During the final days of the Georgia Senate runoff race, the Republican candidates have warned again and again of dire consequences if there’s a Democratic sweep. “We have to STOP socialism,” candidate Kelly Loeffler tweeted on Tuesday morning ahead of her defeat.

The reality, however, is that a moderate Congress awaits President Joe Biden in the years ahead with 50/50 tie in the Senate with Vice-President Kamala Harris set to tip the balance to Democrats once she is sworn in.

“No matter how you slice it, we are looking at a pretty centrist environment for the financial markets,” Greg Valliere, chief U.S. policy strategist at AGF Investments, told Yahoo Finance on Tuesday as voting was underway.

The Democrats were on the cusp of twin victories late Monday morning. Raphael Warnock was declared the winner in his race against GOP Sen. Kelly Loeffler early Wednesday while Jon Ossoff has a lead in his race with Sen. David Perdue.

Even with the victories, “there are a couple Democrats who are quite moderate,” Valliere added about the rest of the Senate.

The moderate Democrats he cited – Joe Manchin of West Virginia and Jon Tester of Montana – have long records of not going along with their party’s more liberal wing on many issues.

Manchin recently led a bipartisan effort on stimulus that was far smaller than what many in his party wanted. And he was reportedly a Democratic voice against larger stimulus checks.

Jon Tester is another Democrat who almost always has the word moderate affixed before his party label. He has been elected three times in Montana (which Trump won by 16 percentage points in 2020) and once boasted a high rating from the NRA.

Republicans have their own moderates. According to the ideology ratings from govtrack.us, Sen. Susan Collins (R., Me.) and Sen. Lisa Murkowski (R., Ala.) are farther to the left than Manchin and Kyrsten Sinema, a Democratic senator from Arizona.

Both Manchin and Sinema have narrowly voted with Trump’s agenda more often than they opposed it over the last four years, according a tally from fivethirtyeight.com.

The moderate faction is now all set to wield considerable influence in 2021. Sen. Mitt Romney (R., Utah), celebrated the passage of a stimulus bill a few weeks back by noting the leaders “used our legislation as the basis for the final package.”

‘I cannot see a big tax increase coming right away’

Of course, Democratic control of the Senate would allow Sen. Chuck Schumer (D., N.Y.) – and not Sen. Mitch McConnell (R., Ky.) – to set the terms of debate in the upper chamber.

Goldman Sachs wrote in a note Monday that control of the Senate could mean the difference between a large chunk of additional fiscal stimulus reaching the Senate floor or not. A strategist at Oppenheimer even predicted a market correction of up to 10% if Democrats win.

In a follow-up note early Wednesday morning, Goldman added that Democratic control is likely to lead to greater fiscal stimulus in the near-term and incremental increases in taxes but noted any increases “would be a fraction of what the Biden campaign proposed.”

During the campaign, Biden promised an array of new taxes for the 1% and companies like Amazon.

In their own note to investors early Wednesday morning, Deutsche Bank said their economists saw Democratic control as likely leading to another large stimulus package as well as possibly an infrastructure bill. “They see that as a material upside to their GDP forecast” said the note.

Many expect that moderates will have the ability to join up and effectively veto any overly partisan provisions they don’t like.

Dan Riffle, a former aide to Rep. Alexandria Ocasio-Cortez had a similar view on Tuesday, calling the policy implications of the runoffs “somewhat overblown.” Riffle added that the real importance lies in what Democratic control of the Senate means for Biden’s cabinet nominees.

Even with Democrats in control of the Senate, “I cannot see a big tax increase coming right away,” said Valliere, adding that Biden himself will likely want to wait and see on taxes to see how the economic recovery is progressing.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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