It all comes down to Georgia.
With the outcome of yesterday's two runoff races in the Peach State determining the balance of power in the Senate, construction industry advocates say whatever the final count determines, it will have broad implications for contractors.
“Our livelihoods are riding on Georgia,” said Kristen Swearingen, vice president of legislative and political affairs at Associated Builders and Contractors. “No pressure down there, right?”
One of those races, between Republican Sen. Kelly Loeffler and Democrat Raphael Warnock, was called by several media outlets including AP early this morning for Warnock. The second race between Republican Sen. David Perdue and Democrat Jon Ossoff was too close to call early Wednesday, though Ossoff had a slim lead of just 0.4% as of publication time.
As the country waits for the results, how the 117th Congress will proceed, and even the construction-related issues it will tackle in 2021, hang in the balance. Despite Loeffler's loss, if Perdue wins, the GOP will maintain its majority in the Senate.
With many important pieces of legislation facing lawmakers this year, the fate of the Senate will have a major impact on construction-related issues, industry advocates say.
Under a Republican-controlled Senate, pro-union legislation like the Protecting the Right to Organize Act, which many non-union contractors oppose because it could essentially bar them from working on federal contracts, would likely never see the light of day.
“If the PRO Act passed the House and went to the Senate, I can assure you a Senate Majority Leader Mitch McConnell would not bring it to the floor for a vote. Chuck Schumer, on the other hand, would have the PRO Act on the floor in a hot second,” Swearingen said, referring to the Senate Democrat leader from New York.
That scenario would only be possible if Ossoff wins, producing a 50-50 split in the Senate, with Vice President-elect Kamala Harris casting the tiebreaking vote.
Another crucial legislative issue for contractors this year is a potential federal infrastructure package. Under a GOP-controlled Senate, President-elect Joe Biden would have to compromise with Republican leadership to advance his multitrillion dollar infrastructure proposal, something his transition team has already been reportedly working to achieve.
While passing a comprehensive infrastructure spending bill has been cast as a bipartisan measure that should have widespread support, both former President Barack Obama and President Trump weren't able to do so. The problem, as with anything in politics, comes down to figuring out the details of who would pay for it.
"There were a lot of good conversations about how infrastructure could impact the potential recovery in the next year" in the previous Congress, said Peter Comstock, ABC’s director of legislative affairs. "But there's always the issue, if you're going to do a multitrillion dollar infrastructure bill, of where is the money going to come from. That's something Congress is going to have to find a bipartisan solution to."
The results of the Georgia race could even have tax implications for contractors, according to construction industry accounting experts.
Among other changes to the tax code, Biden is expected to increase the corporate income tax rate from 21% to 28% and to raise individual tax rates for those making more than $400,000 per year, Frank Scala, partner of Marcum's Assurance Services Group in New York City, told Construction Dive. The latter would impact company shareholders who report business earnings on their personal returns via ownership in pass-through entities like Sub Chapter S corporations.
The likelihood that Biden will be able to make tax-related changes greatly hinges on his support in Congress, including the outcome of the Georgia runoff, according to Raymond Haller, tax partner at Grassi in New York.
If both Georgia Democrats win, it could open the door for another potential game-changer on the Hill: the elimination of the filibuster. The legislative tactic effectively dictates that a three-fifths majority — 60 members — is needed to end debate on any topic and bring it to a vote.
The rule has been cast as a driver of partisan gridlock, and Democrats have recently been building momentum for its elimination, something they would need control of the Senate to do. If that happens, it could make it easier to pass a comprehensive infrastructure bill and would significantly raise the possibility of the PRO Act being passed.
“If the filibuster came down, the swing in things that could get done are limitless,” said Jimmy Christianson, vice president of government relations at the Associated General Contractors of America.
Christianson posed a more philosophical question of how the 117th Congress will function, however, regardless of who wins in Georgia.
“We’re all waiting for Georgia, but I think the real question will be how effective a slim majority will be for either party,” he said, referring to the oversight Congress has over the executive branch.
“We’ve seen over the last several administrations how powerful the president’s pen can be, and having some check on that is beneficial,” Christianson said.
In his view, with the runoff in Georgia and the narrow margins in place in the Senate already, getting the new Congress up to speed and functioning could take longer than expected. It could be days or even weeks before the winners of the Georgia election are official, according to USA Today. Counties have until Jan. 15 to certify results and Secretary of State Brad Raffensperger has until Jan. 22 to certify statewide results.
In addition, under Georgia law, a candidate can request a recount if the margin of victory is less than half a percentage point, and Perdue's campaign has said it will use “every available resource and exhaust every recourse to ensure all legally cast ballots are properly counted,” according to the New York Times.
“What’s going to be interesting is waiting to see how long it takes to find out who’s actually in control of the Senate,” Christianson said. “If you’re waiting a month to find out who the senators from Georgia are, how do you confirm Cabinet nominees? How do you appoint judges?”
The answers to those questions will all come down to Georgia.
This story was corrected to indicate that the vice president can cast tie-breaking votes in the Senate.