Following Tuesday's elections, Senate Majority Leader Mitch McConnell struck a surprising tone by expressing his support for a signed stimulus package by the end of the year which would include funding for state and local governments. He added that it is his top priority. Due to disagreements between House Democrats and Senate Republicans, no deal had been struck.

The main point of opposition for Republicans was their insistence on not including funding for state and local governments. In contrast, Democrats were opposed to Republicans wanting to include a measure that would give business owners immunity from customers or employees catching the coronavirus.

Impact of the Elections

This was especially even more surprising given the unexpectedly strong performance by Congressional Republicans. Going into the night, it was expected that Democrats would flip around 10 seats in the House and gain 3 to 5 seats in the Senate. Instead, Republicans flipped 10 seats in the House, and the Senate's control will be determined by runoff elections in Georgia. Even if Democrats win the Senate, a lot of the body's power will lie with moderate Senate Democrats like West Virginia's Joe Manchin who have conservative leanings on many issues.

As a result, the election gives more leverage to McConnell and Senate Republicans. Speaker of the House Nancy Pelosi's gambit that she would be able to pass a bigger bill after the election, failed. So, McConnell's statement was favorably received by the markets as many were fearing that no stimulus deal would pass following the elections.

2021

Many Democrats were hoping based on the polling that there would be a "blue wave" which would sweep president elect Joe Biden into power as voters rejected President Donald Trump and Republicans. This would give him a strong mandate to pass some of his boldest legislation including a new energy plan, infrastructure plan, and a higher minimum wage.

Usually, new administrations get to pass some sort of new legislation following an election. However, this is not so clear given how Senator McConnell obstructed President Barack Obama's agenda from 2010 to 2016. So, McConnell's statement was a sigh of relief for many that some sort of aid is still coming from the federal government.

Yet, it's also clear that the "far-left" is the biggest loser of the election. Candidates with socialist leanings all lost. Additionally, Biden outperformed Democrats due to his aggressive denunciation of "defund the police" rhetoric and protests that turned violent. As a result, it's unlikely that the most ambitious parts of Biden's agenda will pass during the first two years of his administration.