While every election is considered historic and meaningful, it would be hard to overestimate the impact of this mid-term election.  Certainly presidential elections are generally considered more important because the White House is at stake, but this election will have a huge impact on President Obama, particularly because he will deal with a House that is his polar opposite.  He will also face far more challenges in the Senate with 47 Republicans trying to obstruct his agenda.  There will be hostile Congressional hearings and moves to thwart most of his policy goals.  This is far different than his first two years in office.

This election will also have a reach far beyond this voting cycle.  Nine new Republicans governors bring the total to 29 plus one independent.  This will allow the new Republican governors the power to redistrict the seats in their states, guaranteeing 20 to 25 new Republican members of Congress in 2012.  This advantage will last for at least one decade.  Democrats will have a hard enough time as it is since there will only be 193 Democrats in the House, the fewest since Franklin Delano Roosevelt was President.

In the Senate, the Democrats still have a majority with 53 members.  Republicans gained 6 seats with Lisa Murkowski (R-AK)certain to caucus with the Republicans now that her successful write in candidacy is over.  She will be the first write in victor in 54 years.  Harry Reid (D-NV) survived a tough reelection and was reelected Majority Leader, so the Democrats will have some continuity.  Also, Nancy Pelosi and her Democratic leadership team survived a challenge in the House.  On the Republican side, the Tea Party energized a huge number of races but likely cost them in Nevada, Connecticut and Delaware.  Senator Boxer was reelected in California as was Patty Murray (D-WA) and Michael Bennet (D-CO). Democrats survived some very tough Senate races.  Vice President Biden’s seat remained in Democratic hands but Mark Kirk (R-IL) picked up President Obama’s old seat. It will be harder for the Democrats in the 2012 Senate election cycle since 22 of the 36 seats up for reelection are on their side, while only 12 Republicans are up for reelection.

In the House, the election is the biggest swing to the Republican side in 72 years.  Republicans have won over 60 seats and will pick up several more of the closely contest races.  Several senior stalwarts were defeated including James Oberstar (D-MN) with 36 years of experience, Ike Skelton (D-MO) with 34 years and John Spratt (D-SC) with 28 years in the House.  Republicans made huge gains in the industrial Midwest and even into New England and New York.  Republicans gained 9 governorships and won control of 11 state legislatures including North Carolina, which has been in Democratic hands since 1870.  In Alabama, Republicans now hold the House and Senate for the first time since 1874.  Wisconsin is now in Republican hands in the House and Senate for the first time since 1938.  The Republican gains were wide and deep.

At one point during 2008-2009, Democrats had 60 Senate seats, because Pennsylvania Senator Arlen Specter (R-PA), switched to the Democratic side; and House Speaker Nancy Pelosi had 255 votes.  Today, she has 193, the fewest in almost 80 years.  This is a sharp departure from the first two years of the Obama presidency. Democrats until the surprise election of Republican Scott Brown (R-MA), who replaced Ted Kennedy, had the power to pass virtually any legislation without Republicans being able to stop it.  During this time frame, the health care bill, the Troubled Assets Relief legislation and the climate change cap & trade bill were pushed through the House of Representatives.  Some would say the focus on this legislation and not on job creation created a deep anger in the electorate.

These bills not only used up a huge amount of political capital, it was done in a manner that made many independent voters feel that Congress was out of control and out of touch.  Oddly, this same group of independents and youthful Democrats swept Republicans out for also being out of touch and out of control. This means the newly minted Republicans will have to show almost immediate results, which will be hard to do. Voter patience seems to be fleeting in the current era.  Voter loyalty is down in recent years.   Democrats had controlled the House and usually the Senate from the late 1950’s until 1994.  Republicans held Congress from 1994 until 2006; and now just 4 years later, voters have swung back to the Republican side in an abrupt shift.  Clearly there is an angry and fickle electorate.

This leads to a discussion of what is likely to happen in the 112th Congress, beginning in January of 2011.  But first, what might happen in the Lame Duck?  The first issue is the expiration of the Bush tax cuts.  These taxes affect almost every American that pays federal income taxes.  Currently, 47 percent of Americans pay no federal income tax.  But the real issues is whether Democrats can successfully “decouple” the $250,000 and above tax breaks from those in the so-called middle class.  And the Estate tax issue needs to be addressed because the rate is “zero” until 12/31/10 but jumps to 55 percent on 1/1/11.  And perhaps just as concerning is the Alternative Minimum Tax (AMT) which will hit 30 to 40 million tax payers with a significant tax rate increase in their first pay checks in January.

