With Congressional approval ratings hovering around the same level as approval for head lice and cockroaches, it’s easy for voters to turn their backs on this woefully inept Congress. But despite Washington’s unpopularity, anywhere between 35% and 40% of the electorate will head to the polling booths this November to cast their votes for all 435 members of the House of Representatives and 33 members of the Senate. Their ballots could vastly alter the prospects and expectations for the last two years of Barack Obama’s presidency.
Ultimately, there are a number of different scenarios that could play out this November, each of which brings its own set of consequences. The general feel though is that Republicans are poised to come out on top after this election cycle. Why is this the case though? How many seats will they gain, and what are the consequences? Let’s start off with the “why” question.
It’s no secret that voter turnout is lower in midterm elections than presidential elections. Since 1948, the turnout rate for presidential elections has always been between 10 and 15 percentage points higher than the turnout rate for midterm elections. The problem for Democrats is that their key demographics (young people, women, and minorities) generally don’t turn out in good numbers during midterm cycles.
The Harvard Institute of Politics recently released a new study indicating that only 23% of youth voters will “definitely be voting” this November. They found that the youth who voted for Mitt Romney in 2012 are much more likely to turn out and vote this time around. Of those surveyed, 44% of Romney voters say they will “definitely be voting” this November, while only 35% of Obama voters feel the same way. Self-identified conservatives are also 10% more likely to vote than self-identified liberals. Overall, the trend is that the youth don’t vote much in the midterm elections, and the ones who do tend to be the conservatives.
Unfortunately for Democrats, it’s not just the youth that turn out in lower numbers during midterm elections. Unmarried women, one of the most solid Democratic voting blocs, are among the least likely groups to vote in midterm elections. Latinos’ midterm participation rate has declined 7% since 1988. And African Americans, a group that proportionately voted more than whites in 2012, trailed whites by 5% in voter turnout rate in 2010.
To be fair, Republicans also see lower voter turnout from their key bases, but their drop-off is not as high and therefore tend to fair better in midterm elections. President Obama, as well other prominent Democratic Party leaders like Nancy Pelosi, have pleaded to the Democrats who showed up big in 2008 and 2012 to show up big this November. Ultimately though, those requests don’t look like they’ll come into fruition.
The Battle for the Senate
Barring a miracle, Republicans are going to remain in control of the House of Representatives. The Senate is where the real battle is. Democrats are in serious danger of losing control of the Senate. According to statistician and well-known political savant Nate Silver, the Republicans have a roughly 60% chance of getting a 51-49 majority in the Senate.
All the Senators up for re-election this November were elected in 2008, one of the biggest years for Democrats in the history of this country. Traditionally conservative states like Arkansas, Louisiana, Montana, and Alaska sent Democratic senators to Washington. Democrats, and President Obama, have become far less popular in 2014 than they were in 2008 though. Accordingly, these Democratic senators all face tough elections.
Obviously, the elections are still three months away and Silver will be the first to admit that a lot can happen between now and then. Forecasts issued at this point in 2010 greatly underestimated Republican gains in the House of Representatives. Forecasts at this point in 2006 greatly underestimated the gains Democrats would make in the Senate. Assuming though that Silver’s projections hold up, the country is looking at a Congress where Republicans control both houses.
Republican Congress and President Obama
What would a Republican Congress mean for legislation and policy agenda over President Obama’s last two years? Republicans won’t have a veto-proof majority in either house so they won’t be able to make legislation into law without Obama’s approval. Does this mean even more gridlock, and even lower approval ratings for Congress? Is that even possible?
The Health Care Debate: Repealing the Affordable Care Act
First off, the Senate would probably vote to repeal ObamaCare. The President will veto the bill as soon as it arrives on his desk, but this will largely be a symbolic act that incumbent Republican senators can use as a talking point to fire up their base when campaigning for re-election. Realistically though, there are some parts of the Affordable Care Act that Republicans may successfully be able to repeal with bipartisan support. The medical device tax is certainly a part of the bill that comes to mind.
