By: Richard E. Cohen, Chief Author, The Almanac of American Politics

The victory by Democrat Doug Jones in the Alabama Senate contest was disastrous for Republicans. But the alternative likely would have been much worse for the GOP.

First, their bad news: Most notably, Senate Republicans lost a seat, which will reduce their majority to 51-49. That may be virtually unmanageable after lame-duck Republican Sen. Luther Strange steps down, as expected, by early January.

At least as significant in political terms is that their lost seat was in Alabama. In the deeply polarized nation, Democrats had virtually given up on Senate seats in the South. Aside from what have become the swing states of Florida and Virginia, the twelve other states in the South Atlantic, Mid South and Deep South have one Democratic Senator of the total of 24: Joe Manchin of West Virginia. Plus, Senate Republicans have a virtual lock in the 11 Plains and Mountain states, where they now hold 19 of the 22 Senate seats.

In a chamber of 100 Senators, that’s a deep hole for Democrats to seek to regain Senate control. Until recently, they had little hope of reversing those regional trends. (See maps in the 2018 Almanac of American Politics*, pages 6-7.)

The outcome in Alabama also is an ominous preview for Republicans of what lies ahead in next year’s congressional elections. The nationwide pattern of reinvigorated Democratic voters and discouraged Republicans jeopardizes GOP control of both the House and Senate.

Still, in many ways, Senate Republicans—and Majority Leader Mitch McConnell of Kentucky—dodged a bullet. If Republican Roy Moore had won the Senate contest, the GOP would have faced a litany of horrors.

They would have included: a promised Ethics Committee investigation of Moore’s behavior with teen-age women, while he was a local prosecutor in his 30s; the political embarrassment of having to defend their Alabama colleague in more competitive states across the nation; and the prospect that former Trump White House official Steve Bannon would gain more financing and credibility from conservatives in his promised support of primary opponents to Republican “establishment” Senators and other candidates.

Even with their likely continuing challenge of running next year with the unpopular President Trump, Senate Republicans are poised to have credible contenders—without the baggage of Moore—against Democratic incumbents in several states that Trump won handily last year, including Indiana, Missouri, Montana and North Dakota, plus Manchin. They also likely will be competitive in contests for Democratic-held seats in Florida and Minnesota, and perhaps others.

None of this would have happened, of course, if Trump had not nominated Alabama Sen. Jeff Sessions to serve as his Attorney General—a selection that the President has publicly regretted for other reasons, following official actions taken by Sessions. That topsy-turvy contest was further evidence that special elections can be major headaches, as House Republicans discovered earlier this year when they managed to retain four seats vacated by other Trump appointees.

With a new round of congressional vacancies that is resulting from resignations of lawmakers charged with sexual harassment or other inappropriate actions, additional unexpected elections are being added to next year’s calendar. Some, including the seats of former Democratic Rep. John Conyers of Michigan and Republican Rep. Trent Franks of Arizona, are in politically secure areas.

But both parties are gearing up for contests next year to replace Democratic Sen. Al Franken of Minnesota and Republican Rep. Tim Murphy of Pennsylvania, whose resignations resulted from their bad behavior. Although the Alabama contest made clear that the political climate is Democratic-friendly, other political circumstances seem less predictable.

*The Almanac of American politics is the gold standard of accessible political information, relied on by everyone involved, invested or interested in American politics. Highly regarded for its in-depth analysis and comprehensive profiles of every congressional district, state, governor and member of Congress, The Almanac is the tool you need to better understand the context of the people and perspectives shaping the issues that matter to you.To order your copy of the Almanac of American Politics, click HERE.

Here on the LobbyBlog we’ve been keeping a firm eye on the implications on-going tax-code negotiations have been having across the lobbying community, last week discussing its impact on the renewable energy sector, but a report from Public Citizen last week has shorn light on the scale of importance it has had on the lobbying industry in recent months. Lisa Gilbert, vice President of legislative affairs at the group, described that ‘the mind-boggling number of lobbyists corporate America has hired to reshape the tax code is of almost biblical proportions and undoubtedly cost a fortune’. The report named ‘Swamped’, perhaps seeks to draw attention to the fact that despite Trump’s election pledge to drain the swamp, his promise of a historic tax overhaul has in fact seen the Capitol swamped with interest groups vying for a piece of the action.

