advocacy

Weekly Legislative Update
December 19, 2022

Election Results and 2023 Outlook

The voters defied historical expectations by keeping the Senate in Democrat hands and keeping the red wave in the House to a small ripple. Actually, it was the best mid-term for the party controlling the White House in 20 years. Prior to the election, Minority Leader Mitch McConnell publicly acknowledged that he was worried about winning the Senate because “candidate quality has a lot to do with the outcome.” As it turned out, the voters agreed with him. While not true in all parts of the country, for most of the country the take away was that the electorate (particularly with the Senate elections where candidates were not dealing with a safe district like so many of the gerrymandered House districts) rejected extreme candidates and wanted a return to normalcy. 

Prior to Dec. 9, the Senate ended up with 51 Democrats (really 49 Democrats and 2 Independents who caucus with the Democrats) and 49 Republicans by gaining one seat with Senator-elect John Fetterman in Pennsylvania. The House at this point has 221 Republicans and 213 Democrats, with the last remaining race to be decided likely to go to a Republican. 

Just to keep things exciting on Dec. 9, Senator Kyrsten Sinema announced she was now a registered Independent, joining Senators Bernie Sanders (I-VT) and Angus King (I-ME), both of whom caucus with the Democrats. Senator Sinema made it clear that she will be keeping her committee assignments so this change is not likely to change the way the Democrats in the Senate will be able to operate. Having 51 Senators means the Democrats will have majorities on the committees which will make it much easier for the operation of the committees. 

Most Hill observers are expecting gridlock next year. The expectation as already expressed by many House Republicans in leadership positions is that they plan to investigate President Biden, the President’s son (who has no position in the government), Hunter Biden, Secretary of Homeland Security, Alejandro Mayorkas, the Jan. 6 committee, Speaker of the House, Nancy Pelosi, as to why the Capital wasn’t better protected on Jan. 6, the origin of COVID-19, the alleged politicization of the Justice Department, and many other issues and Democrats. Some Republicans have said that they are hoping these investigations will lead to impeachments of President Biden, Attorney General Merrick Garland and Homeland Security Secretary, Alejandro Mayorkas. This would lead one to think that nothing of substance will happen in the House as far as meaningful bipartisan legislation. 

But… what if the following groups in the House were able to work together - 

  • the Problem Solvers Caucus – a bipartisan group where there are 58 members with equal numbers of Republicans and Democrats, all of whom came to Congress to get things done and not get caught up with ideological fights, and are chaired by Representative Josh Gottheimer (D-NJ) and Representative Brian Fitzpatrick (R-PA), and;
  • the Republican Governance Group, chaired by Representative David Joyce, (R-OH) which is a centrist group with 44 members, and maybe;
  • the Blue Dog Coalition, 19 fiscally conservative Democrats, co-chaired by Representatives Ed Case (D-HI), Stephanie Murphy (D-FL), and Tom O’Halleran (D-AZ), and maybe even; and
  • the Main Street Caucus, a group of 52 House Republicans who favor pragmatic governance, co-chaired by Representatives Don Bacon (R-NE), Mike Bost (R-IL) and Pete Stauber (R-MN).

Could they turn the 118th Congress into one where actual problems are worked on seriously in a bipartisan way? It’s possible and that would be a pleasant surprise. Working against this are what are now being referred to as the “exotics” – the extreme right and left members of Congress who have little interest in working across the aisle. Almost all of these members come from “safe” districts meaning that there is no competition from the other party in that district so little incentive to work with the other party. In fact, working with the other party can be held against a member at the primary level in a safe district. Also, working against a productive House is the fact that control of the House keeps swinging back and forth almost every Congress primarily because the country is almost evenly divided between Republicans and Democrats – so why should a member from a safe district try to work in a bipartisan fashion when his/her party will likely control the next Congress and the legislation passed in the prior two years is likely to be thrown out during the next two years? 

Secure 2.0 Outlook

Unfortunately, if a major bill emerges from the lame duck, which is likely, then the odds are that SECURE 2.0 will pass due to its overwhelming bipartisan support. Looking at this legislation dealing with qualified retirement plans from the big picture perspective, there are a number of relatively insignificant provisions which will be helpful for privately owned businesses sponsoring qualified retirement plans, some important provisions for the major investment and insurance companies, a modification of the tax credit from cash being distributed to a government matching contribution that must be deposited into the taxpayer’s IRA or retirement plan, and a provision allowing emergency withdrawals of up to $1,000 available every three years. Multiple employer 403(b) plans which are designed to make it easier for those entities who can sponsor 403(b) plans to do so, would be allowed effective for plan years after the date of enactment. Other than the pay-for, most privately owned companies would probably be in favor of the legislation or at least be neutral but the pay-for would require any participant who earns $100,000 or more to have their catch-up contributions be after tax (i.e., a forced Roth contribution) instead of pre-tax. Thus, the cost of this pay-for will be borne entirely by employees who are 50 and older and, in particular, older small business owners.

The catch-up contribution was specifically designed to allow people who reach age 50 to contribute a bit more than the regular limit to their 401(k)s (this year the catch-up amount is $6,500). Congress understood that when employees are younger they often do not have excess income to contribute to a retirement plan because their disposable income is spent paying off student loans, raising children and possibly purchasing a home. When individuals reach the age of 50, the idea was that people would be in a position to “catch-up” on making retirement plan contributions that they had been financially unable to make earlier in their work lives. While the catch-up was designed to help out any employee who had reached age 50, it was understood by Congress that small business owners, in particular, did not have the ability to make contributions to a retirement plan during the start-up phase of their business.

The retirement security of many older employees will be harmed because they will either stop making catch-up contributions or lose the option to make catch-up contributions because their plan does not offer an after tax option for catch-up contributions. There are 60 million Americans who actively participate in 401(k) Plans, and the vast majority of these participants are average middle class and upper middle-class workers. A good percentage of these active participants are in, or are moving into, their peak earnings years and they want to and can save more. This bill will curtail most of these participants from wanting to make catch-up contributions.

Thank you to our TopGolf Government Affairs Sponsors! 

TIA organized a golf outing at TopGolf Las Vegas before GTE to benefit TIA’s government affairs efforts. We thank those who participated and to our event sponsors: