Photo illustration: Lindsey Bailey/Axios. Photo: Mandel Ngan/AFP via Getty Images
The Republican victory in the Senate will give President-elect Trump huge leverage in the 2025 tax debate and enough margin to confirm a Cabinet quickly.
Why it matters: Trump's likely to be more prepared to take over the executive branch than he was in 2017.
- Republicans may end up with 55 seats or more — the biggest majority for either party in years and enough cushion to let Trump get some controversial nominees past the objections of GOP moderates.
Here's what we're watching …
Senate leadership fight
The battle of the Johns will be officially decided next week when Senate Republicans hold leadership elections.
- John Thune and John Cornyn are vying for the top spot, while John Barrasso will move on from Energy and Natural Resources to take the No. 2 position.
- Thune and Cornyn are broadly similar on energy policy, but whoever wins will have to deal with an increasingly Trump-y Senate GOP conference.
- That could lead to internal debates about tariffs and manufacturing policy and about the possibility of tossing out the filibuster.
- And watch out for the possibility that Trump himself throws a wrench into the leadership race.
Policy possibilities
Republicans are positioned to dominate the 2025 tax extravaganza. A partial repeal of the IRA is now very much on the table.
- If they win the House — a real possibility at this hour — we'll likely see a filibuster-proof reconciliation proposal that extends the expiring tax cuts and uses unspent IRA funds to pay for it.
- The biggest targets: EPA and DOE grant and loan programs, the EV tax credit and the methane fee.
- Republicans could also keep some IRA tax credits, expanding 45V eligibility for hydrogen production, bumping up the 45Q carbon capture credit, and widening 45X for U.S. mining operations.
Trump can target some of these on his own by slowing or redoing implementation.
- He'll also inevitably roll back all of the Biden administration's climate regulations, slow offshore wind leasing, and end the DOE's pause on LNG export licenses.
- His victory will also set off a mad scramble in the next two months to push money out the door and finalize tax guidance to make it harder for the new administration to change it.
- If Republicans win the House, expect to see some successful Congressional Review Act repeals of regulations finalized in the second half of 2024.
Green reckoning
Environmental groups poured record sums into the election. Trump closed by denying climate change at a Pennsylvania rally.
- Climate wasn't really an issue in this campaign, despite the IRA and Democrats' efforts to sell the energy transition.
- Now attention turns back to the states, where green groups still hope to protect climate laws and get new ones passed.
- One down-ballot bright spot for Democrats came from Washington state. Voters there rejected a ballot initiative to roll back the state's cap-and-trade program and repeal a 2021 climate law.
Permitting futures
The lame duck is not shaping up to be very productive, particularly if Republicans take the House.
- This is the worst-case scenario for the Manchin-Barrasso permitting bill, since Republicans will not be motivated to strike a deal when they will have more power to shape it next year.
- "I think we can all agree that the lame duck is going to be pretty damn lame," Bracewell's Scott Segal said during a post-election webinar this morning.
- Still, Trump wasn't successful negotiating these issues during his first term, and a December omnibus often carries unexpected surprises.
