November 5 , 2010

AHC WASHINGTON UPDATE

Republicans Make Big Gains for 112th Congress Lame Duck Session Looms

The pollsters got it right this time.  They had been predicting a Republican wave and it swept through Washington on November 2.  The Republicans rode the 2010 voting surge into the majority in the House of Representatives and additional seats in the Senate.  This is the third straight election that Americans have voted a party out of power. 

The Republicans will take control of the House in January, 2011 when the 112th Congress is convened.  The GOP needed only 39 seats for a majority in the House and they picked up at least 61 with some elections still undecided when this was sent out.  They now have a margin of 239 to 185.  Three Democratic chairmen, with long seniority, were defeated.  Half the Blue Dogs, Democrats with a conservative bent, were defeated.  It was clearly an electoral tsunami and produced the largest Republican House majority since the late 1940s when Harry Truman was President.

Although the Republicans failed to win a majority in the Senate, they did pick up 6 seats and the margin is now 52 to 46 with two elections undecided.  This is the first time in 80 years that a party has gained control of the House without also gaining control in the Senate.

For the most part, issues specifically affecting the horse industry are not partisan.  Our legislative concerns don’t clearly split along party lines.  Democrats and Republicans may approach issues from a different perspective, but the industry works on a bi-partisan basis with both.  Clearly the industry must educate the many new members of Congress about the economic importance of the $102 billion horse industry, that it supports 1.4 million jobs nationally, and is an important part of the nation’s agri-business, sporting, and recreational life.

Changes in the Next Congress

This change of control in the House will have various effects on the Congressional process, not the least of which is a change in the House leadership, committee chairs and the ratio of committee members.  Every House committee will get a new Republican chair and Republicans will now substantially outnumber Democrats on all committees.  John Boehner (R-OH) is in line to be the new Speaker, replacing Nancy Pelosi (D-CA).  Eric Cantor (R-VA) is expected to be elected the new Majority Leader.  This means that the Republicans will control the agenda, schedule and issues for the 112th Congress in the House.      

Some of the new chairs in the House will likely change the debate on some issues of concern to the horse industry.  While the elections of new chairs will not occur until Congress returns and begins organizing for the next Congress, speculation has already started in Washington. 

Barney Frank (D-MA), chair of the House Financial Services Committee for the last two years, was a strong supporter of legalizing and regulating Internet gambling.  His likely successor, Congressman Spencer Bacchus (R-AL), is not. 

The chances of Congress passing comprehensive immigration reform, supported by the horse industry, may be lessened if Congressman Lamar Smith (R-TX) takes over the chairmanship of the House Judiciary Committee.

The House Agriculture Committee will have many new faces. In addition to many more Republicans on the committee, fourteen members of the committee were not reelected.  Congressman Frank Lucas (R-OK) is expected to become the new chair of the committee, replacing Colin Peterson (D-MN), who was re-elected.  That committee will begin work next year on the 2012 Farm Bill, which will affect the horse industry.

Jim Oberstar (D-MN), chair of the House Transportation and Infrastructure Committee, lost his re-election bid and John Mica (R-FL) is in line for the chairmanship.  Mr. Oberstar was a strong supporter of funding for trails and the Recreational Trails Program, which provides funding directly to the states for recreational trails important to recreational riders.  The RTP will have to be re-authorized in the highway bill if it is to continue.  Fortunately, the program and recreation on federal land has support from both Republicans and Democrats.

Senate leadership is not expected to change with Harry Reid (D-NV) continuing as Majority  Leader and Mitch McConnell (R-KY) continuing as Minority Leader.

There will not be across-the-board changes in the Senate committees, but there could be a few more Republicans added to particular committees.  Senator Blanche Lincoln (D-AR), who won this year’s American Horse Council Rolapp Award for her support of the horse industry, lost her re-election bid.  She was chair of the Senate Agriculture Committee and will have to be replaced.  Senator Debbie Stabenow (D-MI) may become chair since other Democrats on the committee with more seniority already chair other committees. 

