In the midterm elections on Nov. 6, Democrats took control of the U.S. House of Representatives while Republicans gained seats to solidify their hold on the Senate. This will lead to a federal government that operates differently than what has been seen the past few years, and electrical contractors may be curious how this will affect their businesses.
Many results further emphasized the polarized climate in American politics, and in a divided U.S. Congress, cooperation is unlikely to be the name of the game. According to Marco Giamberardino, executive director for government affairs at the National Electrical Contractors Association, the two chambers will likely devote a lot of energy to checking each other. On the House side, the greatest challenge for Democrats will be how they handle their newfound power; Giamberardino called this a balance between real oversight versus overreaching.
For ECs, however, the most exciting developments could be related to infrastructure. Giamberardino called this a potential area of agreement between the two parties, as well as one that would benefit President Trump after he pulled back on the public/private partnership he announced in 2017.
“The new makeup of Congress should lend itself to a robust discussion on infrastructure investment,” he said. “There are several fundamental questions that must be addressed, however, as Congress and the Administration decide to move forward on such an endeavor. The idea is that this would be a new package of additional investments outside of the normal budgeting and authorization cycle. That said, hard decisions will have to be made over the types of projects that should receive funding. Will it be just roads and bridges or far more encompassing to include clean water, waste water, hospitals, schools, and especially the grid? Another key question is how will these projects be funded? Direct appropriations, new revenue increases, or, as is needed, a mixed portfolio?”
Other potential areas in which ECs can hope for headway are workforce development, trade, energy improvement and pension reform. Healthcare will continue to be a hot-button issue, but substantive reform is unlikely in a divided federal government.
Looking at the economy, many questions are still to be answered. For one, the Trump Administration may choose to continue escalating import tariffs or pull them back going into the new year. Economists at Dodge Data & Analytics said in the annual construction outlook this is an important question for 2019 because increased tensions in the trade war could lead to a more severe downturn in 2020. Dodge said a continuing trade war could even invoke a recession earlier than expected.
The deficit and rising national debt will likely radiate through many other issues but will not be a huge point of emphasis in the short term. According to Dodge, if unaddressed, the deficit and national debt would become a bigger economic factor in the next 5–10 years. The more immediate effect, Giamberardino said, is countries such as China could use the debt as a weapon in the trade war.
Giamberardino described any further tax legislation “unlikely” in 2019, since there is no plan that both parties would agree to.
“There should not be significant changes to the progress of how the economy is going to do with the new Congress at this point,” he said. “It is clear that, if Congress is consumed with partisan infighting and not much legislating, that could hinder any additional new progress for growing and expanding a healthy economic environment for electrical contractors nationwide.”
Finally, it remains to be seen what will be done in the lame-duck session of Congress, as House Speaker Paul Ryan concludes his final term. (He did not seek re-election in 2018.) Giamberardino said it was likely that Ryan would like to clear certain items off his plate before stepping away. Similarly, the Democratic Speaker of the House—presumed to be Nancy Pelosi—would like a clean slate to begin 2019, as well.