Get Ready for Reconciliation
Democrats have flipped both Georgia Senate seats from the Republicans, resulting in the US Senate being split 50/50. With the Vice President as a tie-breaker vote when needed, that gives control of the Senate to Democrats, to which Senate Democratic Leader Chuck Schumer tweeted “Buckle up!”. This will make it much easier for them to confirm their appointees for the new administration, and there are rumors that the still vacant Secretary position in the Department of Labor (DOL) may go to a more progressive candidate.
It takes 60 votes to “invoke cloture” in the US Senate and avoid a filibuster, so Democrats are not likely going to be able to push through some of their most progressive initiatives (unless they try to remove the filibuster, which Democratic Senator Joe Manchin has promised to block as he calls for a “new era of bipartisanship”).
Items that are most possible are those that can be accomplished through a “reconciliation” process that only requires 51 votes but must have a direct impact on federal spending. These could include:
- $2,000 stimulus checks and another $1 trillion in COVID-19 relief measures (noting Dr. Anthony Fauci has indicated it may be late 2021 before restrictions can begin to be lifted, which could leave many businesses unable to operate at normal capacity for several more months)
- Tax reforms to significantly alter the changes made under the Tax Cuts and Jobs Act of 2017
- The TCJA was originally able to pass by utilizing the reconciliation process
- The TCJA had reduced the ACA’s individual mandate penalty to $0, so a new reconciliation measure could restore the penalty and potentially render the lawsuit against the ACA moot
- Infrastructure advancement
- Climate legislation
IMA will continue to monitor legislative and regulatory guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.