Senate Math Primer from the Sevens Report: One of the easiest ways to cut through the seemingly unending amount of political noise in the markets is to focus on the fact that there are only two important questions that need to be answered.
- Will Republicans agree on border adjustments and a corporate tax cut?
- Can that plan get approved in the Senate?
We’ve already covered the first question from multiple angles in the full subscriber edition of the Sevens Report, but I think the second question is just as important.
In fact, part of the reason I’m covering this is because I get the sense that a lot of people think that once a plan has general Republican support it will automatically become law, because Republicans “control” the House, Senate and the presidency.
While the first and the last are truly under control from Republican leadership, the Senate is anything but.
Looking at the math, as mentioned yesterday, Republicans have a simple 52 to 48 majority—but that’s not really that powerful.
First, it’s well short of a filibuster-proof 60-person majority, and there’s zero chance eight Democrats will break with Republicans on Obamacare or corporate tax cuts.
That’s why both those issues have to be passed via a budget process called “reconciliation.” Reconciliation only requires a simple majority, so 52 to 48 would work.
But, it gets more complicated than that.
First, to say Republicans have a hard 52 votes on any issue is an overstatement. Senator Susan Collins of Maine (technically a Republican) acts much more like an independent. The same can be said for Alaska Senator Murkowski (she’s taking a hard line against supporting an Obamacare repeal that rolls back Medicaid expansion).
Then, there are Senators McCain and Graham. Both are solid Republican votes, but I think it’s fair to say they despise President Trump for multiple reasons. So while it’s unlikely they’d derail passage of Obamacare repeal/replace or tax cuts, they are going to be tough “gets.”
Finally, Rand Paul is more Libertarian than Republican, and he (and others) will have a hard line approach to any tax cuts that might increase the deficit.
Bottom line, while Republicans “control” the legislative and executive branches of government, the Senate is still a bottleneck in the legislative process, and getting Obamacare repeal/replace through the Senate by Memorial Day will be a tough task—never mind corporate tax reform by the August recess (remember, there aren’t even hearings scheduled for the Supreme Court nominee yet).
Again, I’m not trying to throw cold water on this rally, or the optimism fueling it. I’m just trying to keep everyone focused on facts, and the outlook for passage of major reforms through the Senate remains dicey at best.
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