We’ve been clear in this space that Washington won’t feature any high-stakes policy clashes over the next two years. Instead, the action moves to the margins. The December scrum over a $1.1 trillion government spending package previewed that shuffled dynamic. Its most toxic provision: a relatively minor rollback of Wall Street reform that restored banks’ ability to trade some derivatives. Congressional critics of the industry on both the left and right cried foul over a special-interest fix slipped into a funding bill. But welcome to the new order. Congressional Republican leaders will look to game the legislative process for incremental wins, while President Obama pushes what’s left of his authority through regulatory backchannels. From afar, it may look like shadowboxing. But corporate chiefs know well that what happens in the margins can add up.Beltway Agenda:
Congress is mostly stuck—but regulators aren’t. Here’s what new rules could cost American industry.
Following several explosive derailments, the Department of Transportation is tightening standards for trains that carry flammable liquids like shale oil.
Annual cost: $291 million
Call this the Big One: The Environmental Protection Agency aims to cut carbon dioxide emissions from existing coal plants by as much as 30% by 2030.
Annual cost: $8.8 billion
The Occupational Safety and Health Administration is developing rules to monitor workers’ exposure to silica dust, which can prove fatal when inhaled over a prolonged period.
Annual cost: $658 million
Treasury is implementing a Dodd-Frank provision hiking capital requirements for swap dealers.
Annual cost: $149 million
The Food and Drug Administration wants to subject the booming and as yet unregulated e-cigarette industry to rigorous review.
Annual cost: $41 million
Despite their big wins in Congress, the GOP is still torn between its Tea Party and establishment factions. Here’s how the most powerful Republicans compare, based on their official roles, voting records, and Fortune’s judgment. (Hover over the picture for more information about each person.)
Interactive by Analee Kasudia Campaign Dream Team
Tired of standing by, watching government malfunction? There’s a well-worn if rocky path from the corporate world to politics. If you’re a Republican mulling a run, these are the up-and-coming talents you want to know.
The Money Man:
The Palantir co-founder is emerging as a key Republican donor in Silicon Valley. More important, he’s fortifying the party’s still-fragile connections to young tech, introducing pols to other industry heavies, and advising on digital strategy.
The Policy Innovator:
He leads the “reformicon” movement seeking to regrow Republican policymaking muscle after an era of obstruction. His quarterly wonk journal, National Affairs, is churning out the grist for a new middle-class economic agenda.
Behind the controls of the Senate Republican campaign operation, he transformed the GOP’s even-money shot at reclaiming the upper chamber into an Election Day romp that netted it nine seats.
The Message Maven:
She pioneered the ad strategy that lifted incoming senator Cory Gardner to victory in blue-tinted Colorado. It neutralized the Democratic attacks meant to peel off women voters, a playbook the national party should borrow.
The former Israeli soldier (he’s a dual citizen) blended a mastery of traditional polling with insights from digital analytics to give Senate strategists a clear, real-time view of races across the map.
Democratic survivors will hand over the keys to the Senate and take up a withered House minority. But Obama has two years left, and they still have work to do, blocking, spinning—and occasionally compromising.
These policy sharps will provide the first line of defense against the Republican agenda.
From left: Sen. Ron Wyden (Ore.) will remain a key player on tax reform despite a tough year, as Sen. Barbara Mikulski (Md.) checks GOP attempts to jab Obama through funding bills, and Sen. Sherrod Brown (Ohio) will combine his anti–Wall Street views with a knack for finding Republican partners. Across the Capitol, Rep. Chris Van Hollen (Md.) will lead attacks on GOP spending priorities.
Their loyalty is divided between a restive base and a White House open to compromise with Republicans.
Sen. Harry Reid (Nev.) will give McConnell a taste of his own obstructionist medicine, while Sen. Chuck Schumer (N.Y.), a business-friendly moderate and Reid’s heir apparent, crafts the party’s message. In the House Rep. Nancy Pelosi (Calif.) will channel the frustrations of her shrunken liberal caucus. Her deputy, Rep. Steny Hoyer (Md.), will command like-minded moderate swing votes Boehner may need.
The centrists who could determine what gets done in the Senate.
Six votes shy of a filibuster-proof majority, Mitch McConnell will have to reach across the aisle to move much of anything. The Senators he’s adding to his speed dial:
Sen. Mark Warner (Va.),
Sen. Heidi Heitkamp (N.D.),
Sen. Joe Manchin (W.Va.),
Sen. Claire McCaskill (Mo.),
Sen. Joe Donnelly (Ind.),
Sen. Angus King (I-Maine).
This story is from the January 2015 issue of Fortune.