While most of the post-election chatter in Washington has focused on either President Trump’s challenge of votes or Joe Biden’s transition plans, the outcome of two Senate elections to be held on January 5 in Georgia will largely determine the policy agenda on Capitol Hill for 2021-22. Georgia requires a runoff election if no candidate receives more than 50% of the vote, and no candidate did in either Senate race on November 3.
The outcome of these races will determine which party has a majority in the Senate and therefore what specific policy agenda might advance next year. With Republicans currently holding a 50-48 advantage in the Senate, they need to win just one of the two seats to retain its majority. Democrats would need to win both seats to capture a 50-50 majority, where they would have the edge with the tie-breaking vote of Vice President-elect Kamala Harris.
The four candidates in the two races have been campaigning vigorously and will continue to do so through election day. Early voting, whether by mail or in person, began on Monday.
This report will cover the candidates, their vote counts on November 3, key dynamics surrounding the races, and policy issues that may be prioritized based on a Senate majority of either party.
In Context: the November Results
In Context: the November Results
The Republican and Democratic candidates in these two races already faced each other in the November 3 election. Those races were very close, and we expect the January 5 outcomes to be no different.
In the Perdue-Ossoff race, Senator Perdue fell just short of the required 50% of votes cast and had an almost 2% lead over Ossoff. A third candidate – a libertarian – received over 2% of the vote and likely was the primary reason that Perdue didn’t exceed the 50% threshold. Perdue received more votes than Donald Trump in November and is the only candidate (of the four) who has actually won election to any office.
The other incumbent senator, Senator Kelly Loeffler, was appointed to her seat in December of 2019. Her race this year featured 20 candidates, which made it very difficult for any of them to come close to reaching the 50% threshold and therefore avoid a run-off election. Senator Loeffler’s position was particularly challenging due to a serious intra-party challenge from Congressman Doug Collins (R-GA). Dr. Warnock led the field with a plurality of the vote (32.9%). However, the six Republicans in this election combined to receive 49.37% of the vote, while the combined vote percentage of the eight Democrats in the race was 48.39%. The remainder of the vote went to third party candidates.
The Senate election results reflect a slight advantage for the two Republican candidates. This edge, however, may not be meaningful in a run-off where the election dynamics and voter motivations may be very different.
Voter Turnout is the Key
While the January 5 run-off is unlikely to exactly mimic what happened in the general election, the November results do give us a sense of the sentiment of Georgia voters for these candidates. The big question is how will turnout and the composition of voters change. Will the same voters come out to vote again on January 5? Will new voters vote, and if so, who are they and what candidates will they support? Will voters have less of an interest and incentive to vote and instead stay home as they often have done in past run-off or special elections?
While run-off elections in Georgia are not new, there has only been one Senate run-off in the past 20 years. In 2008, the general election was close, with incumbent Senator Saxby Chambliss (R-GA) falling just short (0.2%) of the needed required 50% threshold against Democratic challenger Jim Martin, who received 46.8% of the vote. However, the run-off election was a different race and Senator Chambliss went on to win with 57.4% of the vote. The turnout in the 2008 November election was at the time a record high of 65.2% of registered voters (this record was broken by the turnout this year). However, the turnout for the subsequent run-off election was significantly lower, with only 37.1% of voters casting their ballot, which is indicative of the turnout in most run-off and special elections.
Looming in the background is a question about the new political profile of the Peach State. The state supported Joe Biden for president this year, and it has shown signs of becoming a swing state as its population, voters and politics have changed over the past two decades. Still, it has been a traditionally Republican state and has elected two Republican senators and a Republican governor in the most recent elections (prior to 2020). Before Biden’s win in the state this year, the last Democratic presidential candidate to win the state was Bill Clinton in 1992 who benefitted from a fractured vote caused by serious third party challenger Ross Perot. We will learn a lot about Georgia in this run-off election and whether it has truly emerged as a swing state.
As in most elections, the bottom line on these races is that they are all about who turns out to vote. The party that can turn their voters out in large numbers will have a clear advantage. If both parties turn their members out to vote in large numbers, as occurred in November, the Republican candidates have a very slight advantage. If the Democrats win with both parties turning out their voters in large numbers, Georgia’s transformation into a swing state for statewide elections will be complete.