The medical device tax is a 2.3% excise tax applicable to all medical devices sold in the United States after Dec. 31, 2012. The tax has been universally despised by Republicans and labeled a job killer, although there is reasonable doubt that this assertion is true. Nonetheless, the tax has also drawn the ire of some Democrats in Congress. Strong bipartisan support could pressure Obama into signing a repeal of this tax. In addition, there are other aspects of the healthcare bill that Republicans could try to target: repealing the health insurance tax or repealing the employer mandate for example. It’s unclear though how much bipartisan support, if any, those proposals will get though.
Immigration Reform: A House Divided
A Republican Congress could also mean a new bill on immigration reform. However, this bill will likely be far too extreme for President Obama to ever sign. In the past few years, the division among Republicans over immigration has become crystal clear. An immigration bill that Republican Senator Marco Rubio helped pass in the Senate in 2013 with bipartisan support (68-32) never gained any support from House Republicans and Speaker Boehner. Republicans and Tea Party supporters openly bashed Senator Rubio for what they thought was another big government bill. Months later, Senator Rubio caved into political pressure and reneged his support for the bill. The fact that the bill included a path to citizenship for millions of undocumented residents living in the United States ensured that the more conservative House of Representatives would never support it. A pathway to citizenship is a key component of what President Obama would like to see in immigration reform.
All and all, immigration reform will still depend on the ability of Congress to work together and will require bipartisan support from both the Senate and the House of Representatives. Considering Congress’ prior record on the ability to work together, immigration reform seems unlikely until after 2016.
Energy Policy: the Keystone Pipeline and Big Coal
Another important domestic issue that a Republican-controlled Senate could impact is our energy policy: specifically the construction of the Keystone Pipeline. President Obama, in the last five years, has not made a firm decision supporting or opposing the pipeline. He has continuously called for environmental studies on the proposed project to find out just how much damage the pipeline will do to the economy. President Obama was supposed to give a verdict on the pipeline in April, but he once again delayed his decision.
Currently though, there is a dispute between landowners of Nebraska and TransCanada, the oil company poised to build the pipeline, over the legality of building the pipeline through certain property. The Obama Administration has said it will wait until the dispute is settled to make a decision. A Republican controlled Congress though could make a difference in this matter. The bill that would approve the Keystone Pipeline is expected to soar through the House of Representatives.
The Senate needs 60 votes to pass the bill necessary for construction of the line. Right now, they have 56 votes: all 45 Republican Senators and 11 Democrats. They also have a few maybes. If Republicans get 51 seats in the Senate, they should get the 60 votes they need and perhaps even the 67 they need for a veto-proof majority. If this were to happen, construction could begin on the pipeline in the northern states closer to Canada, where the pipeline would initially begin. Before building through Nebraska though, TransCanada would have to wait until the lawsuit has been resolved.
Also a hot topic in the energy world is President Obama’s executive order that aims to cut greenhouse gas emissions 30% from 2005 levels by 2030. The regulation clearly takes aim at the country’s largest polluters: coal-fired power plants. There are roughly 600 coal-fired power plants in the United States and many of them may close down in the wake of this new regulation. This has drawn stern criticism from enthusiastic coal-supporting politicians, coal miner unions, and people who think the cost in jobs is not worth the benefit in better air quality and a smaller carbon footprint.
However, these people opposed to the bill realistically have little power to change it. Vetoing an executive order requires two-thirds support in both the Senate and the House of Representatives. That will not happen. The only hope for Republicans in this “war on coal” lies in 2016. If a Republican president is elected, he/she can issue a new executive order that effectively destroys the one President Obama issued earlier this year.
Tax Reform: Is a Compromise Possible Under Obama?
When it comes to changing the completely outdated tax code in America, corporate tax legislation is the hot issue in Congress right now. Both Republicans and Democrats agree that the structure needs to be changed to prevent companies from “inversion.” Corporate inversion allows American companies to merge with foreign companies and relocate their headquarters overseas to avoid paying taxes.
In order to pass any legislation on this though, there needs to be bipartisan support even if Republicans control the Senate. But it doesn’t seem likely. In June 2013, President Obama sent a bill to Congress that proposed to lower the corporate tax rate to 28% (25% for manufacturers) for all businesses, eliminate certain tax deductions, and “broaden the tax base.” Obama’s legislation would have created a short-term boost in revenue that he wanted to use for job-training programs and infrastructure development in the United States. Republicans though quickly denounced the proposal as another “tax and spend” liberal policy.
