Republicans Win Control of US Senate Ahead of Key Tax Fight (1)

Republicans won control of the US Senate amid a slew of victories by allies of Donald Trump, giving the GOP powerful leverage in high-stakes tax and spending battles next year.

GOP candidates defeated Banking Chairman Sherrod Brown in Ohio, unseated Montana’s Jon Tester and picked up the open Senate seat in West Virginia. Nebraska Republican Deb Fischer also fended off an unexpectedly tough challenge, giving the party at least 52 seats in the 100-member Senate. That means the GOP will have the final say in the Trump’s executive and judicial nominations.

Republican control of the Senate, projected by the Associated Press, dashes progressives’ hopes of dramatically shifting the burden of US taxation toward corporations and wealthy individuals as trillions of dollars worth of provisions in the 2017 tax law expire at the end of next year.

The announcement of Trump’s presidential victory extended a sharp selloff in the bond market, with traders speculating that his tax-cut and tariff policies would fan inflation pressures and keep interest rates elevated. Rates on the 30-year Treasury rose as much as 24 basis points, the most since 2020.

Any new tax law would need approval from the GOP-led Senate. But the balance of power going into the fight over how to handle tax cuts’ expiration will also depend on control of the US House, which still is unclear.

Competitive Senate races in Pennsylvania, Wisconsin, Michigan, Arizona and Nevada haven’t yet been called.

Democrats went into the election with a slender Senate majority and had to defend far more seats than the GOP in this cycle, including three states won twice by Trump and several more he took in 2016. Only a third of the Senate is up for reelection because members serve six-year terms.

Democrats’ hopes of upsets in Texas and Florida were quickly dashed as Republican incumbents Ted Cruz and Rick Scott won reelection. Democrats did, however, manage to fend off a challenge in Maryland from former Republican Governor Larry Hogan with a victory by Angela Alsobrooks.

Read More: Black Women Break a Barrier in US Senate, Winning Two Seats

Republicans campaigned to oust Democrats by castigating them for surges in the cost of living and illegal border crossings under President Joe Biden.

The Democratic Senate was crucial to passing Biden’s agenda in the first two years of his administration, including trillions of dollars in stimulus spending and investments in semiconductor manufacturing, infrastructure and his signature climate law.

Deeply Split

Republicans have said they intend to chip away at Biden’s climate law, roll back regulations on energy production, strengthen the US border with Mexico and extend Trump’s 2017 tax breaks.

The party, however, is deeply split over the budget and foreign policy issues, including funding for Ukraine. Those divisions, and the Senate’s filibuster rule requiring 60 votes to advance most legislation, will require working with minority Democrats.

Mitch McConnell, who set the record for the longest-serving Senate party leader, has said he will step down from his leadership post. Republicans aspiring for his job include McConnell’s No. 2 — John Thune of South Dakota — and John Cornyn of Texas.

Both men have at times criticized Trump and backed aid for Ukraine. That leaves room for a potential challenger better aligned with Trump, such as Florida’s Scott.

(Updates throughout)

--With assistance from Megan Howard.

To contact the reporter on this story:
Steven T. Dennis in Washington at sdennis17@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Mike Dorning

© 2024 Bloomberg L.P. All rights reserved. Used with permission.