Election outlook: 2024

Latest update: September 5, 2024

Presidential: Toss-up, but momentum swinging toward Democrats

Election day is two months away. Momentum has continued to swing in favor of the Democrats since Vice President Kamala Harris became the Democratic nominee. Recent polling shows Harris with a narrow lead nationally and—importantly—in the Blue Wall battleground states of Michigan, Pennsylvania, and Wisconsin.  In addition, other swing states—Georgia, Arizona, Nevada, and North Carolina—which previously trended towards former President Donald Trump, are now back in play.

Source: Cook Political Report Electoral College Ratings (Aug. 27, 2024) 

Source: RealClearPolitics Poll Average (Sept. 4, 2024)

Net/net: National polls are interesting, but the presidency is won at the electoral college—i.e., at the state level. Harris likely needs to win the three Blue Wall states, but her expanded battleground map has provided a few additional alternatives to victory, which did not exist a few weeks back.

There is still a long way to go until November, and voters will start paying more attention to the candidates and their policies as the campaigns enter the final sprint. The candidates are scheduled to debate on Sept. 10, which could further shake up what has already been an unprecedented election cycle. 

Congress

The tightening presidential race has further narrowed the battle for control in Congress. 

Senate: Likely Republican

Republicans are still expected to win the majority; the question remains by what margin. The GOP is almost certain to pick up a seat in West Virginia. If Democrats lose West Virginia, they will need to hold all their current seats and win the White House to maintain control. If Democrats lose the White House and/or one additional Senate seat—Montana or Ohio, for instance—they will lose the majority. Despite his past history of outperforming, incumbent Sen. Jon Tester is trailing by a gap that may be hard to make up with Trump atop the ticket in the red state of Montana. The other race where Republicans have the best pickup opportunity is Ohio, but Sen. Sherrod Brown, who is well-liked among populists and progressives, seems to be in a better position to hold on to his seat despite the Republican tilt of the state.  

Net/net: Republicans are likely to take control.

House: Toss-up

The path to the majority in the House largely remains the same: the top of the ticket will impact down-ballot races, and likely determine the House majority. Whichever party prevails, the House is likely to remain closely divided given the narrow field of battleground districts. 

Election outlook | August 8, 2024

Election day is less than 100 days away, and this cycle has already delivered a host of plot twists that have not been encountered in modern political history. The Carta Policy team is launching an election outlook series to provide insights into how election dynamics and potential outcomes might impact the innovation ecosystem. 

Presidential: Toss-up

The candidates, the policies

Democratic ticket

On July 21, President Biden withdrew as the Democratic nominee, transitioning the party to its next generation of leaders and marking an end to his distinguished career of public service at the conclusion of his term.  Biden’s decision to exit the race followed his disappointing debate performance, which fueled concerns among Democrats (and donors) about whether he could defeat former President Donald Trump in the general election. 

Biden immediately endorsed Vice President Kamala Harris to succeed him.  Harris quickly secured the Democratic nomination, which was formalized in a virtual nomination process in early August before the Democratic National Convention later in the month. 

Vice President Kamala Harris: A former prosecutor, Harris represented California in the U.S. Senate and served as the state’s attorney general before becoming vice president. Harris has historically taken more progressive policy positions, but has moderated some of her previous stances since becoming the presumptive nominee. On macro economic issues, she has focused on expanding access to capital for small businesses, as well as investment in areas around supply chain and semiconductors.  Harris is expected to continue many Biden administration policies, but there is optimism in the tech and venture capital communities that she will take a more measured approach to regulating the innovation ecosystem— or at least be more open to engagement. 

VP candidate, Gov. Tim Walz: Harris selected two-term Minnesota Gov. Tim Walz as her running mate.  Walz, a former schoolteacher and member of Congress, was once considered a dark-horse candidate but won the support of the more progressive wing of the party. Reporting suggests the decision came down to personal chemistry and a focus on the Midwestern “blue wall” states as a path to victory. In Congress, Walz had a centrist voting record, but his policy positions have shifted to the left while serving as governor. With respect to the innovation ecosystem, Walz’s political positions are relatively unknown, and both sides will devote resources to defining the candidate over the next three months.  

Republican ticket

Former President Donald Trump secured the Republican nomination for the third cycle in a row. A known but mercurial quantity, the former president’s policy initiatives are reflected in the 2024 Republican policy platform.  Highlights include extending the 2017 tax cuts, embracing digital assets and blockchain technology, and cracking down on crime and illegal immigration. Despite the longstanding Democratic tilt of the venture ecosystem,Trump has attracted more support from the VC community than in his previous runs, as some see him as more favorable to policies that encourage innovation, drawing contrast with the posture of the current administration (particularly on crypto). 

