What The Democratic Majority In The Senate Could Mean For Your Wallet

Following the two U.S. Senate runoff elections in Georgia, the balance of power in Washington D.C. may be shifting dramatically. Senators-Elect Jon Ossoff and Rev. Raphael Warnock – both Democrats – defeated incumbent Republicans, effectively shattering the Senate majority the GOP has held since 2014.

Ossoff and Warnock pushed the number of Democrats in the chamber to 48, plus two independents that caucus with the party. That means the Senate is split, 50-50, but the Democratic Party also holds the tiebreaking vote in the form of Vice President Kamala Harris, who also serves as President of the Senate.

So since Democrats retained control of the House in the 2020 election, when Biden enters office his party will have the majority in both chambers of Congress. Democratic lawmakers have an opportunity to push for things like $2,000 stimulus checks, student loan relief, a rollback of Trump’s 2017 tax reform bill, and more. All of this was near impossible until Democrats took the Senate, and these policies and others could end up majorly impacting your finances in the coming years and months.

Why The Majority Matters

Technically, Democrats don’t have a majority in the Senate. The chamber is tied, and although Harris has the power to cast a tie-breaking vote, she isn’t a senator. However, holding the Vice Presidency plus 50 senators affords Democrats all the benefits of being the majority party.

Some implications of this are pretty obvious. For instance, Biden championed Ossoff and Warnock’s campaigns in part by pledging that a Democrat-led Senate would swiftly pass further COVID-19 relief, including $2,000 stimulus checks. Generally, Biden should find success in enacting his agenda since he only needs to garner votes from within his own party.

For example, President Trump took office when Republicans held both majorities and managed to pass a sweeping tax reform bill despite zero Democratic senators signing on. Biden could similarly enact his own new tax plan, or look to strengthen the Affordable Care Act through legislation and do so without a single Republican vote.

What Could Change? 

Control of the majority also allows Senator Chuck Schumer (D-NY) – now Majority Leader – to set the chamber’s agenda. Every Senate committee will also be chaired by a Democrat, giving the party even more leverage to pursue its agenda and the differences could be stark.

Sen. Ron Wyden (D-OR) will chair the Finance Committee, for example, replacing Sen. Chuck Grassley (R-IA). Wyden has been a vocal advocate for stimulus checks and enhanced unemployment pay, while Grassley has been critical of extending CARES Act unemployment boosts and long skeptical of the feasibility of stimulus checks.

Sen. Bernie Sanders (I-VT) is set to head up the Senate Budget Committee, which helps oversee the federal government’s spending. While the chairmanship doesn’t come with limitless power to control the budget, Sanders has been vocal about providing further relief to Americans, both during and after the pandemic. So first and foremost, it seems a Democrat-led Senate means there’s a fighting chance more stimulus is coming.

Biden has also pledged to invest heavily in American manufacturing and create 5 million new jobs, but it’s unclear how quickly he intends to enact this plan. The president-elect has also supported eliminating $10,000 per borrower in student debt. Even a majority-Democrat Senate is unlikely to pass a sweeping debt cancellation bill, but the topic will certainly remain relevant.

Prior to the presidential election, House Speaker Nancy Pelosi (D-CA) hinted at what she thought a three-house majority could bring.

“We’ll almost certainly be passing a reconciliation bill, not only for the Affordable Care Act but for what we may want to do further on the pandemic and some other issues that relate to the well-being of the American people,” she reportedly said at an event. 

Roadblocks Ahead

Holding the majority and effectively using it are very different things. Republicans were successful in passing their tax bill, for instance, but failed to make any significant changes to health care policy. When the Senate voted on repealing the ACA, three Republicans broke rank and voted against the motion, tanking the GOPs shot at healthcare reform.

Democrats will face similar problems rallying every member of the caucus to vote together on many key issues. Sen. Joe Manchin (D-WV), a moderate Democrat in a heavily red state, has emerged as a Senate “swing vote” after announcing his opposition to another round of stimulus checks. Other moderate Democrats may defect on future legislation, and moderate Republicans may occasionally cross the aisle as well.

Other policies like student loan forgiveness that are gaining traction are still likely to be divisive. Democrats may be able to drum up support on a few key issues, but it’s unlikely that this slim majority leads to sweeping legislative change.

The Bottom Line

President-Elect Biden and Vice President-Elect Harris will be sworn in on January 20th, and Senators-Elect Ossoff and Warnock should take office roughly the same time. Once all four are seated, the Democratic Party will have control over both chambers of Congress and the White House for the first time since President Obama took office.

For now, it seems like there’s some cautious optimism around additional stimulus payments and unemployment boosts. Biden’s plan to combat the pandemic will hopefully help the overall economy recover as well. The president-elect may now succeed in passing a new tax bill, but only those earning $400,000+ would end up paying more. If nothing else, the Democratic majority in the Senate will allow these and other potentially helpful propositions to be debated, tweaked, and potentially passed in the next few years.