The Lame Duck will still have Speaker Nancy Pelosi presiding in the House with her 255 seat majority.  The newly elected will not be sworn in until January.  Majority Leader Reid with have 59 votes during the Lame Duck session; however Joe Manchin (D-WV), Mark Kirk (R-IL) and Christopher Coon (D-DE) became Senators immediately since they are replacing Vice President Biden, President Obama and deceased Senator Byrd (D-WV).  Many observers believe that Majority Leader Reid may be able to obtain the support of Maine Senators Snowe (R-ME), Collins (R-ME) and Murkowski (R-AK) to support decoupling the middle class tax cuts from the $250,000 and above.  Others believe the Republicans will stick together and force Reid to take all of the cuts or none of the cuts.  This could be a case of Senate political “chicken.”

If there is a solid wall of Republican support on the Bush tax cuts, then the Democrats would be forced to “blink.”  This means they would take all of the Bush tax cuts but possibly for only one year, in order to allow the 112th Congress to deal with the tax, budget, social entitlements issue as one whole package.  The debt ceiling vote that will occur in April or May of 2011 complicates this strategy.  Tea Party members who were elected as Republicans will insist on strong budget cuts in order to vote to raise the debt ceiling.  If the debt ceiling is not raised, the US would default on bills owed and some nonessential government services would cease.  This is the type of showdown then Speaker Newt Gingrich forced on the Democrats and President Clinton in the mid-1990’s.  The move backfired on Republicans, but it is a clear threat once again unless serious financial reforms are made in early 2011.

There will also be a move to de-fund some aspects of the health care, or Obama Care legislation.  This will produce a strong reaction by the President, Majority Leader Reid and House Democratic Leader Pelosi.  Republicans might force votes to raise the retirement age for social security beneficiaries and to fix the Medicare shortfall for doctors to the tune of $500 billion.  Doctors are threatening to not take new patients unless this funding is restored.  These are just a few of the really serious issues this 112th Congress faces.  If the Bush tax cuts lapse there are dozens of items including the Marriage Tax Penalty and many more that will cause great financial pain.

If President Obama responds to the new Republican Congress in the manner President Clinton did in 1994, he could find a way to make these changes work.  But the Democratic minority in the House is clearly more liberal than before since 20 of the 54 Blue Dog (business oriented) Democrats lost in this election.  In the states of Pennsylvania, New York, Illinois and Florida at least 20 Democratic  incumbent members lost their seats.  Most of these members were friendly to business and worked well with Republican members.  New Minority Leader Pelosi (D-CA) will preside over a less business friendly group.  Republicans will have their share of problems with Tea Party members, because they will push very hard for immediate fiscal changes.  They have already forced the Republican leadership to ban earmarks from the Appropriations process and are likely to be combative on a number of fronts making life difficult for new Speaker John Boehner (R-OH).  Boehner is road tested.  He was dumped from the Republican leadership in the 1990’s, and fought his way back.  He was also part of the Republican management team that got dumped by Pelosi in 2006, so he understands winning and losing.

Boehner says he will run the House in a more collegial, bipartisan fashion.  He also says committee chairs can run their committees without his interference.  Speakers Gingrich and Pelosi were very dictatorial and ran the House from their own office. This created problems for both of them.  Boehner says he will be a user friendly Speaker.  On the other hand, Republican Senate Leader McConnell told an audience that his goal is to “make Obama a one term president.”  He said this the day after the election.  McConnell clearly will challenge President Obama at every turn.  A divided House and Senate, a beleaguered President Obama and a tough economy will make for a very interesting and perhaps combative mixture.

Don’t count on much from the Lame Duck; but do count on major political fireworks for the next two years leading up to the election.  And remember, in the last one hundred years there have been three times where 20 or more House seats were lost on three consecutive elections.  It happened in the pre-World War 1 era, just before and after World War 11 and during the last three elections.  These periods were known for their international turbulence (World War 1, World War 11, and now the Iraq and Afghanistan Wars), they were also known for tough economic times including the Great Depression and the current Great Recession and they were known for their social unrest. These are clearly troubled times and there seems to be no quick end to them.

Independent voters now make up about 42 percent of the electorate, whereas Republicans and Democrats make up about 20 percent each.  Suburban white independents strongly sided with Democrats in 2006 and 2008.  In 2010, they swung back to the Republican column by a 13 percent margin.  These voters rent their ballots.  They do not have an allegiance to either party and they are watching closely to see how the Republicans and President Obama handle this latest electoral change.  Independent voter reaction to the results of the next two years will likely decide the outcome in 2012.

The next two years will be fascinating.


David Crow
DC Legislative and Regulatory Services, Inc.
1156 15TH ST NW, STE 525
Washington, DC 20005
202-872-8808 – fax