Democratic control of the Senate would be a bonanza for munis
Whether Democrats will regain majority control of the Senate may be the most crucial question for the municipal finance sector in this year’s November election.
Democrats already are widely favored to keep majority control of the House, where last month they approved the reinstatement of advance refunding and other sought-after public finance measures as part of the Moving Forward Act.
The only concern for the public finance industry in the House involves the political future of Ways and Means Committee Chairman Richard Neal of Massachusetts, who faces a challenge from the left in a Sept. 1 Democratic primary with Alex Morse, the openly gay mayor of Holyoke.
Neal, a former mayor of Springfield who is a staunch advocate of tax-exempt bond financing, led the tax-writing Ways and Means Committee to recently enact many muni-friendly provisions to the Moving Forward Act.
Senate Republicans have vowed to not consider the Moving Forward Act, which passed the House July 1 on a 233 to 188 with the support of only 3 Republicans.
Senate Republican Majority Leader Mitch McConnell of Kentucky has almost absolute control in deciding which legislation is brought to the Senate floor for a vote.
Should Democrats gain a majority, that decision would be made by Senate Democratic Leader Chuck Schumer of New York starting in January.
In the interim, some of the muni-friendly provisions passed by the House might be included in future House-Senate negotiations on a surface transportation bill, but the Senate has not yet voted on a reauthorization.
Even if Neal loses his September primary, House Democrats already have cast their support for the Moving Forward Act and it could be reintroduced next year should the Senate continue to block it.
In fact, there might be an even larger expansion of muni-friendly laws next year if former Vice President Joe Biden wins the presidency. Biden is a hard-core supporter of increasing infrastructure spending and, as vice president, oversaw the implementation of the American Recovery and Reinvestment Act’s infrastructure investments, which included direct-pay Build America Bonds.
Republicans hold a 53 to 47 edge over Democrats in the Senate.
Senate Democrats need only a net gain of four seats for majority control, and three seats if Biden wins the White House. If there’s a 50-50 split in the Senate, the vice president will cast the deciding vote. So if Sen. Kamala Harris, D-Calif., is elected vice president, she would be the tie-breaker. And her California Senate seat would be filled by another Democrat selected by Gov. Gavin Newsom.
There are enough vulnerable Senate Republicans on the November ballot to make a Democratic majority in the next Congress a real possibility.
Republicans have 23 seats up for election this year compared to only a dozen among Democratic incumbents.
In Arizona, Republican Sen. Martha McSally is facing a strong challenge from Democrat Mark Kelly, a Space Shuttle pilot married to former Arizona Rep. Gabby Giffords.
The widely respected Cook Political Report rates the Arizona Senate race as lean Democrat. Three polls released this month found Kelly with an edge averaging just over 7 percentage points.
The Cook Political Report also rates six other Senate Republicans in tossup races -- Cory Garder of Colorado, David Perdue of Georgia, Jody Ernst of Iowa, Susan Collins of Maine, Steve Daines of Montana and Thom Tillis of North Carolina.
Recent polls reported by RealClearPolitics have found the Democratic challengers with small leads in Maine and North Carolina.
Only one of the 12 Senate Democrats on the ballot -- Doug Jones of Alabama -- is considered endangered.
Ten of the Democratic Senate seats are considered to be safely Democrat. Sen. Gary Peters in the battleground state of Michigan is only slightly favored. The latest poll conducted for CNBC on Aug. 7 to 9 found Peters leading Republican John James 48%-45%. Biden also has consistently registered a small lead over Trump in Michigan in polling over the last couple of months.