The Democratic sweep of Georgia leaves the party about to control the presidency, the House of Representatives and the Senate.
Despite plenty of handwringing ahead of time, so far the stock market has been fine with Democratic control. In fact, two major indexes ended higher Wednesday even with the violence on Capitol Hill from the rioters supporting outgoing President Trump.
A big part of investor confidence seems to stem from how Democratic control makes more economic stimulus likely. Sen. Chuck Schumer – the soon-to-be Senate Majority leader – announced more stimulus checks were at the top of his agenda.
Investor calm could also be a result of the knowledge that a bipartisan group of moderates – many of whom already have a record of working together – appear set to act as a veto on the overly partisan (and perhaps less market-friendly) impulses that could bubble up in the coming years.
Here are the six names – three Democrats and three Republicans – who are set to be most closely watched.
Joe Manchin
Democrat Joe Manchin is serving his second term as senator from West Virginia. He is also the state’s former governor. Manchin has been repeatedly elected in his deeply-red state – Donald Trump won by almost 40 percentage points there last year – by genuinely distancing himself from Democratic leadership in Washington.
His official biography talks about his desire to bring a “spirit of bipartisanship to Washington” and also highlights the need to “put our fiscal house in order.”
Last year, Manchin led a bipartisan effort on stimulus that was far different from what many in his party wanted. He was also reportedly a Democratic voice against larger stimulus checks, facing off against Sen. Bernie Sanders behind closed doors last year.
David Bahnsen, chief investment officer at the Bahnsen Group, recently wrote that “some of the market unfriendly policies that investors have been worried about in the event of a Blue Wave are still not going to come so easily,” citing moderate Democrats, “most notably Joe Manchin of West Virginia.”
Greg Valliere, chief U.S. policy strategist at AGF Investments, said in a Yahoo Finance interview Tuesday, “I cannot see a big tax increase coming right away, I can't see Joe Manchin approving it.”
Manchin has also long been an ally of the energy industry – specifically coal – unsurprising given the importance of the industry in his home state.
Jon Tester
Another red-state Democrat whose name is often cited as a moderating influence is Sen. Jon Tester of Montana.
Tester is a third-generation Montana farmer who lost three of his fingers in a meat grinder accident when he was 9. He still operates his farm and has repeatedly turned away attempts by Republicans to flip his seat. In one memorable example during the 2012 presidential campaign, an attack ad photoshopped the senator’s fingers back on in order to show him shaking Barack Obama’s hand.
Tester won that race even as Mitt Romney carried the state easily that year.
Isaac Boltansky, director of policy research at Compass Point Research & Trading, told Yahoo Finance that Tester was one of the moderate red-state Democrats who will control what’s possible in Washington this year. “That is, net-net market positive,” he said.
Tester once boasted a high rating from the NRA and has long been an important voice for the banking industry through his position on the Senate’s Banking, Housing, and Urban Affairs Committee.
He has also been outspoken about Democratic failures in rural America. “[O]ur message is really, really flawed” there, he recently told the New York Times.
On Wednesday, a Deutsche Bank research note argued that Democratic control of the Senate means Manchin “and Montana’s Tester [are] the likely swing votes in the Senate.”
Krysten Sinema
Since elected in 2018, Sen. Kyrsten Sinema (D., Ariz.) has been the most conservative Democrat in the Senate, according to some measures. Both Manchin and Sinema have narrowly voted with Trump’s agenda more often than they opposed it, according to a tally from fivethirtyeight.com.
Like Tester, Sinema sits on the Senate’s Banking committee and has also been a powerful voice on the airline industry, grilling Boeing and other airline executives at hearings.
She has avoided fitting into any partisan mold since she joined the upper chamber. One the on hand, she made history as America’s first openly bisexual senator and and was described at her Senate swearing in (conducted by Vice President Mike Pence) as “bold queer” by the Huffington Post. At the same time, Sinema has close relationships across the aisle and has called Republican Sen. Ted Cruz an “ally.”
In a preview of the Georgia elections, Nomura’s Economics Insights newsletter highlighted Sinema alongside Manchin and Tester and predicted that even with Democratic control of the Senate “leadership could face something comparable to the ‘herding cats’ issue that Republicans experienced during 2017 while attempting to repeal the Affordable Care Act.”
Three Republicans to watch
While Democratic control will cut into their power, a group of Republicans have wielded a considerable moderating influence in recent years with President Trump in office. They’re likely to want to do the same in the new Congress.
Sen. Mitt Romney of Utah had an extensive business background at Bain Capital before his two runs for the presidency and subsequent election to the Senate in 2018. Sen. Susan Collins of Maine was re-elected last year to another term, and Sen. Lisa Murkowski has represented Alaska since 2002.
All three have long criticized Trump and many of his priorities. Romney called Wednesday’s rioting “an insurrection, incited by the President of the United States.”
These three senators joined Manchin and other Democrats during last year’s stimulus negotiations. Romney celebrated the passage of the final bill by noting the leaders “used our legislation as the basis for the final package.”
If these senators are able to find more new coalitions with Democrats in 2021, they could be crucial in any legislation that ultimately gets to incoming President Biden’s desk.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
Read more:
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