Dispatch from Washington: A Red Wave Few Predicted
by Annie Lange
Senior Director, Federal Affairs
The 2024 election cycle was nothing short of dramatic: a squabble over golf handicaps during a presidential debate, an incumbent president exiting the race, slews of celebrity endorsements and two attempted assassinations. Voters, pummeled by texts, ads and phone calls, were exhausted as they cast their ballots and watched the results come in Tuesday night. The result was an outcome few expected.
Presidential Election
Before the returns started to pour in Tuesday night, voters expected a tight race, with the final electoral college count a few days from today, leaning toward Vice President Kamala Harris. Weeks before the election, key indicators pointed to a slight advantage for the Vice President, including a crass remark about Puerto Rico from a comedian at a Trump rally and droves of moderate Republicans supporting the Vice President.
Tuesday night, however, proved these predictions of voters’ minds might be incorrect. Seven swing states were key for former President Trump to win the presidency: Arizona, Nevada, Georgia, Michigan, North Carolina, Pennsylvania, and Wisconsin. Early Wednesday morning, Trump had 266 electoral votes (270 to be confirmed President), winning North Carolina, Georgia and Pennsylvania. The following day, Georgia, Pennsylvania, Michigan and Wisconsin, all blue in 2020, were now red.
So, what does Trump 2.0 mean for beer? Voters knew there would be a new administration in the White House regardless of who won. However, a Harris administration would have been akin to a Biden one. The Trump administration is expected to be similar to his administration from four years ago. The Trump administration will have several major issues to tackle in the coming year, including the Dietary Guidelines for Americans, a new trade agenda and expiring tax provisions.
A new administration means there will be a change of staff in both agencies reviewing the Dietary Guidelines for Americans. We can estimate that not only will there be a change of personnel but also a possible modification of procedure. The final Dietary Guidelines are expected to be released by the end of 2025, giving the new administration a full year to review the work HHS and USDA have done. A new administration also means there will likely be a change of staff at the Alcohol and Tobacco Tax and Trade Bureau (TTB). This will alter the priority of the regulations the agency is reviewing.
Former President Trump also campaigned on new tariffs. These tariffs aim to raise capital for the federal government as the administration grapples with the 2025 expiring tax breaks enacted under the Trump administration in 2017 under the Tax Cuts and Jobs Act (TCJA). Currently, the Joint Committee on Taxation (JCT) estimates that the reinstatement of TCJA would cost $5 trillion. TCJA included the Craft Beer Modernization Act that gave the beer industry tax relief from excise taxes, which eventually found permanency in the code in 2020.
The tax package that Congress will consider will likely include already expired corporate tax provisions. These provisions include restoring full and immediate expensing in various investments, immediate research and development expensing, and the business interest deduction limitation. Finally, the Trump administration campaigned to allow taxpayers to forgo paying taxes on tips earned. If this legislation comes to fruition, it is estimated to cost over $100 million over ten years.
Congress
Senate Election
The Senate also flipped from Democratic to Republican control, giving the Trump administration a Republican majority and an easier path to securing cabinet confirmations. As of Thursday afternoon, Republicans have 53 seats, taking the Senate majority. Republicans were able to flip Montana, defeating Sen. John Tester; Ohio, defeating Sen. Sherrod Brown; Pennsylvania, defeating Sen. Bob Casey and West Virginia, as Sen. Joe Manchin (WV-I) retired.
Three Senate races have not been called yet, but they will not change who leads the majority in the Senate. The three Senate races left are Arizona, Nevada and Maine. Senator Tammy Baldwin (D-WI) has held her Senate seat in Wisconsin. With Senator Mitch McConnell (R-KY) retiring, the race for majority leader in the Senate will heat up now that the Republicans secured leadership. The race will be between Sens. John Thune (R-SD), John Cornyn (R-TX) and Rick Scott (R-FL). As we learn more, we will keep you informed.
House Election
As of Thursday, the House has not been called. Of the 435 races, Republicans won six seats, and Democrats won two. Currently, Republicans have 209 seats, and Democrats have 191, with 35 of those seats still pending election results.
Thankfully, CHEERS Act sponsors Rep. Darin LaHood (R-IL-16) and Rep. Steven Horsford (D-NV-4) both held their seats, and of the 35 cosponsors of the CHEERS legislation, none lost their race at this time.
The upward trend of Republican seats increases the likelihood that they pick up at least another nine seats to take the majority. If the Republicans hold the House, they can use a budgetary measure called reconciliation to pass legislation for specific tax, spending and debt limit legislation with a simple majority of only 50% of votes. In 2017, Republicans also used reconciliation to pass TCJA as they controlled the House, Senate and White House.
Should Republicans keep the House, leadership is likely to look the same as it did this Congress with Rep. Mike Johnson (R-LA-4) as speaker, Rep. Steve Scalise (R-LA-1) as majority leader, Rep. Tom Emmer (R-MN-6) as majority whip, and Rep. Elise Stefanik (R-NY-21) as chair of the House Republican Conference.
What’s Next?
Members return to Washington on November 12th to finish the work of the 118th Congress in five short weeks, with a break for Thanksgiving. Currently, the government is funded through December 20, and Congress will need to pass another continuing resolution if all twelve spending bills are not completed by that time. As a reminder for brewers, if Congress cannot pass a government funding package or continuing resolution, the government will shut down, and TTB will not be able to approve labels or recipes. Please ensure if you require TTB’s review, your documents are submitted well before December 20.
Republican leadership proposed many other projects during this short five-week period, including passing the Farm Bill. While this is possible, it is unlikely as the chambers have not finalized the text.
As we covered at the Annual Meeting, beer is a non-partisan product loved by Democrats, Republicans and Independents alike and as such is uniquely positioned to address the challenges before us. Your Beer Institute team will continue to educate the Trump transition team, incoming Members of Congress and key stakeholders on beer’s position on our priority issues. While this political update only skims the surface of issues, we will continue to provide updated information in our On Tap newsletter and through member communication. As always, please feel free to reach out to our team on the issues covered here or otherwise.
