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Guest Post: "Inside Washington"
Submitted by Michael Bagley of the Global Intelligence Report
"Inside Washington"
This note provides an initial look at some of the ways the election results will affect Capitol Hill and the Executive Branch during the coming lame duck session and the beginning of the 112th Session of Congress.
A ROILING WAVE
By now we all know the essentials of what happened on Election Day - Republicans gained 60+ seats in the House, at least six seats in the Senate, and 9-11 gubernatorial races (depending on recounts). We will leave it to others to analyze the "big picture" and what this election means for the long history of the American Body Politic. But, in the near term, several aspects of the overall results caught our attention for having near-term importance on Capitol Hill.
First, as part of the biggest mid-term turnover of Members since World War II, how will so many inexperienced lawmakers acclimate to the Hill? Second, while the Tea Party movement has had a profound effect - by one estimate, 120 House Republicans ran and won with some sort of Tea Party endorsement - the effect in the Senate was less clear. A number of Tea Party-backed candidates came up short, and some winning candidates clearly tempered their rhetoric when they moved from primary to general election season. Finally, how does the White House react to Tuesday's results. In his initial post-election press conference, the president seemed loathe to attribute any of the cause for the results to his administration's legislative efforts, a premise with which some on the Hill - Democrat and Republican - might disagree.
In any event, we see a number of near-term effects the elections will have on Congress and the Obama Administration.
THE FIRST ORDER OF BUSINESS
We wrote previously that Republicans have little incentive to pass legislation during the lame duck and we believe that is still the case. While the list of pending issues is imposing - another continuing resolution to fund the government, the fate of the Bush tax cuts, expired business tax "extenders" - it is still hard to envision a concerted, successful effort to pass meaningful legislation during the remainder of the 111th Congress. Conservatives know that waiting a few weeks swells their ranks, and the 60+ Democratic Members who just lost general election contests have already begun thinking about what comes next for them after January 3rd, 2011.
At this point the odds favor Congress doing little more in the lame duck other than to pass another short-term CR that runs into early next year and to forge a stopgap compromise to extend temporarily the expiring Bush tax cuts for as much as a year or two.
It is also important to remember that early in the 112th Congress, likely by March, Congress will need to consider legislation to raise the federal debt ceiling. This vote has become more politically perilous in recent years, and many of the new Members have already made clear their distaste for voting to issue more federal debt. Considering the president's debt commission is scheduled to make recommendations on December 1st, it is not out of the realm of possibility to see a series of challenging votes in early 2011 on a whole raft of fiscal tax and spending issues.
NEW FRIENDS AND NEW FACES
Depending on how a handful of remaining races play out, there will be over 90 freshmen Members of the House. In the Senate, starting in January, 2011 40 Members will be serving in their first term in the body. This represents one of the great influxes of "new blood" on Capitol Hill in our nation's history.
On the House side, several powerful panels will have new chairmen. While it is always perilous to predict what will happen, several possibilities seem safe. At the Committee on Ways and Means, Rep. Dave Camp will take the gavel and attempt to resuscitate the panel. On Energy and Commerce, Rep. Joe Barton already claims majority support in the GOP Steering Committee to return as Chairman, but we are closely following the public speculation that veteran committee member Fred Upton will make a run for the top slot. For the Financial Services Committee, most observers now think that Rep. Spencer Bachus will claim the chairmanship although just recently Rep. Royce has made public his interest in the post. Additionally, the chairmanship of the Appropriations Committee remains uncertain.
Perhaps most important for the Obama Administration, Rep. Darrell Issa is expected to assume the helm of the Oversight and Government Reform Committee. As a dogged investigator and sharp critic of the administration, Issa's role as the leader of a committee with wide-ranging jurisdiction bears close watch. He has already talked publicly about his desire to hire more investigators and analysts, and such an effort would dovetail with the likely focus of the new majority leadership on oversight of current programs. Also, Republicans remember the great effect to which then-Chairman Waxman used this panel to spotlight problems during the Bush Administration.
