Destiny became reality in the midterm elections as the Republicans gained a majority of the Senate and widened their lead in the House to historic proportions. The Republicans now must decide the mix of confrontation and collaboration that will define their leadership. Due to variations in beliefs and campaigning strategies, the rank-and-file members of the two chambers might see this ideal mix differently.
House. As I discussed in my earlier updates, the redrawing of Congressional districts in the wake of the 2010 census tended to make most House seats safe for incumbents. As a result, House incumbents typically were not concerned about winning the general election. Instead, Republican (and some Democrat) incumbents had to be concerned about winning their primaries. Republican incumbents who were viewed as too moderate or too willing to compromise could find themselves facing a successful primary challenge from a more ideological conservative candidate. (A poignant example of this phenomenon was Eric Cantor’s primary loss to an untested political candidate supported by the Tea Party.) Given this background, the typical House member is more likely to identify with the conservative wing of the Republican Party, either because he or she is a conservative incumbent or because he or she won a primary against a more moderate incumbent.
Senate. Senate candidates have to appeal to voters throughout a state, not just in their home districts. Thus they typically must reach out to Independent voters, who now compose 42% of the electorate and who tend to be more moderate, supporting compromise in Washington. In 2012, the Republican candidates who emerged from the Senate primaries were more ideological and less willing to moderate their views. Not surprisingly, those candidates failed to attract Independent votes and Republicans lost seats in the Senate. This time the Republican candidates for Senate were more moderate, exhibiting willingness to compromise. Those moderate Republican candidates attracted Independent voters and claimed their seats in the Senate.
Given this background, Republicans in the House are likely to be more conservative and ideological, with less of a desire to compromise. With certain notable exceptions (such as Ted Cruz), Republicans in the Senate are likely to be more moderate and willing to compromise. Where the Senate leadership might seek incremental progress through limited bipartisan legislative efforts, the House leadership might prefer to stake out positions for 2016 by sending Obama legislation he is likely to veto. The party leadership will have to figure out a mix of strategies that satisfies the members of both chambers.
One thing is clear: The Republicans are no longer simply the opposition party. They now “own” Congress, and will receive the credit or the blame based on what Congress accomplishes over the next two years.
Of course, it takes two to compromise, and President Obama has his own decisions to make. If he acknowledges this election as a repudiation of his policies, he too should be more willing to compromise with the new Republican leadership. But if he continues to view Republicans in Congress as an impediment to his legacy, then he will veto unwanted legislation and continue to use his executive power as broadly as possible to implement his social agenda, likely angering the new Congressional leadership and thwarting opportunities for bipartisan progress. Split government is alive and well.
In January I will consider all of these dynamics more thoroughly and discuss in detail the legislation that is likely to emerge – or not emerge – from the new Congress.
In the meantime, Congress still has a number of items to address in the lame duck session to take place in December. (Remember, the lame duck Congress is the existing Congress, with Democrats in the majority in the Senate.) Among those items are:
Andrew H. Friedman is the principal of The Washington Update LLC and a former senior partner in a Washington, D.C. law firm. He speaks regularly on legislative and regulatory developments and trends affecting investment, insurance, and retirement products. He may be reached at www.TheWashingtonUpdate.com.
Neither the author of this paper, nor any law firm with which the author may be associated, is providing legal or tax advice as to the matters discussed herein. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. It is not intended as legal or tax advice and individuals may not rely upon it (including for purposes of avoiding tax penalties imposed by the IRS or state and local tax authorities). Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement.
Copyright Andrew H. Friedman 2014. Reprinted by permission. All rights reserved.
Here's a good read, and case studies, on deciding when to retire. Well worth your time whether you are a financial advisor or an investor. Enjoy! ow.ly/hFEB30ky1XO
SCOTUS has a big decision to announce regarding gerrymandering of the House of Representative districts. ow.ly/KA3b30kxZOA Decision on Wisconsin just came down: ow.ly/vf9l30kxZQX Still waiting on the Maryland and the North Carolina decisions.
Well, that didn't take very long. China was ready with an announcement of retaliatory tariffs in response to POTUS's announcement this morning. The ball is now back in our court. POTUS promises even more tariffs. ow.ly/P0Q630kvZ6H
White House announces trade tariffs on Chinese imports. China pledges retaliatory tariff action. POTUS says he is prepared for additional tariffs if China responds with more tariffs. Sounds like a tit for tat trade war, doesn't it? ow.ly/Ydvb30kvU1e ow.ly/1TZW30kvU1N