View from Washington, D.C.: Making sense of the midterms
By John McClelland

View from Washington, D.C.: Making sense of the midterms

The 2023 outlook for ARA government affairs

Tuesday, Nov. 8, 2022, will go down as one of the most interesting elections in our recent history. Republicans were poised to take control of Congress. House Republicans were expected to flip 20 to 30 seats, creating a fairly comfortable governing majority. The Senate was always going to be close, but the hope was for Republicans to gain the majority and solidify Republican control of Congress. As I write this on Nov. 18, Democrats have held their control of the Senate — holding 50 of the 100 Senate seats. Republicans have gained control of the House by reaching the minimum 218 seats needed to hold the majority.

While Republicans managed to gain control of the House, it was not the red wave that had been predicted. Three factors I think were part of the underperformance by Republicans were candidate quality, messaging and voter turnout/enthusiasm. The other factor that has been a problem for several election cycles is the failure of polls to provide a clear picture of what is happening in the electorate.

U.S. Senate:

After several election cycles of failed Republican Senate candidates, the 2022 crop of Republican candidates did not do well. They failed to take advantage of vulnerable Democrats in states like Arizona, Nevada, New Hampshire and Pennsylvania. Democratic wins in these states have led to the Democrats holding their control of the Senate reaching 50 seats with Vice President Kamala Harris serving as a tie breaker. The Senate race in Georgia was too close to call and will result in a runoff election held Dec. 6, 2022.

U.S. House of Representatives:

What was supposed to have been a big or at least good night for House Republicans has turned into a disaster. First, while they did gain the majority in the House, it’s going to be a small majority. Given some of the extreme views held by some Republican members it will be difficult for Republican Leader Kevin McCarthy (R-Calif.) to control his conference and pass legislation. McCarthy’s leadership may be tested early by the need to raise the debt ceiling as early as March 2023. Some Republicans are already demanding concessions on spending and entitlements in exchange for their votes. This will set up confrontation with the Senate which has favored passing clean debt ceiling increases needed to keep the country from defaulting on its debt.

Additional analysis and takeaways:

If you are a fan of divided government, you are glad that Republicans took the majority in at least one House of Congress. Now, Democrats will not be able to use the budget reconciliation process they have used so effectively in the 117th Congress.

“I’ve always said that politics is about choosing up sides. But if you are going to have a winning team you have to put players on the field that can get the ball across the goal line.”

Republican control of the House could produce new tax legislation that benefits the equipment and event rental industry. Several members of the House Ways and Means Committee have expressed their support for making the tax cuts passed in the Jobs and Tax Cuts Act of 2017 permanent. For example, the provision allowing 100 percent expensing of capital purchases begins to phase out in 2023 and making such provisions permanent would definitely benefit the industry. However, it may take some time for the Ways and Means Committee to get organized. With the retirement of Rep. Kevin Brady (R-Texas) there will be a new top Republican on the committee. There are currently three senior Ways and Means members running to succeed Brady. That and other committee leadership elections will be part of the Republican conference’s organizing work. These elections will be in addition to choosing a candidate for Speaker of the House.

On the Democratic side, Speaker of the House Nancy Pelosi (D-Calif.) has announced she is stepping down from House Democratic leadership but she will remain in Congress. There was speculation that she would step down if Democrats were not in the majority. The recent attack on her husband, Paul, also may have been a factor in her decision. Steny Hoyer (D-Md.) — House Majority Leader — also is stepping down from his leadership role but will remain in Congress.

With Pelosi and Hoyer leaving their leadership positions, there is likely to be a move to replace all of the current Democratic leadership positions with younger members. Bottom line, we could see a lot of new faces in the Democratic House leadership ranks.

While President Biden was not on the ballot this election, he certainly will remain a major player over the next two years of his first term. Even with Republicans controlling the House, they may see much of their legislation unable to get 60 votes in the Democrat-controlled Senate. Beyond that, they will have to contend with Biden’s veto power which requires a two-thirds vote of both Houses to override. Therefore, it is unlikely we will see extreme legislative proposals — such as reauthorizing Social Security every five years — passing the Senate, let alone being signed by Biden.

Finally, something I mentioned at the beginning of the piece that undoubtedly shaped the outcome of this election is candidate quality, particularly on the Republican side. Republicans have nominated candidates for the Senate who had little or no chance of winning a general election contest. The result has been a Democratic Senate majority. This year, some of those poor choices have crept into House candidates. I blame this on the closed primary system that exists in many states that allows the party bases to control the nominations. In today’s America, elections are won and lost on a candidate’s ability to attract voters in the moderate middle — sometimes they are affiliated with one of the major parties, or they are independents. This year, even though conditions were there for a Republican takeover of Congress,
the poor quality of particularly Senate candidates either blunted or outright eliminated that outcome. I’ve always said that politics is about choosing up sides. But if you are going to have a winning team you have to put players on the field that can get the ball across the goal line.

John McClelland, Ph.D., is the American Rental Association’s (ARA) vice president for government affairs and chief economist.

John McClellandJohn McClelland

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