The election will have several other notable effects on the sociology of the House. First, a number of veteran Democratic chairs and Members will not be returning -- Reps. Obey, Spratt, Skelton, Oberstar, Boucher, Gordon and Edwards quickly come to mind. Many of these veteran Members were known as moderate, pragmatic lawmakers and, in all, hundreds of years of experience and institutional memory were lost on the Democratic side of the aisle. This will have a profound effect on how the House functions on a daily basis.
Next, of the 54 House Democratic Blue Dogs, 21 lost on Tuesday and six chose not to run for re-election. The loss of half of this group means that the political center of gravity of the House Democratic caucus will move decidedly left in 2011. Juxtapose this shift against a Republican Conference that will move forcefully to the right as it absorbs 60+ new members who won on Election Day and the stark division between the two parties in the House that has been growing in recent years becomes even clearer.
As we pointed out in our October memo, the House is becoming more polarized at a time when some of the issues facing the country - rising debt, long-term fiscal/tax challenges, rebuilding the financial system, the future of health programs like Medicare and Medicaid -- would seem to lend themselves to an incremental, consensus-based approach to legislation. Perhaps the biggest question for the leaders of the 112th Congress will be how they resolve the gap between political division and policy necessity.
WE (HEART) LOGISTICS
A new House majority always brings changes to the day-to-day workings of the House, changes that can directly affect policy. For instance, Politico recently ran a story about how the new House majority might change the schedule to focus Members and committees on oversight of current programs and executive branch rule-making rather than consideration of new legislative initiatives. We have also heard these proposals in our own discussions with senior Members of the new Majority.
We would also not be surprised to see House leadership propose cuts to its spending as a nod to the swelling number of deficit hawks. We remember how the new Republican House majority cut its legislative budget by $200 million in 1995. If this happens, the challenge for House leaders will be properly staffing Members to oversee and question the administration on the implementation of complex new regulations in fields as diverse as health care, financial services and air quality.
New majorities in the House always promise to run the floor "better" and "in a more fair way" than their predecessors, and Republicans are no different. We would not be surprised to see Speaker Boehner bring legislative efforts to the floor under open rules with more opportunities to offer amendments; he has recently promised such an approach as a way of "venting pressure" and "letting off steam", and looking back again to 1995 when then-Rep. Boehner ran the House GOP Conference there were indeed several months of open rules during debate of the initial parts of the Contract with America. The questions will be: how long can a free-wheeling debate process last in the House with such a new, raucous group of Members, and how could such a process affect legislation in the House? Early 2011 could turn out to be very busy and very unpredictable on the south end of the Capitol.
Other logistical nitty-gritty bears close watch in the next few weeks. Both parties in the House vote on leadership the week of November 15th then soon thereafter choose committee chairs and set the Member ratios for individual committees. In the end, because the Republican majority in the 112th Congress will be slightly smaller than the current Democratic majority, we expect these ratios to be slightly less favorable to the new majority.
Some House panels saw large numbers of Members lose on Tuesday. Nineteen T&I Committee Democrats lost; 13 majority party members on the Financial Services Committee went down to defeat; the Armed Services Committee saw 16 Democrats lose their seats. While much of the downsizing of panels on the Democratic side of committees will be done through attrition, in some instances current Members could lose their committee perches.
At the same time, Republicans can expect to add as many as 10 new Members to the Energy and Commerce Committee and nearly as many on Ways and Means. This means that some committees with complex subject matter jurisdiction will see an extraordinary number of new, relatively inexperienced Members. This influx of new members to the panels could affect policy in unpredictable and pronounced ways.