Is Bi-Partisanship Possible?

What effect all these changes will have on Congressional dealings with the White House remains to be seen.  But it is clearly a sea change.

Will there be bi-partisan cooperation next year?  Republicans will be in control in the House and have new members in the Senate.  But Republican leadership will be dealing with many new and enthusiastic members who were supported by tea partiers, for whom fiscal restraint is a fundamental belief and compromise anathema. 

On the other side, the Democrats in the House will likely be more liberal since many of their more conservative members, including many Blue Dogs, were defeated. 

The President has indicated he wants to reach out to all, but that was also the mantra two years ago at the beginning of this Congress.  Democrats know that anything the House passes must still be passed by the Democratic Senate; and President Obama can still veto any legislation. 

In light of the current deficits and the results of this election, the most difficult task may be simply moving federal funding for existing programs, much less needed new federal programs, through the legislative process.  It will take great skill, and perhaps more importantly some willingness by all to compromise, to get these constituencies together and keep them moving in one direction.  Bi-partisanship will be needed even more in the next Congress, but may become only an afterthought.

What might the Lame Duck Session Bring?

A lame-duck session is expected to begin November 15 and last a week, although that time may be spent organizing for the next Congress, particularly in the House.  Then Congress will break for Thanksgiving and return for another two weeks in December before adjourning.

What might a lame-duck session bring?  Congress has yet to approve any appropriation bills that fund the various federal agencies.  Several continuing resolutions have been passed to keep the government operating at current levels. The current continuing resolution will expire December 3.  There is little chance Congress will try to deal with specific bills funding the agencies in the lame-duck. It is expected that Congress will simply pass another continuing resolution to keep the government operating until next year and deal with government funding in the next Congress.

During any lame-duck session, taxes, and in particular the expiring Bush-era tax cuts, will be on the front burner.  The tax rates are scheduled to rise effective January 1, 2011, unless the current rates are made permanent or extended.  Republicans want to extend the tax cuts for all, while the President and many Democrats want to extend them only for families earning less than $250,000.  Possible scenarios being discussed include extending all the cuts for one year; or making the cuts permanent for those earning less than $250,000 but only one year for others.  

Also facing Congressional action is the estate tax, which is presently zero.  If there is no action on this provision, it will return to 55% with a $1 million exemption on January 1, 2011.  There is still disagreement over the optimum tax rate, the size of the exemption and whether the rate should be indexed for inflation.  Many in Congress do not want the tax to remain at zero, but they also do not want it to go back to the 55% level of 2001. 

Congress may also try to deal with several other tax provisions that expired at the end of 2009, including the tax incentive for contributions of property made for conservation purposes, which is important to the horse industry.  Last year the House passed a bill that extended the conservation easement benefit through 2010, but the Senate never acted on it.

There also may be strong sentiment to simply deal with these tax provisions in the next Congress. 

Immigration reform is also still in the mix for action during the lame-duck session, but action on such a complicated and emotional issue may be “a bridge too far” in a short lame-duck session, particularly with the changes in the House that the next Congress will bring.
 
Conclusion

The next six months promise to be interesting to those who follow Washington politics.  But they might also be maddening to many others.  It appears that voters were primarily motivated by economic worries, jobs, the size and cost of the new federal health care program, and concerns about the increase in the national debt.  Reconciling all these concerns, particularly those that cost money, will be difficult for elected officials. 

Although the Republicans made big gains, polls also suggest that they are not held in much higher regard than Democrats with approval ratings low for both.  Many voters said they were voting against President Obama’s policies, rather than for Republican ideas.  Some Republican leaders and newly-elected members have said they have received a “second chance” in this election. 

In the end, the real message being sent by the majority of the electorate to both parties may simply be “would someone please do something?”  Given the wide divide between the new Republican members just elected to Congress, those Democrats and Republicans re-elected, and those Senators who did not have to run for re-election, that may be very difficult.

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