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What a blue wave in Georgia would mean for corporate taxes in 2021

As investors eye which political party will have control of the Senate, Stefanie Miller — managing director of FiscalNote Markets in Washington, D.C — joins Yahoo Finance Live to discuss what’s at stake in the Georgia Senate runoffs.

Video Transcript

JULIE HYMAN: Well, moving on to sort of talk about more of the context behind all of this today, we are joined by Stefanie Miller. She is FiscalNote Market's Managing Director. And, Stefanie, to pick up on the last point that Jess was making, it could take some time before we find out who the winner is here. And you say in a note that it could be maybe even weeks, maybe even a replay of what we saw with the presidential election. I mean, I imagine the markets aren't going to like that kind of suspense.

STEFANIE MILLER: No, I think that the selloff yesterday was sort of an admission that the certainty and an answer, and that answer being a Republican sweep, was starting to feel less certain to many investors. And this is something we've been warning our clients around for weeks, that there are just a number of things that are going to make this a very, very, very close race. First and foremost is just looking at November 3. As you mentioned, it was so close that neither Republican Senate candidate broke 50%, and that's why we're in this runoff. And furthermore, when Biden's victory was declared, it was more than two weeks later. And so I think we just all need to be prepared to not know an answer for some time in the event that an actual hand-count recount is needed.

BRIAN SOZZI: Stefanie, connect some dots for us. If the Democrats do wrestle back control of the Senate, does it mean yes we get more stimulus but, because of that stimulus, we get higher corporate taxes in 2021?

STEFANIE MILLER: So the way I think about it right now is will Joe Biden be negotiating with Mitch McConnell? So if Republicans win, Mitch McConnell will remain the majority leader. Or will Joe Biden be negotiating with the middle, with the center?

And what I think will happen is if Democrats win majority control, as was discussed earlier, it would be a 50/50 split and the vice president being the tiebreaker. It's going to mean that moderates from both the Democratic and Republican sides of the aisle are going to need to be coalesced around some sort of package, whatever it may be, whether it's stimulus or otherwise, that they think they can get enough of a centrist group around something to get it done.

So when it comes to tax and fiscal stimulus, you know, Biden is going to push his fairness agenda pretty hard. And I think that a number of moderates in this current economic environment when there is a clear have and have-not sort of feeling in the US that kind of all sides agree on, I think there could be some minor corporate-tax increases to help pay for relief for middle-income, lower-income individuals.

And so it's not going to be a sweeping tax overhaul. It would-- it's going to be hard to characterize it as this huge progressive Democratic push because the caucus is going to barely have control and is very divided. But there is going to be a path likely for something.

MYLES UDLAND: So I guess another way of asking that question-- and you sort of got at it there-- is if we look at what happened from '08 to 2010 and then we saw what happened from '16 to '18, I guess you're not expecting that to be sort of the classic first two years, full control, broad mandate type view that we've seen recent administrations have.

STEFANIE MILLER: Yeah. I think the one way where it will be similar if Democrats win is that Biden will be able to get way more policy on the floor, and this is why I think that there will be this sort of power center in the middle because Mitch McConnell would not let many of Biden's-- or will not like many of Biden's policies even be considered for a vote in the event that he's still the majority leader, whereas Chuck Schumer, if he's majority leader, would be way more willing to work with the president. And so then the question is can you come up with a compromise policy? rather than will the policy ever even be considered?

And so that's kind of how I think about it, and that nuance I think is super important because potentially more progressive policies or more extreme policies will start on moving their way through the legislative process that otherwise wouldn't have, but I do think everything gets watered down if it's going to pass.

JULIE HYMAN: Stefanie, I also want to ask about something else that's going on simultaneously, and that's this whole business about certifying the Electoral College results and the president bringing up all kinds of conspiracy theories and, of course, the call with the Georgia secretary of state. I've been trying to sort of tease out what, if any, lasting repercussions there will be. I mean, it looks certain that his efforts are not going to succeed, but just politically in Washington, will there be some kind of lasting ripple effect?

STEFANIE MILLER: Yeah, this is the are we in the middle of a constitutional crisis? question. And, you know, Republicans who are objecting to the result, the president and others who are sympathetic to his argument, think that not objecting creates a constitutional crisis and creates an opportunity for fraud. And the other side obviously says, well, we've had a number of trusted institutions, including your own Department of Justice and others, say that there was no fraud. Everything was kosher for the most part and certainly not in a determinative way that would indicate, you know, that you have your election stolen from you, and we have to move on.

I think that Donald Trump is the most unique individual in the political realm, and the idea that he can set precedent for scores of other people is probably-- it's hard for me to imagine. However, I think he will continue to be involved in politics one way or another for the future-- for the foreseeable future, and so I think the heartburn of the last eight weeks and the uncertainty that will continue through tomorrow could be something that we have to just get used to.

JULIE HYMAN: Awesome. All right, Stefanie Miller, thank you so much of FiscalNote. Appreciate your time this morning.

STEFANIE MILLER: Thank you.