On the Senate side, there will be less upheaval. Most of the committees will likely have only one more Democrat than Republican. There will be several new Democratic committee chairs (Sen. Stabenow at Agriculture, Sen. Johnson at Banking) as well as new Ranking Republicans (Sen. Hatch at Finance, Sen. Grassley at Judiciary, Sen. Sessions at Budget). However, several panels (Energy, Environment and Public Works, and Banking) are likely to see 3-5 new Republican members. We will especially watch the Appropriations Committee where there will be at least six new Republicans, and some conservatives are speculating that Sen. DeMint and fiscal conservatives might try to join the committee as part of their efforts to limit federal spending.
Within the Senate Republican Conference, a central question will be how the new crop of conservative Members fits in. Sen. Coburn has filled a key role as an unofficial emissary from the elected leadership to the younger, more conservative Members. At the same time, Sen. DeMint has recently given notice with several op-eds about his desire to continue to pull the Conference in a more conservative direction going into the 2012 cycle.
On the other side of the aisle, a Democratic caucus that struggled mightily to pass legislation with a 60-vote supermajority in the 111th Congress will have no more than 53 members in the 112th Congress. While the re-election of Sen. Reid saved Democrats from a potentially bloody internecine struggle to choose a new leader, the challenges facing a caucus where any small group of Members can make or break a bill will be daunting.
SO WHAT DO YOU WANT TO TALK ABOUT?
So what will be the agenda for House and Senate in 2011? What will the White House propose or re-propose? We will begin to learn the answers to these questions in the coming weeks.
One approach that Hill Republicans might take is to propose a number of early hearings focusing on current programs leading to a renewed effort on authorizing legislation. In recent years, the only federal departments that were routinely re-authorized on the Hill are DoD and the various intelligence agencies. It would not be surprising for the House majority to follow up on talk of expanded oversight of the executive branch by also working on new authorization legislation for various cabinet agencies. Senate Republicans would likely support such an effort which could go hand-in-glove with more aggressive hearings by the Appropriations Committees to use its "power of the purse" to bring cabinet secretaries to the Hill and to put agencies and their programs under the microscope.
Of course, oversight and authorization work is difficult and time-consuming. It requires strong staff work, and there is admittedly not a great deal of institutional memory on the Republican side of the aisle to provide the foundation for such an effort. If Hill Republicans take this approach, it will be challenging to stay focused on the often unglamorous nuts and bolts of governance.
WHAT 2010 MEANS FOR 2012
Although several gubernatorial races remain too close to call, when all of the votes are finally counted the GOP will have control of as many as 32 governor's mansions, while also picking up no fewer than 19 state legislative chambers across the country. This gives Republicans a strong hand going into the decennial redistricting process: combined with the force of conservatives' victories on Election Day, and it is quite possible that many veteran Democratic House Members might decide not to run for re-election in less-hospitable districts in 2012. Watch for efforts in early 2011 by Democratic leadership on the Hill to tamp down retirements while Republicans try to build on their recent electoral gains.
On the Senate side, there are 33 senators up for re-election in 2012 and only 11 are Republican. Of the 21 Democrats running, many hail from swing states that just elected Republicans by strong margins (Missouri, North Dakota, Ohio, Florida, Pennsylvania) or potentially pose challenging environments during a presidential election year (Montana, Nebraska). By the same token, some Republicans running for re-election in 2012 are also feeling pressure on their right flank. As we pointed out in our October memo, attention will focus on the 2012 class very quickly in the wake of Tuesday's results as they soon have to deal with tough votes on extending the Bush tax cuts, FY2011 spending, and legislation to increase the federal debt ceiling.
By. Michael Bagley
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Disclosure: I am a fierce fan of Hughe Hendry, Zero Hedge, Market Folly and Vitaliy Katsenelson. Short Japan, China, the Euro, (long USD) and US equitites; Uncle ben’s has pissed me off and shaken my faith. Thanks to you all - I have studied the May market commentary from Hugh Hendry's Eclectica Fund. Can any fellow fans update me on Hendry’s latest positions? Fighting the Fed SUCKS. Personal opinions on when this global market will FINALLY F**king crash (!) are most welcome.
