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Democrats gain Senate majority as President Biden continues transition

Executive Compensation|Health and Benefits|Retirement
COVID 19 Coronavirus

By Ann Marie Breheny , Maureen Gammon and Steve Seelig | January 25, 2021

Biden administration and Senate priorities could have potential impacts on health care, retirement and other benefit-related legislation.

The January 5 run-off elections in Georgia created a 50 – 50 tie in the Senate, which gave Democrats the majority after Vice President Kamala Harris was sworn in and now has the authority to cast tie-breaking votes. Democrats also hold a majority in the House of Representatives. With majorities in both chambers, the priorities and agenda for the 117th Congress will take shape over the next few weeks, and more information about the early priorities of the new Biden administration will continue to emerge.

Following is an overview of the potential impacts to health care, retirement and other benefit-related legislation as of the time of this writing.

Senate results and outlook

The outlook for the 2021 – 2022 congressional term depended significantly on the results of the January 5 run-off elections in Georgia. Now that Democrats hold majorities in both the House and Senate, there will be a smoother path for President Biden’s political appointees and for legislative enactment of some of his policy proposals. A 51-vote majority will allow Democrats to use the budget reconciliation process and the Congressional Review Act (CRA) to achieve some legislative goals. The path is not entirely clear, however. Obstacles remain that could impede action on some issues.

Senate Democrats are expected to use the budget reconciliation process to move some budget and tax legislation. Budget reconciliation procedures allow the Senate to approve legislation with 51 votes instead of the 60 votes usually required under current Senate rules, but the rules limit provisions that may be included in budget reconciliation legislation.

Tax changes generally qualify for budget reconciliation, which could allow action on important health and retirement provisions. For example, budget reconciliation could be a possible legislative vehicle for expanded Affordable Care Act (ACA) premium tax credits, pension funding stabilization, retirement savings incentives, student loan repayment assistance and other provisions. Budget reconciliation cannot be used for all legislative priorities, however, because reconciliation rules limit the provisions that may be considered. Provisions that do not affect revenues or budget outlays may not be considered under budget reconciliation. Prohibited provisions also include, among others, those that increase future budget deficits, changes to Social Security and those for which the revenue effects are incidental to the underlying policy.

With a Democratic majority in the Senate, Congress may use the CRA to disapprove some recent rules issued by the Trump administration. The CRA allows Congress to overturn regulations under special fast-track legislative procedures. The current Congress may use the CRA to overturn regulations that were issued during approximately the last 60 legislative session days of 2020.

Regular legislative procedures will be available for policies that do not qualify for budget reconciliation or the CRA. Under current Senate rules, legislation generally requires a 60-vote majority to end debate and take a final vote for approval. Thus, a one-vote Democratic margin in the Senate will likely limit the policies enacted through regular legislative procedures, except for legislation that attracts strong bipartisan support and for must-pass legislation, such as appropriations bills.

Democrats will now chair the Senate committees in addition to those they already chair in the House. Senator Ron Wyden (D-OR) is expected to chair the Senate Finance Committee. Active in retirement and health care discussions, he has sponsored or cosponsored important retirement, health and compensation legislation, including the Retirement Enhancement and Savings Act, Retirement Parity for Student Loans Act and Prescription Drug Pricing Reduction Act, among others. Senator Patty Murray (D-WA) is expected to chair the Health, Education, Labor and Pensions (HELP) Committee. She has also been active in health care and retirement policy as well as paid leave, childcare and fair pay legislation. Both committees are expected to discuss retirement, health care, compensation and workforce policies during the 2021 – 2022 legislative term.

COVID-19 will likely be a top early priority for the 2021 legislative session. After the Consolidated Appropriations Act, 2021 was enacted in December 2020, Democratic leaders in Congress said they would seek additional relief and economic stimulus. President Biden has announced the American Rescue Plan, a COVID-19 stimulus plan for Congress to consider. The legislation is expected to include an additional direct payment of $1,400 to most Americans (in addition to the $600 authorized in December) and increasing unemployment assistance by $400 per week, $350 billion assistance for state and local governments, $170 billion for primary and higher education, $50 billion toward COVID-19 testing and vaccination, and increasing to $3,000 per child ($3,600 for a child under age 6) the childcare credit. The American Rescue Plan also proposes to subsidize COBRA continuation coverage and reinstate and expand COVID-19 paid leave mandates that lapsed at the end of 2020. The legislation seems likely to move to legislative debate soon after the inauguration.

Biden transition update

Biden has announced important cabinet nominees and engaged in other transition activities.

Biden’s transition team announced that they will impose a regulatory freeze at noon on January 20. This freeze, which has been standard procedure during recent transitions, generally provides that new regulations cannot be published until they are reviewed by the new administration. In addition, it often delays the effective date of regulations that were published but did not take effect before the inauguration. Biden’s spokesperson said the freeze would apply to guidance documents as well as regulations. Specific details about the freeze will be available when the freeze is formally issued on January 20. The transition team also indicated Biden would rescind some executive orders issued by President Trump. Biden had previously announced that he planned to issue new executive orders during the first days of his administration.

Biden has also announced important cabinet nominations, including Janet Yellen to serve as Treasury Secretary, former Rep. Xavier Becerra to serve as Secretary of Health and Human Services, and former Boston Mayor Marty Walsh to serve as Secretary of Labor. Cabinet nominees, chairs of independent agencies — such as Gary Gensler nominated to head the Securities and Exchange Commission — and scores of additional executive and judicial nominees must be approved by the Senate. A Democratic majority in the Senate will likely smooth the path for most nominees, but the process of approving nominees for a new administration typically consumes significant Senate committee and floor time during the early weeks of a new administration.

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