihood of a Democratic conversion win in District 13 along with the three impending vacancies, the House partisan division would feature 217 Republicans and 215 Democrats at least until the two special vacancy elections scheduled in Florida for April 1st are completed.
FL-1: Unofficially declaring as an open race candidate for Governor in 2026, former Rep. Matt Gaetz (R) announced that he will not take the oath of office for a new congressional term on January 3rd.
After withdrawing as President-Elect Trump’s nominee for Attorney General because the Senate would obviously not confirm him, there was speculation that Mr. Gaetz would instead return to the House since his resignation was from the current Congress and not the future one.
In the 2024 election, he was re-elected to a fifth term with 66% of the vote.
Gov. Ron DeSantis (R) has already set the special election to fill the vacant 1st District seat. The partisan primaries will be held January 28th with the special general on April 1st. Therefore, the Republican majority will be a seat down for the first quarter of 2025. Under Florida law, this was the quickest time frame in which to fill the vacancy.
State CFO Jimmy Petronis (R), though not a resident of Congressional District 1, is quickly becoming the man to beat in the January 28th Republican special primary election to replace Mr. Gaetz. Already with President-Elect Trump’s endorsement, Sen. Rick Scott (R) now joins the Petronis backers. State Rep. Michelle Salzman (R-Pensacola), businessman Keith Gross, and former state Rep. Frank White have all dropped out of the race and endorsed Mr. Petronis.
While 13 other Republicans are still on the ballot, Mr. Petronis is fast becoming the clear favorite. The FiveThirtyEight data organization rates FL-1 as the safest seat in the state at R+38.
FL-6: President-Elect Donald Trump and House Speaker Mike Johnson (R-LA) have already chosen their preferred candidate to replace outgoing Florida US Rep. Mike Waltz (R-St. Augustine Beach). The latter man has been selected as Mr. Trump’s National Security Advisor and announced that he will resign his seat on January 20th, the day the President-Elect is sworn into office for a non-consecutive second term.
With those endorsements, state Sen. Randy Fine (R-Melbourne) is the clear early favorite though seven other Republicans including two former local elected officials and Rep. Waltz’s district director are also announced candidates.
Because of the appointment notice, Gov. Ron DeSantis (R) was able to combine the state’s two special congressional elections in one cycle (primary January 28th; special general, April 1st).
NY-21: New York US Rep. Elise Stefanik (R-Schuylerville) has been appointed US Ambassador to the United Nations and will leave Congress upon her confirmation to the new post. Anticipating an impending replacement congressional special election, businessman Anthony Constantino (R) has announced his candidacy and says he will put $2.6 million into his campaign account.
A crowed Republican field is expected to form but, under New York election procedure, there are no special election primaries. In this case, the district’s 15 county chairs from both parties will decide who becomes their prospective nominees. Therefore, a big campaign budget at this stage is largely irrelevant.
The FiveThirtyEight data organization rates NY-21, which covers most of the land mass in northeast New York, as R+17 and the Dave’s Redistricting App statisticians calculate a 58.5R – 40.2D partisan lean. The Down Ballot political blog data experts project NY-21 as the 66th safest seat in the House Republican Conference.
GOVERNOR
Georgia: Georgia two-term Attorney General Chris Carr (R) announced late last week that he will be a candidate in the state’s open Governor’s race in 2026. Incumbent Gov. Brian Kemp (R) is term-limited, but likely to challenge Sen. Jon Ossoff (D) as the latter man runs for a second term.
Expect both parties to have spirited nomination fights. AG Carr is coming under attack from conservatives for not challenging the life sentence for Laken Riley killer Jose Ibarra. Those criticizing believe Mr. Carr could petition the state Supreme Court to overrule the sentence and impose the death penalty for Ibarra.
New York: US Rep. Ritchie Torres (D-Bronx) is confirming reports that he is considering challenging Gov. Kathy Hochul (D) in the 2026 Democratic gubernatorial primary. Mr. Torres, a staunch defender of Israel, also says he would contemplate entering the crowded 2025 New York City Mayor’s race but the Governor’s challenge, he reiterates, is “more appealing.”
Gov. Hochul, who ascended to the Governor’s office from her elected post as Lt. Governor when then-Gov. Andrew Cuomo (D) resigned, defeated New York City Public Advocate Jumaane Williams and US Rep. Tom Suozzi (D-Glen Cove) 67-19-13% in the 2022 Democratic primary. She won the general election with an underwhelming 53-47% margin over then-US Rep. Lee Zeldin (R).
Of all 50 states, President-Elect Trump’s performance improved over his 2020 showing by the most in the country, a net 11.4 percentage points. Therefore, the state could potentially become more competitive in future elections.