I think we are in for some fireworks this week yet... :) Panic Bitchez!
Thank you!
Am sick of this irrational melt-up!
TilerDerden@gmail.com
When the real times comes a change in the taste of your water will be the signal that the event is about 2 weeks away. Minor fluctuations until then.
"I saw a black swan in the botanical garden at Melbourne a week or so ago and it reminded me most poetically of Mr. Taleb's proposition that nobody really knows what is going on in this republic. And so, appropriately, we held an election in which many candidates who know nothing found themselves elevated to political office well-prepared for careers in lying and doubletalk in the service of knowing nothing. Join me please in cringing for our country's future..."
http://kunstler.com/blog/2010/11/pre-post-mortem.html
I was resonating with this article until the part where the author declares that in his opinion what's needed is incrementalism and compromise.
We are long past the point where deck chair rearrangement on the USS Titanic could possibly help. And, of course, compromise is how we have 100X more government than we should, and 50X more than we can afford. We tax to a level that punishes production, subsidize and moral hazard bad activities. And we pay for the deficits via the magical free lunch seemingly made possible by the Fed.
We don't have the time for a slow, incremental, evolutionary solution. And compromise, pragmatism (hey, whatever works), and bipartisanism isn't any kind of solution. It's more of the poison which is killing us.
Indeed. This is the last chance for politicians. If they f*** up now there will be trials, convictions, and rewriting of history books.
Much smaller gov't is called for, and really, no new regulations would be needed if the existing ones were being enforced!
As stated above, this is the last straw. If politicians don't keep their word this time, the whole system will have to be reset, and post-reset dare I say politicians will be 'inclined' to follow through on election promises!
Transparency and accountability, bitchez!
http://psychonews.site90.net
Read our latest PsychoNews story, The Currency Wars, Part 3
Don't worry, the band-aid will be ripped off. Out of necessity.
There's a new book on that topic.
For starters take your money out of TBTFs. I've almost completed this step.
Sorry kids, the country is run by events now, not tea baggers or democratz.
Etc.
http://www.energybulletin.net/stories/2010-09-28/energy-security-annotat...
Meanwhile, there is The Bundeswehr study
http://www.energybulletin.net/stories/2010-09-28/review-putting-bundeswe...
Lessee, we are already having the, "crashing financial markets, a loss of confidence in currencies, mass unemployment, the collapse of critical infrastructure, and famine."
What does this tell ya? I told me last year Peak Oil took place in 1998.
Nice post Steve, thanks.
Tyler seems quite bright. I wish he would direct some of his intellect to the implications of zero (followed by negative) growth and how it might shape the current financial mess.
Oil's scarcity will assert itself, and very soon, but likely not by February 2011, which is when the debt ceiling vote happens.
The Washington folks are so accustomed in their own brand of cynicism to presume that either side will just carry on as in the past that I do believe they have not calibrated this particular revolution.
I strongly suspect the new GOP folks coming in from the Tea Party are going to cross their arms across their chests and say NO.
That will cause an upheaval of unprecedented proportions. I do not believe these folks can be bought off with promises of 85B cuts (what is left of the proposed 100B after the Senate and Obama are done with them). 85B just won't do the trick when the shortfall is 1.2T.
I do believe the Tea Party people will say no, causing that 1.2T to become 0 the next day, and then the lawsuits start over contracts signed and not paid for. The Tea Party will just shrug and say "you lawyers can win all the lawsuits you want. We don't have the money to pay so you really should not bother. And don't bother trying to get the courts to ORDER us to appropriate funds. The legislative branch doesn't take orders from the judicial branch."
Then the clamor about causing a constitutional crisis starts. The Tea Party folks shrug and say, there is no crisis if the lawsuits aren't filed. If they are, then the filers caused the crisis, not us.
