The election impact on Ways and Means and munis
Current election polls point to the Democrats retaking control of the House of Representatives in November, which would result in leadership changes in all of the key committees, including the House Ways and Means Committee.
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“We do anticipate Richie Neal to assume the gavel in the 120th (Congress),” said Paige Mellerio, senior policy advisor for the Government Finance Officers Association.
“While he is a familiar face, we should expect a shift in subcommittee leadership due to retirements and primary losses, as well as new rank and file members.”
Rep. Richard (Richie) Neal, D-Mass., served as Chairman of Ways and Means from 2019-2023 before the Republicans took control of the House and voted in Rep. Jason Smith, R-Mo.
Smith is a strong, vocal supporter of President Trump and shepherded the One Big Beautiful Bill Act through the 119th Congress.
If the Republicans beat the odds and keep control, Smith is expected to remain chairman and maintain the status quo.
In that case the 120th Congress would be “an extension of the 119th,” said Brett Bolton, vice president of federal legislative and regulatory policy for the Bond Market Association.
“This could include working to advance an additional reconciliation package, enacting the Trump trade agenda, and continued work on safety net reforms.”
Committee leadership doesn’t become official until after the first of the year which leaves the current cast of characters in charge of a very busy docket and a short time clock.
“Congress has a very crowded agenda following the election with must-pass legislation like the National Defense Authorization Act and an expiring continuing resolution that includes a surface transportation reauthorization,” said Mellerio.
The House Transportation and Infrastructure Committee has already laid the groundwork for surface transportation reauthorization and kicked the can into the Senate where election predictions show an increasingly tight race.
“Looking at the situation next year through the lens of reality: we’re very likely going to have a divided Congress and that presents an opportunity for drilling down on our issues being nonpartisan,” said Brian Egan, chief policy officer for the National Association of Bond Lawyers.
“Municipal bonds are good for red districts, and they’re good for blue districts.”
Affordable housing was a bipartisan winner in the 119th with advocates hopeful for more progress.
“There appears to be continued interest and momentum to do more on affordable housing,” said Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition. “Regardless of the midterm election results, we expect to see affordable housing on the agenda in 2027.”
Assuming the Democrats and Neal triumph in the House, clues are already emerging about what will be on the menu in January.
“Ranking Member Neal has begun socializing his planned agenda, which as expected includes increased tax oversight of the current administration, extending Obamacare tax subsidies, restoring clean energy tax incentives and addressing expired tax credits not extended in HR 1 (OBBBA),” said Mellerio.
Mellerio also points out that checking items off the wish list will depend on what happens in the Senate and achieving buy-in from an already combative White House.
“Raising the Department of Transportation private activity bond cap could have a better chance of being enacted,” she said.
Muni bond advocates have their own wish list that includes restoring the advance refunding of tax-exempt bonds, raising the cap on ban-qualified debt and keeping the tax exemption.
“Despite serious really existential threats, this Republican Congress has not significantly damaged tax-exempt bonds, and in fact in a few areas improved things,” said Chuck Samuels, a member at Mintz, and counsel to the National Association of Health & Educational Facilities Finance Authorities.
“If either or both the House or Senate flips one would think that bonds, including nonprofit bonds, would gain some protection, but please keep in mind that many of our goals were not achieved in Democratic congresses.”
Samuels remains concerned about Democratic support for a national infrastructure bank and the possibility of losing state and local decision-making in public finance.
“The proper reaction of the municipal bond community if Democrats win one or both houses should not be a sigh of relief, but a renewed effort to dig in and make sure the new folks understand the implications of their actions,” he said.