The key findings of the report show that in all, 6,243 lobbyists have been listed on lobbying disclosure forms as working on issues involving the word ‘tax’ through the first three quarters of 2017, this equates to a massive 57% of the 11,000 people who have reported engaging in any domestic lobbying activities at all in 2017. Equating to more than 11 lobbyists for every member of congress, the scale of operations becomes apparent. It is worth noting that not all tax issues reported in the lobbying disclosures have related specifically to Congress’s tax overhaul debate, but nevertheless of the 20 organizations who hired the most lobbyists on tax issues, all 20 reported lobbying specifically on ‘tax reform’.

The report has drawn attention to the diverseness of industry piling into the debate, twenty-six industries have hired at least 150 lobbyists each to work on tax issues in the first three quarters of 2017. The pharmaceutical industry alone deployed 653 lobbyists to work on tax within this period, and the Chambers of Commerce was the most active organization, with over 100 lobbyists working on tax issues. Across industry, corporate tax rates, repatriation of corporate profits, intra-organizational transfers of assets, depreciation rules and deductibility of interest were among the core focuses of activity.

Jeff Birnbaum, who covered the 1986 tax overhaul for the Wall Street Journal, noted that the current lobbying deluge is reminiscent, however in 1986 conferees spent a month hashing out differences between the House and Senate bills, now they have just a couple of weeks. The final-sprint has seen the lobbying community presented with two main options; influence senators and representatives who will make up the conference committee charged with finding a compromise, or work to persuade Republican members of Congress whose constituents may see their taxes go up if changes are failed to be made. Builders and real estate will continue the fight to save the mortgage interest deduction, and across wider business, a push to strip-out the preservation of the corporate alternative minimum tax will go into overdrive.

With the GOP Tax Bill taking shape over the past weeks, advocates across an array of industries have been fighting hard. Some have perused their interests on the offensive, trying to tap into the administration’s appetite for a radical overhaul, and others on the defensive fighting to maintain existing benefits. For advocates and trade groups representing the solar and wind energy sectors, the latter has taken hold.

Whilst the Trump administration’s preference for fossil fuels and nuclear power has been no secret, initial House and Senate versions of the tax reform bill saw the solar industry breathe a sigh of relief. There appeared to be no provisions to change the step-down of the U.S. solar Investment Tax Credit (ITC) for Solar Substantially. However within the detail of the Senate bill, a provision called Base Erosion Anti- Abuse Tax (BEAT) has caused alarm for those in the industry, with advocates arguing that money for wind and solar power projects could dry up if Congress doesn’t alter its language in the tax bill that is designed to prevent banks from moving their profits aboard. The Washington Post reported earlier this week that the problem has come in that ‘the formula for calculating multinationals under that new tax sweeps up the wind and solar credits too’.

The BEAT tax could see an additional dollar of tax levied for every dollar earned through a wind or solar credit. Solar and wind representatives in the Capitol have fought back against the proposals, a letter sent by key industry players including the American Wind Energy Association, the Solar Energy Industries Association and ACORE has urged senators to provide them with exemptions. The urgency of appeals was expressed by Peter L. Kelley, Vice President of public affairs at the American Wind Energy Association who stated that ‘plans could potentially ‘kill over half the wind projects in America, cause factory layoffs and break construction contracts already signed, and deprive farming communities of a cash crop they’re counting on’. Not only do those in the industry fear a drying up of investment, but organizations have also noted that BEAT provisions would apply retroactively to tax credits on operating as well as new projects, leading to fears of a mass sell-off that would flood the marketplace and further damage tax equity markets. Whilst lobbying efforts have achieved a degree of support from a number of GOP senators representing wind-swept states such as Iowa, Nevada and South Dakota, it remains unclear what the final implications will look like for the industry. If changes fail to be made to the initial bill, advocates are viewing the ‘manager’s amendments’ as the next route to exemption, as part of a number of amendments presented by Senate Finance Committee Chair Orrin Hatch, to be voted on as a bundle.