A key variable is whether President Trump’s legal challenge and questioning the legitimacy of the vote count in several states (including Georgia) will discourage some Republican voters from casting their ballot. On the other hand, Democratic voters who were motivated by a desire to vote President Trump out of office may not see that as relevant in the January races since his name will not be on the ballot. Each side will need a high level of turnout to win, and both sides fear a drop-off among their voters. Nearly 69% of Georgia’s registered voters voted in November, and we expect the same or just slightly less to vote again in January.
The Vote So Far
To date, 1.3 million voters have requested mail-in ballots for the January 5 elections, representing 75% of the total requests for mail-in ballots received for the November elections. So far, 427,127 of those ballots have been returned and accepted with only 1,583 mail-in ballots having been returned and rejected. In-person early voting began on December 14, and a total of 486,970 in-person early votes have been cast thus far. While the early voting period has not been open long, early reports show that it’s occurring at a similar rate and pace as the November elections.
While there are other factors to consider, such as the holidays, which may be prompting more voters to cast their early ballot now as opposed to later, it is becoming clear that turnout for this run-off election will likely be higher than a typical run-off election. Just how high remains to be seen.
Election Night Watching
On November 3,Georgia was one of several states that began election night with an early “blue tint” due to already counted mail-in ballots and early votes, which leaned Democratic before quickly turning red as more in-person election day votes were counted that leaned Republican. Georgia eventually turned Democratic again after all of the mail-in ballots were counted. No changes have been made to the election rules since November, though voter registration did open again for the run-off elections. This means that there is a very strong possibility that the evening of January 5 will look similar to November 3, where early mail ballots will be tabulated first (likely favoring the Democratic candidates) and in-person votes immediately following (likely favoring the Republican candidates). Mail ballots submitted later will be counted last, and they are likely to lean Democratic.
There will be fewer Georgia mail-in ballots to count this time, but the process of sorting and counting those ballots is still painfully slow. It is likely all of these ballots will not be fully counted by election day evening. If you’re following the Georgia elections, it’s possible that you’ll know the results of the election before you retire for the evening, but more likely you’ll hear of the results the following morning.
The Post-Election Policy Agenda
Depending on which candidates wins these elections and therefore the Senate majority, one of two very different policy agendas will evolve next year.
If Republicans win:
- Budget deal to control spending
- Technology industry reforms
- Prescription drug pricing reforms
- Scrutiny of Biden nominations
- Smaller COVID-19 relief bill (in 2021)
- Expanded economic sanctions on high-risk countries
- Oversight hearings on Biden administration and Hunter Biden
- No restrictions on fossil fuel energy sources
- Higher defense spending
- More Biden focus on executive actions
If Democrats win:
- Tax reform/increases
- Infrastructure investment
- Strengthening of Obamacare
- Green light for Biden nominations
- Bigger COVID-19 relief bill
- Greater reliance on international coalitions in international affairs
- Oversight hearings on Trump admin and financial affairs of Donald Trump
- Promotion of green energy, restrictions on fossil fuel energy sources
- Less defense spending
- Fewer restrictions on immigration
Both parties have common interests and remedies to some degree on other issues, such as cybersecurity protections, police reforms, retirement security, surprise medical billing and a potential US-United Kingdom Free Trade Agreement, among others. Perhaps they could be subject to bipartisan action next year if the two sides are willing.
The Home Stretch
The Home Stretch
With Congress soon poised to complete final actions on key priorities like government funding and COVID-19 relief, national attention will very soon fully turn to Georgia. Peach State voters have been subject to a barrage of advertisements and high-profile visitors touting the various candidates since early November. Already, all four candidates and the respective outside advocacy groups supporting them have spent twice as much on the run-off elections as was spent on the general election. Clearly, more will be spent over the next three weeks. All four candidates will have near universal name recognition going into election night, and unlike November 3, there will be no third party candidates or additional options or issues on the ballot.
Polling in Georgia was more accurate than national polling, and polling of likely voters for the January 5 races suggest two very close races. We are aware of two statewide polls over the past two weeks – one projecting a slight lead by the two Democrats and the other showing a slight lead by the two Republicans. Both poll results are within the margin of error. Crucially, almost all of the polling has all four candidates below 50%, with 5 to 10 of voters still undecided.
The vast majority of registered voters have made up their minds, though, and perhaps the bigger question is whether they will vote. As is increasingly the case around the country in elections, the election day – January 5 – will be the last opportunity to vote. The results will give us all clarity on the public policy agenda next year and how Washington policymaking may affect the financial markets and our livelihoods.