Understand: China isn't going to file a fucking lawsuit, idiot.
YAWN! This writer IS THE problem. "The dumborats will loose 100's of years of...blah blah blah." "At a time when pork needs to be ladened and backs scratched to feather beds the house becomes more polarized..." no wait "When compromise and working together to tackle tough problems..." Hot air and horse spit.
I think they should move capitol shill, the war house and the supine court building to Kabul...or Peshwar...that'd get some stuff done quick and business settled for the majority of the year so the rest of us can put this place back together again.
No mention of Ron Paul and his direction or effect on the Fed? Did i miss that. Must not be important.
Yes, that was a GLARING omission. Ron Paul evidently seeks to ream, I mean examine, the Fed upon becoming Chairman of his Committee. If things are as screwed up (and criminal) as many of us think, it is RON PAUL who will (finally) be a big cog up there in DC.
...
Looks to the Bearing that the system is going to be under a lot of stress. Get prepared! Buy gold! PMs! Food! Guns & ammo!
TEOTWAWKI, bitchez!
Agreed. Dr. Paul's time has finally come, and that really should have been mentioned. I've met the man, and if he has a flaw, it is his humility: Like Washington, he seems to take no notice of his place in history.
I think i agree with the rest. Except the part about buying Prime Ministers; don't think I can afford that.
No mention of Rand Paul either. I begin to doubt the writers efficacy.
This is beyond fixing anyway, too late Ron, forget bout it! We are so fucked! Damn you Bankers all too hell and gone. Zionist Bastards.
If I could schedule orientation for the new lawmakers coming in, I would make it simple. 1. read zerohedge daily 2. you have a 6 month moratorium on any lobbyists 3. cut your staff in half 4. cut non essential spending in half 5. get to work
You forgot #6.
6. Defund the SEC's porn accounts.
such high hopes... sounds like the democrats in early '09. i do hope ron paul makes it to the white house in '12 and survives to see half his program instituted. i also would like to see a unicorn.
p.s. and may issa rip away the veil from tbtf that the democrats could never quite manage as it was being instituted by bush and spit shined by obama.
Ever get the feeling ZH is one big ARG ... selling fear?
Henry Clay and John C. Calhoun helped to pass the Tariff of 1816 as part of the national economic plan Clay called "The American System," rooted in Alexander Hamilton's American School. Described later by Friedrich List, it was designed to allow the fledgling American manufacturing sector, largely centered on the eastern seaboard, to compete with British manufacturing through the creation of tariffs.
After the conclusion of the War of 1812, British factories were overwhelming American ports with inexpensive goods.
http://en.wikipedia.org/wiki/Henry_Clay
Time for the Republicans to live up to their Daddy's Principles.
During the Lincoln Administration (1861-65), ex-Whigs dominated the Republican Party and enacted much of the "American System;" later their southern cousins dominated the white response to Reconstruction. In the long run, America adopted Whiggish economic policies coupled with a Democratic strong presidency.
http://en.wikipedia.org/wiki/Whig_Party_(United_States)
When you see vital interest before special interest until then we will continue to wind down. I feel as I get older we just focus on core issues at home at those who get it abroad will fall in line to cooperate as friends or line up to serve there new master at the gallows. Those choosing the middle to suck the tax payers dry will choose. Americans need to grow up mind there own Business since the Corporate realm has decimated and corrupted to long since Gatt and Nafta. As for balance of trade thoughts Keynes addresed this topic and enumerated the issue as basic sanity but we know groups of people will never have this ability as the fatal deceit conveyed from Hayek. We were warned as in amplitude of effect in relationship to credit, and we are past the prisoner dilema even before Nixon.
" Perhaps the biggest question for the leaders of the 112th Congress will be how they resolve the gap between political division and policy necessity."
No it will not happen since Empire and debased currency is a oxymoron as history conveys. They do not have the will on the hill to maintain it, not debase it.
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