Republicans clinch control of the House, tax package could happen relatively quickly in 2025

Republicans are poised to maintain control of the U.S. House of Representatives in the new year, as the Associated Press (AP) has called enough House races in their favor. This GOP victory in the battle for House control completes a sweep in this month’s elections, following contentious campaigns focused on high inflation, immigration, tariffs, abortion rights, and democracy. The AP declared Republicans had secured a Senate majority on Election Night, on November 5, and called the White House race for Donald Trump in the early hours of November 6.

author: Economician

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category:economy

For days, the GOP appeared on track to retain control of the House, with the AP’s tally of seats gradually approaching the 218 needed for a majority in the 435-member chamber. Other news outlets made their calls earlier in the week or earlier that day. The AP’s final call came Wednesday night when Republican incumbent Juan Ciscomani was named the winner of Arizona’s 6th District.

With a successful Election Day behind them, the president-elect and Republicans are expected to prioritize using the budget process known as reconciliation to address the impending expiration of the 2017 tax cuts and advance other tax-policy priorities. According to analysts at Beacon Policy Advisors, passage of a tax package could happen relatively quickly in 2025, though likely not in the first quarter. “While we are skeptical that the GOP can advance a reconciliation bill within 100 days of Trump taking office, the party will likely get a reconciliation bill over the finish line, likely closer to the middle or end of 2025,” noted the analysts, who had anticipated a GOP House majority.

Had Democrats taken control of the House, more extensive negotiations over any tax package would have been expected, potentially delaying the legislative process. The battle for control of the House was viewed as closely contested leading up to Election Day, with the GOP facing challenges from internal divisions over the past two years. These included infighting and the historic ouster of former Speaker Kevin McCarthy, who current Speaker Mike Johnson of Louisiana succeeded.

Markets have rallied since last week’s elections, driven by expectations of tax cuts. Neal Keane, head of global sales trading at ADSS, noted that the “proposed easing of business conditions, including a reduction of the corporate tax rate,” has contributed to the rally.