GOP agenda includes pressuring SEC, advancing tax legislation

House Republicans indicated this week that putting pressure on the SEC and advancing tax legislation will be part of their agenda if they take over the chamber in November’s election, as the party is favored to do.

The top Republicans on several House committees demanded the Securities and Exchange Commission demonstrate that it has the authority to pursue several rulemaking items given a recent Supreme Court ruling that held that government agencies must have a clear directive from Congress before engaging in major rulemaking.

The lawmakers questioned whether the SEC can consider regulations on climate disclosure, special purpose acquisition companies and cybersecurity risk management, among others.

“The Court’s decision casts doubt on the Securities and Exchange Commission’s (SEC) authority to develop, finalize and implement a broad swath of regulations,” the lawmakers wrote in a letter Tuesday to SEC Chairman Gary Gensler.

The Republican signatories included the highest-ranking party members on the House Financial Services, Oversight and Reform and Appropriations committees.

The House GOP’s warning to Gensler was similar to resistance he received from Senate Republicans at a recent hearing. Republicans on both sides of Capitol Hill have been criticizing Gensler for the aggressive pace of his rulemaking.

The letter to Gensler reflects the agenda that House Minority Leader Kevin McCarthy, R-Calif., released this week. One of the items on the roster is to “conduct rigorous oversight of government.”

Another GOP priority is to advance “pro-growth tax and deregulatory policies.” Tax legislation introduced earlier this week by Rep. Vern Buchanan, R-Fla., is in that vein. Buchanan’s bill would extend indefinitely 23 tax cuts included in a 2017 law that are scheduled to expire in 2025.

Republicans are favored to win the House, where Democrats hold a narrow majority. But even if the party takes over that chamber, its agenda faces a tough legislative road.

The Senate, where Democrats hold a razor-thin majority, is an election toss-up. If Republicans win the Senate, they almost certainly won’t have a big enough majority to overcome a filibuster. If a Republican bill gets to President Biden, he would likely veto it.

But winning the House would give Republicans leverage on tax and spending legislation, which must originate in that chamber, said Michael Zona, senior vice president of Bullpen Strategy Group.

“So taking back the [House] would significantly strengthen the GOP's negotiating power and force compromise on budget bills,” Zona wrote in an email. “Republicans may be able to pass certain priorities into law as part of that compromise process.”

When it comes to the SEC, Republicans can turn up the heat on Gensler, but he leads a 3-2 majority at the independent agency. It can proceed with his rulemaking agenda as long as Biden is president.

Investment advisers should pay attention to the GOP's governing plans, said Paul Auslander, director of financial planning at ProVise Management Group.

“There’s going to be a [political] sea change either now or in 2024,” Auslander said. “We should be ready for it.”

Auslander works in the ProVise office in Clearwater, Florida. He has talked to Buchanan about tax policy and he backs his bill. Buchanan represents a congressional district anchored by Sarasota.

“I support, and most advisers you talk to would support, making the [2017] tax cuts that are scheduled to sunset permanent,” Auslander said.

Many Democrats say they favor tax relief for low- and middle-income Americans. If the party maintains control of Congress, it may try again to pass tax hikes on the wealthy.