November 15, 2022
The results of the 2022 Congressional elections are still coming in and the only certainty these days is that the electorate – and the government – are closely divided.

As of November 15, Democrats have retained a razor thin majority in the Senate, while control of the House of Representatives is still undecided.  Regardless of the outcome, the Jewelers of America Political Action Committee, JAPAC, had another successful year.

Jewelers of America’s legislative counsel, Haake & Associates headquartered in Washington, D.C., kept a close eye on this year’s races. Here’s what we know so far.

JAPAC Success in Congress

As of November 15, with several close races still undecided, candidates supported by JAPAC won or were leading their elections in 12 out of 15 House contests and 3 out of 4 Senate ones. JAPAC is the only PAC that represents the fine jewelry industry in D.C., so success for JAPAC is success for jewelers.

Given how closely divided the government is, having friends on both sides of the aisle is increasingly important for supporting good policy and pushing back against those that could hurt businesses. With campaign costs continuing to rise, JAPAC relies more than ever on JA members to contribute, ensuring the jewelry industry has a voice in DC. JA members can learn more about JAPAC by visiting here.

Congress: A Nearly Even Split
Democrats will retain their slim majority in the Senate, with the split currently at 50-49 and Georgia’s Senate seat still undecided. Should Republicans flip that seat in the December 6 run-off, the Democrats will still have control since the Vice President can cast the deciding vote. The stakes for the final Senate seat remain high however, since a 51-49 split would give Democrats more leeway in passing priority legislation and pushing through President Biden’s nominees.

However, that advantage will be tempered with the House expected to shift to Republican control. As of November 15, Republicans had a 217 to 205 advantage, needing just one more seat to win the majority.

Tally as of November 15, 2022:
  • Senate: 49 Republicans, 50 Democrats (includes 2 independents who caucus with the Democrats) (1 race undecided and going to a run-off)
  • House: 205 Democrats, 217 Republicans (13 races undecided, the Republicans are expected to reach at least 218 to take control of the majority)

What This Means for Legislation & Regulation

We can expect gridlock with the chambers so closely divided. That means lawmakers on both sides of the aisle will have a harder time making any sweeping changes to taxes, laws or regulations. Potential issues include the need to lift the limit on U.S. debt, probably sometime in 2023. Partisan fights over the limit have sparked disruptions of the economy in the past, something that has the potential of reoccurring given the current environment.

Overall, we can expect that each party will play to their slim advantages, with Republicans capitalizing on House oversight and Democrats focused on their leverage in the Senate and Administration.

An unpredictable leadup to the 2024 election cycle, with former President Trump expected to run for reelection, is likely to add to the volatile environment with both Republican and Democrat leadership facing pushback within their ranks.

Here are Haake & Associates’ insights into specific legislation or issues that Jewelers of America is watching on behalf of its members:

Last-In, First-Out (LIFO) Accounting Method
Repeal of LIFO would deal a potentially fatal blow to companies in the jewelry industry that use the long-standing method of accounting for inventory. Lawmakers on both sides of the aisle have looked to it as a very favorable revenue raising option. With the government so evenly split, it seems unlikely that repeal would pass, but businesses will need to keep pressure on lawmakers.

Russia/Ukraine Crisis
US Policy toward the Russian invasion of Ukraine is unlikely to change in the next two years, though jewelry businesses will face increasing pressure to ensure they are not sourcing diamonds, precious metals or gemstones that have emanated from either Russia or Belarus. JA members are advised to continue practicing enhanced due diligence. For more information, see JA’s Guidance.

Sales Tax Fairness
Given that states now can collect sales tax from out of state remote and internet vendors, the playing field has become more level. However, states are still working out the kinks when it comes to state-by-state collection and there could still be the need for federal legislation to create a more unified approach. Realistically, it is not an issue that is top-of-mind for lawmakers and government gridlock is likely to keep it that way for the time being.
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