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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.


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.


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.


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.


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 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

Source: http://www.globalintelligencereport.com/categories/Professional-Level-1

The global Intelligence Report is a Private news & Intelligence service for sophisticated news consumers, investors and energy market participants. To find out more please visit: http://www.globalintelligencereport.com/categories/Professional-Level-1


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