Considering the fact that Obama will sit in the Oval Office for another two years, Republicans will have to give into the idea of using new revenue generated from corporate tax reform for job and infrastructure spending if they want the law to change. It doesn’t look like this will happen, so corporate tax reform looks more like a 2016 issue for (based on current polls) President Hillary Clinton.
Budget Deficit: A Non-Issue for the Midterms
Since the Great Recession, the United States has had huge budget deficits. Deficit spending accounted for nearly 10% of GDP in 2009. For this fiscal year though, deficit spending is projected to only account for 2.8% of GDP, the lowest level since 2007. So with a shrinking budget deficit and interest rates on bonds still low (2.49% on 10 year-note as of 8/6/14), President Obama is not under a lot of pressure to continuously reduce deficit spending.
Also, Republicans will not approve any big spending legislation that significantly increases the deficit over the last two years of his presidency. The CBO projects the budget deficit to remain between 3% and 4% of GDP through 2024. Unless one party gets control of Congress and the Presidency prior to 2024, and drastically alters the federal budget one way or another, this is unlikely to change.
Economic Expansion and Job Growth: It’s a Tax Code Issue
For people still looking for jobs and disappointed with the sluggish recovery in employment, they want to know if a Republican-controlled Congress will change the prospects of economic/job growth, for better or worse.
With a Republican-controlled Congress, stimulus is out of the question. Job growth will be largely dependent on corporate tax reform going forward. America’s corporations are sitting on roughly $2 trillion overseas that they don’t want to bring back into the country because it will be taxed at 35%. If Congress can pass corporate tax reform that allows these corporations to bring their money back to the U.S. without being taxed (or paying minimal tax on it), then there could be a spur in domestic investment, which could lead to job growth. Again though, considering the stark contrast in viewpoints between Democrats and Republicans on how to address the flaws in the corporate tax code, comprehensive legislation that both parties can agree to seems unlikely.
If Congress does nothing though, the good news is that employment has grown by 200,000 jobs per month over the last six months and the CBO projects some positive news moving forward. Economic output is expected to grow 3.1% this year and 3.4% in 2015 and 2016. The increase in output will spur employment growth in businesses, which will push down the unemployment rate and raise the labor force participation rate.
More Political Gridlock
All and all, expect a similar amount of gridlock after 2014. There may be some changes to the Affordable Care Act and construction of the Keystone Pipeline could become a reality with a Republican Congress, but unless Republicans and Democrats have a change of heart and commit to working towards bipartisan legislation for the good of the country, not much is going to change after these midterm elections. But for all the political junkies out there excited for election season and looking to get something positive or enjoyable from the midterms, there are some interesting races in the Senate and the House to pay attention to.
Politics always has a bit of drama in it. This midterm-election cycle already produced a huge surprise when the majority leader of the House of Representatives Eric Cantor embarrassingly lost his own primary to a completely unheard of economics professor named David Brat. Come this November, it’ll be interesting if the extremely conservative David Brat can pull off a victory against Democratic candidate Jack Trammell, also a completely unheard of college professor in Virginia.
Staying with the theme of Republican leaders, Senate minority leader Mitch McConnell from Kentucky faces a tough challenge from Democratic opponent Allison Grimes. Grimes is the Secretary of State for Kentucky and a fairly conservative Democrat who opposes many aspects of the Affordable Care Act, supports the coal industry in Kentucky, and definitively states that she is not a fan of Barack Obama. Although McConnell is predicted to win as of now, a lot can happen in the next three months.
Finally, any time a celebrity runs for Congress, it always turns out to be an interesting race. In North Carolina’s Second Congressional District, former American Idol runner-up Clay Aiken will be running on the Democratic ticket against Republican incumbent Renee Ellmers. Although it’s a long shot for this traditionally conservative district to elect a Democrat, much less an openly gay Democrat, Clay is standing tall to the challenge. He even managed to fundraise more money than Renee Ellmers last quarter.
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