Steven Taylor runs some numbers and concludes that the combination of (a) Beau Biden's decision not to run for the Delaware's open US Senate seat and (b) GOP Congressman Michael Castle decision to run for the Senate means "that the Republican’s chances for the seat have substantially increased."
Marc Ambinder reports that there are analysts "moving Delaware to the 'solid' Republican side," although Ambinder himself views it as "a lean-Republican seat."
This matters a lot for those of us who toil in the corporate governance vineyards. Until quite recently, corporate governance consisted mainly of state corporation law rules and generally accepted best practices. Because Delaware is the dominant choice as state of incorporation for publicly held corporations, Delaware law long has dominated corporate governance.
Since 2002, however, we have seen a creeping federalization of corporate governance (as I detailed in this Regulation article).
Hence, while it used to be assumed that Delaware competed with other states to set corporate governance rules, it is now the case that Delaware's principal competitor is the federal government. In the past decade, when a corporate governance issue has national ramifications, the federal government has been increasingly willing to nationalize the relevant legal regime or, at least, to threaten to do so in oder for force Delaware to do the “right thing.”
In this environment, it behooves Delaware to elect Democrats to the US House and, especially, the Senate. Here's my logic:
- Delaware senators of either stripe are likely to understand how critical it is to the state budget that Delaware remain the dominant choice as state of incorporation (up to 20% of the state budget comes from corporate franchise taxes).
- Delaware senators of either political stripe are therefore likely to oppose federalization or, at least, to mitigate its effects on state corporate law. As our friend Francis Pileggi noted, for example, "There’s no question that [former Biden used his position and influence] to protect Delaware or look out for Delaware’s interests," in the corporate governance area.
- All else equal, Democratic Senators are more likely to favor federalization than are Republicans.
- Having 2 Delaware members in the Senate Democratic caucus thus provides the maximum voice against federalization in the caucus otherwise most likely to favor it.
- Maximizing the number of Delaware Democrats thus mitigates the risk of federalization of corporate governance.
In an ideal world, I'd like to see a GOP majority in the Senate but have two members of the Democratic minority come from Delaware.