VP candidate, Sen. JD Vance: Trump  selected JD Vance, the 40-year-old junior senator from Ohio, as his running mate. A relative newcomer in politics,  Vance gained notoriety for his 2016 memoir, Hillbilly Elegy, and worked in venture capital before entering politics. Once a staunch Trump critic, Vance’s political views have pivoted to the right, embracing both former President Trump and more populist policy positions that deviate from the establishment, free-market wing of the party.

The path to 270: Too early to tell

Heading into July, the  political landscape began shifting in favor of Republicans following the first presidential debate and the assassination attempt where the former president narrowly escaped serious injury. But Harris’s ascendancy has energized Democrats, brought money and new donors into the campaign, and reset the race.

Source: Cook Political Report Electoral College Ratings (July 9, 2024)

While national polls and the popular vote are oft-referenced statistics, electoral math determines the presidency. The Rust Belt’s “blue wall” fell in 2016 when Trump flipped Pennsylvania, Wisconsin, and Michigan, but it was rebuilt by Biden’s victory in those states in 2020. These key battlegrounds—along with Arizona, Georgia, Nevada, and North Carolina— will likely determine the outcome of the 2024 election. 

Polls have tightened across the board, and almost all national and swing-state polls for the presidential race are within the margin of error. 

Source: RealClearPolitics (August 7, 2024)

Net/net: The race has reset, polls nationally and in battleground states are tightening, but we have a long way to go in an already volatile election cycle. Expect more signal post-Labor Day when voters start paying closer attention

Congress

Senate: Likely Republican

Republicans are expected to control the Senate next Congress. Democrats currently control the chamber with a slim 51-49 majority. Republicans need to flip two seats to gain outright control of the Senate, regardless of who wins the presidency. But if Republicans win the White House, they only need to flip one seat: In  a 50-50 split, the vice president casts the tie-breaking vote needed for a majority. 

The 2024 map heavily favors the GOP. Only one-third of the Senate is on the ballot each cycle, and Democrats are defending 23 of the 34 seats, including several races in which Democrats hold seats in Republican-leaning states (such as Montana and Ohio). Meanwhile, Republicans are not defending any seats that pundits and pollsters consider  truly competitive, and the GOP is almost guaranteed to pick up the ruby-red state of West Virginia following Sen. Joe Manchin’s retirement. With few seats in contention, Republicans are able to focus resources on pickup opportunities. 

Net/net: Republicans are likely to take control of the Senate.

U.S. House of Representatives: Toss-up

The House remains a coin flip. Republicans currently hold an ultra-slim majority; Democrats only need to net four seats to regain control of the chamber. All 435 seats of the House of Representatives are on the ballot in November. However, the number of House seats in contention is relatively small. Due to gerrymandering, congressional maps tend to favor incumbents, so political control over a majority of seats is not expected to change. 

A limited number of races will determine control of the chamber next Congress. 

• Of the 435 races, national polling aggregators only consider around 70 to be competitive. There are 22 “toss-up” races, evenly divided between Republicans and Democrats.

• In 2022, 16 Republicans won races in districts that Biden carried in 2020. Much of the battleground is in these “crossover” districts and traditionally blue states (New York and California), which could give Democrats a slight edge. But Democrat frontline members are also defending a number of seats in key battleground states (Pennsylvania and Michigan) where Trump has recently led in polling, as well as states that have tilted red in recent years.

Net/net: Whichever party prevails in the presidential election is likely to gain control of the House, albeit with a slim majority. 

Governing dynamics

Elections matter: The outcomes of the House and Senate races will significantly impact how the  new administration implements its agenda.

Unified control: If one party wins control of the White House, Senate, and House, the administration has the ability to advance elements of their policy agenda through the budget reconciliation process, which requires only a simple majority vote for legislation to move forward. Budget reconciliation does not make legislating easy, but it will be useful to advance tax reform policies and spending priorities. As of August, only Republicans have a realistic shot at unified control, given their advantage in the Senate.

Divided government: In a divided government, the new administration will have to find common ground with the opposition party in Congress to advance any legislative priorities. Deep political divides and slim margins will make legislating hard and nearly impossible for any policies that are partisan. As legislating has become more difficult, presidential administrations have increasingly turned to regulators to further their policy agendas through agency rulemaking and enforcement initiatives. However, agency authority has been under scrutiny and curtailed by recent judicial actions. Given that the House and presidency are both toss-ups, the 2024 elections have a high possibility of returning a divided government to Washington.

Slim margins: Ultimately, a majority in either chamber will be hard-fought and slim. Tight margins diminish the power of leadership and increase the influence of individual members and factions. 

