Washington Wire: High Stakes Musical Chairs

Published by Michael Novogradac on Thursday, November 1, 2012
Journal thumb November 2012

The weeks following Election Day on Nov. 6 will a busy time for lawmakers as they begin to adjust to the postelection landscape. In addition to the presidential race, voters will elect governors in 13 states and territories and the members of the new 113th Congress, who will shift gears from campaigning for election to vying for committee assignments.

The Breakdown
In the House of Representatives, elections will be held for all 435 seats representing the 50 states, as well as for the delegates from the District of Columbia and five major territories. Forty House incumbents are retiring: 21 Democrats and 19 Republicans. This will be the first congressional election using congressional districts apportioned based on the 2010 U.S. Census. In primary elections 13 representatives lost renomination; eight were lost in redistricting battles in which incumbents were pitted against one another, and five incumbents lost nomination to non-incumbent challengers. Additionally, one candidate failed to make the ballot for renomination. Seven Democrats lost renomination: five in redistricting and two to a non-incumbent challenger. Six Republicans lost renomination: three in redistricting and three to a non-incumbent challenger.
In the Senate, 33 of the 100 seats in the Senate are up for election. Of the Senate seats up for grabs, 21 are held by Democrats, 10 by Republicans and 2 by Independents—Joe Lieberman, I-Conn., and Bernie Sanders, I-Vt.—both of whom caucus with the Democratic Party. Of the 21 Democratic seats up for election, six lawmakers are retiring and 15 are running for re-election. In addition, Rep. Lieberman is retiring and Rep. Sanders is running for re-election. Of the 10 Republican seats in play, three incumbents are retiring and 7 incumbents are running for re-election.

So what does all this mean?

Leadership Changes
If Democrats retain control of the Senate and Republicans retain control of the House in the 113th Congress, the significant House and Senate leadership changes that followed the midterm elections in 2012 won’t take place. This means the major leadership shift will take place at the committee level. Party conferences will convene before the start of the next Congress to determine committee assignments.

Assuming Republicans retain control of the House, it is expected that Rep. Dave Camp, R-Mich., will remain chairman of the House Ways and Means Committee and Rep. Sander Levin, D-Mich., will retain the ranking member position.

House Financial Services Committee Chairman Spencer Bachus, R-Ala., is term-limited, and early predictions suggest chairmanship of the House Financial Services Committee will be passed to Rep. Jeb Hensarling, R-Texas, assuming control of the House doesn’t change. Rep. Maxine Waters, D-Calif., is next in line to assume the ranking member position from Rep. Barney Frank, D-Mass., who is retiring after 20 years in Congress. Rep. Frank will be missed by the affordable housing community, as he has been a strong supporter of federal incentives for affordable housing, including the low-income housing tax credit (LIHTC).

In the Senate, leadership of the Senate Finance Committee may remain unchanged. Sen. Max Baucus, D-Mont., is expected to stay on as chair of Senate Finance Committee and Sen. Orrin Hatch, R-Utah, will likely remain ranking member. Sen. Charles Grassley, R-Iowa, has seniority over Sen. Hatch and could claim the chairmanship of the committee if Republicans took control of the Senate. However, Sen. Grassley is expected to opt to remain Ranking Member of the Senate Judiciary Committee.

The Senate Committee on Banking, Housing and Urban Affairs will most likely still be chaired by Sen. Tim Johnson, D-S.D. However, reports indicate that current Ranking Member Sen. Richard Shelby, R-Ala., may leave to become Ranking Member of the Senate Appropriations Committee. In this scenario, Sen. Michael Crapo, R-Idaho, would succeed Sen. Shelby as Ranking Member of the Senate Banking Committee.

If control of the House or Senate shifts, the likely chairmen of each committee would become the ranking members and the ranking members would be the likely chairmen.

Postelection Landscape
In addition, if control of either house of Congress was to change hands, a huge swing would take place in committee membership to correlate to each party’s representation as a whole. If that doesn’t happen, changes would relate more to vacancies stemming from retirements and the results of specific races.

For example, on the House Ways and Means Committee, Rep. Wally Herger, R-Calif., is retiring, freeing up one spot in the roster. In addition, Rep. Rick Berg, R-N.D., and Rep. Shelley Berkley’s, D-Nev., are both seeking election to the Senate.

On the House Financial Services Committee, at least two Republican slots will be available following the retirement of Rep. Ron Paul, R-Texas, and the primary loss of Rep. Donald Manzullo, R-Ill. On the Democratic side, Rep. Frank, will be joined in retirement by Reps. Gary Ackerman, D-N.Y., and Brad Miller, D-N.C. Rep. Joe Donnelly, D-Ind., will not return to the committee, as he is seeking to fill the seat vacated by the retirement of Sen. Richard Lugar, R-Ind.

Four membership slots on the Senate Finance Committee will become available as a result of retirements, two Republican and two Democratic seats. Sens. Kent Conrad, D-N.D., Jeff Bingaman, D-N.M., Olympia Snowe, R-Maine, and Jon Kyl, R-Ariz. are all retiring. Sens. Bingaman and Snowe will also be missed by the tax credit community. Sen. Bingaman has been a strong and vocal supporter of renewable energy tax credits, as has Sen. Snowe. She has also been an ardent supporter of the LIHTC and new markets tax credit (NMTC).

Two seats on the Senate Banking Committee will become available in the 113th with the retirements of Sens. Daniel Akaka, D-Hawaii, and Herb Kohl, D-Wis. A Republican slot could open up on the committee if Sen. Shelby leaves to become Ranking Member of the Senate Appropriations Committee.

What’s at Stake for Tax Credits
In Washington, D.C. and around the United States, tax credit professionals will spend the coming weeks parsing the election results and what lies ahead for affordable housing, community development, historic preservation and renewable energy. If control of both houses of Congress is retained, with Republican House and a Democratic Senate, nothing will pass the 113th Congress without broad bipartisan support, as demonstrated plainly by the 112th Congress.

In the meantime, the lame duck session of the 112th Congress will have a chance to address tax extenders legislation, a key component of the so-called fiscal cliff. And looking farther out, stay tuned to future updates in the Journal of Tax Credits to learn what they will mean for tax reform, federal appropriations and other issues of importance to the tax credit community.