House: The pitfalls of governing with a razor-thin majority—particularly in divided government— have been on display in this Congress in the House: A  small but vocal minority of the conservative House Freedom Caucus deposed Speaker Kevin McCarthy, and  at times, united with Democrats to block procedural motions and tank bills, essentially paralyzing the legislative process. Whichever party wins the House will have to manage similar dynamics, as the margins there are almost guaranteed to be slim.

Senate: Outside of the budget reconciliation process, any policy initiative will need 60 votes to pass the Senate. Neither party will gain a filibuster-proof majority, so  advancing legislative priorities will require bipartisan support. However, the Senate only needs a simple majority to advance nominations, such as those to the federal judiciary and administrative agency heads.

Nominations:  Personnel is policy, and nominations will be a key battleground that will occupy much of the coming year. Unified control makes the process smoother, but if there is a party split between the Senate and the administration, personnel choices may require moderation (and negotiation) to gain bipartisan support to pass. 

Role of the courts: As policymaking has increasingly fallen on regulators, the courts have increased their scrutiny over agency authority to take such actions. Recent decisions, including the Supreme Court’s reversal of Chevron deference, will impact how policymakers approach both the legislative and rulemaking processes. Agencies will be limited in their ability to act unless explicitly authorized by Congress, so more pressure will fall on the lawmaking body to legislate—which becomes more difficult in a divided government with slim margins. 

Key policy issues impacting the innovation ecosystem

Regardless of election outcomes, a number of issues on the agenda will affect the innovation ecosystem. Over the next month, the Carta Policy team will  publish deep dives on key topics that will impact the innovation ecosystem.  Here is a quick overview:

Tax reform: Tax policy will be the focal point of the next Congress regardless of the election results. Key pillars of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire in 2025, setting the stage for a partisan fight over another broad tax package. The debate will be focused  on issues around the individual tax rate; corporate tax rate; global tax issues; incentives for investing in families and the economy; and how we pay for it all. But it will not end there.

Beyond TCJA: Importantly, in addition to those headline issues and even beyond the scope of the expiring TCJA provisions, there will be a debate about issues specifically meaningful to the innovation economy, such as: 

• Expanding the qualified small business stock (QSBS) eligibility 

• Preserving tax treatment for long-term capital gains and carried interest to incentivize long-term investment in the private markets

• Promoting corporate investment in innovation to restore full R&D expensing costs to boost innovation  

• Aligning taxation to the year that shares are sold to help employees realize the full value of their hard-earned equity

• Extending the duration of the post-termination exercise period to better enable former employees to exercise their options and own the equity they earned following their departure from a company

Capital markets:  Private market policy will remain a focus next Congress. Democrats are expected to continue scrutinizing private markets through the lens of investor protection (as seen through the tenure of SEC Chair Gary Gensler), and Republicans are expected to focus more on expanding access and encouraging innovation, including through fintech and digital assets. In both instances, there is an opportunity to shape and drive policy that preserves the ability for founders to access capital and that expands private market investment opportunities for more investors. These policies include:

• Increasing the size and investor limit for qualifying venture capital funds

• Expanding the scope of qualifying venture investments to include secondary transactions and fund-of-fund investments. 

• Modernizing the accredited investor definition

• Permitting structured access to private market investments through funds and retirement vehicles

Innovation and technology: Tech policy has been a focal point of the 2024 election and will continue to drive the policy debate next Congress. This centers on three principal subjects:

• Crypto: The industry has significantly ramped up political engagement. Republicans and a growing number of Democrats are supporting policies to adopt a crypto regulatory framework and pushing for changes in leadership at the SEC, which has been viewed as hostile toward the industry. 

• Artificial intelligence: There is bipartisan consensus that AI needs a policy framework, but no consensus on how as of yet. Republicans will be hesitant to impose sweeping regulations, preferring  instead to allow technological developments to drive regulation. Democrats, on the other hand, have been more willing to impose guardrails.  Either way, Congress will be under pressure to wrap its arms around AI as Europe and states move forward with their own AI frameworks. 

• Antitrust and big tech: Competition policy is an area where there has been more alignment between the progressive left and populist factions on the right. The Republican vice presidential candidate has praised efforts of FTC Chair Lina Khan to more heavily scrutinize M&A deals and break up big tech. This approach could be a mixed bag for the innovation ecosystem: more scrutiny on big tech could help increase competition and innovation, but the potential chilling effect on M&A could harm startups and investors looking for exits.

The Carta Policy team will do deeper dives on these broad policy pillars in the coming weeks. Stay tuned.

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