News and updates

The first election of 2010 is over and the balance of power in the US Senate has shifted just enough to put the Administration’s policy agenda in jeopardy.  Senator-Elect Scott Brown (R-MA) will be the newest member of the Senate, and will be sworn in as soon as the election is certified.  Clues on how the agenda will be impacted and how political power has changed will come in the President’s state of the union address scheduled for January 27^th.   The White House has signaled that the President will likely talk about jobs, fiscal responsibility, Iraq, Afghanistan, and terrorism.

Senate Republicans have already stated that they are more committed than ever to opposing President Obama’s health care agenda, citing the GOP victory in MA as validation of their political strategy and policy course.  Top Republicans said Brown’s performance in the overwhelmingly Democratic state confirms public surveys showing wide discontent nationally with the Democrats’ leadership and policies, and they remain confident that success in the upcoming midterm elections hinges largely on their opposition to health care.

While Brown’s victory could have a negative effect on health care reform, other parts of the Democratic agenda may survive.  Democrats’ six month reign with a 60-vote super-majority is over, but a smattering of Republicans may be willing to play ball on their own pet issues, giving the President and the Democrats at least a theoretical shot at passing some form of financial reform, an energy bill – without cap-and-trade – and a watered-down deficit-reduction package.  Immigration reform is also likely a casualty of the change in power in the Senate.  But Republicans – no longer free to stand by while Democrats muster their own 60 votes – may help out on war funding and other national security issues.

Here’s the outlook for seven major agenda items that Democrats hoped to move in 2010.

1. Financial reform:  One of the President’s biggest legislative issues in 2010 is expected to be an overhaul of financial regulations already approved by the House.  There are enough Republicans who support cracking down on the financial industry that caused – in part – the economic meltdown.  But Democrats will likely moderate on two issues in order to get legislation passed.  First, the proposed consumer financial protection agency is not popular with most Republicans and may be removed from the debate.  Second, Democrats may have to modify the President’s proposed bank fee, which Republicans have labeled “just another tax.”

2. Deficit reduction:  In 2009, we watched Congress approve a $700 billion bank bailout, a $787 billion stimulus, and debate a $1 trillion health care bill.  Now Democrats find themselves in a bad public relations position on deficit spending.  They have recently started working on a deficit reduction project but it is unclear at this point how seriously they will work on this in 2010.  The good news is that there is a bi-partisan group of Senators committed to working on the issue.  The bad news is that the Appropriations Chairs, who don’t like even the slightly question about their “power of the purse” will likely try to block attempts to reduce spending.  The most likely outcome is some sort of blue-ribbon commission that will be charged with making recommendations back to Congress.  This will “punt” this issue down the field for at least a year.

3. Cap and trade/Climate Change/Energy Legislation:  Most pundits agree that cap-and-trade legislation is dead for this year.  If Democrats dump that provision and focus on a more modest climate and energy bill, they’ve actually got a shot at getting something done in 2010.  Even before the election in MA, moderate Democrats were pushing Senate leadership to drop the cap-and- trade provision in favor of an energy-only bill, which could include renewable fuels standard tax incentives for alternative energy.

4. Terrorism and national security:  With the Christmas Day terrorism attempt, Republicans believe they have an opportunity to reclaim their dominance on national security with the American public.  However, the President’s approval ratings on terrorism and national security have gone up since the attempt so Democrats could win Republican support if they push for significant changes in airline security and intelligence gathering.  All indications are that they will do this and receive bi-partisan support.

5. Immigration Reform:  Any attempts to revise the debate on immigration reform seem all but impossible in the new environment in the Senate.  Even before the GOP victory in MA, the Senate Democrats did not have the 60 votes to pass a reform measure.  The White House floated a trial balloon last month saying that some immigration bill could get done this year, but there is no clear path forward on how (or whether) to create a path to citizenship that opponents won’t see as an attempt to provide amnesty for illegal immigrants.

6.  Health care:  Most pundits this morning are predicting that the GOP win in MA puts health care reform on hold – mostly because that win denies Senate Democrats the 60 votes they need to break GOP filibusters and the growing resistance from rank-and-file members to pressing ahead with the current bill.  Some Democratic leaders nevertheless vowed to enact health care legislation, although the path to do so will be much more difficult now.  The options are few, and extremely complex, mostly involving legislative tactics that would be difficult to pull off in the best of circumstances.  One option includes paring the bill down to something that has wide bipartisan support, trying to attract a handful of GOP moderates to support the measure or trying to move a compromise quickly, before Senator-Elect Brown is sworn in.  Under another scenario being discussed, budget reconciliation could finally play a role — with the House initially adopting and clearing for the President the Senate-passed health care bill and then sending to the Senate a set of Democratic negotiated compromises under budget-reconciliation procedures. Legislation considered under budget reconciliation cannot be filibustered, and needs only a simple Senate majority for passage.  But several House members have already indicated that they’re not prepared to pass the Senate bill alone – even if it means health care reform would die.  This issue is extremely fluid right now so more to come later.

7.  Appropriations/Spending:  The GOP win in MA is also likely to have a major impact government spending and fiscal discipline.  With the November general elections on the horizon, that will give pause to many Democrats in conservative states and districts as Congress this year considers President Obama’s fiscal 2011 budget and lawmakers work on appropriations bills.  It also probably means that Obama will redouble his efforts to emphasize administration efforts to restore fiscal discipline, which will be spotlighted both in his State of the Union address next week and in the new budget he will submit to Congress on February 1^st.  Democrats certainly will highlight any agreement they eventually reach on restoring pay-as-you-go rules into law and on forming a commission to make recommendations on reducing future deficits and debt, but it’s unknown whether their response will translate into tighter constraints on spending this year.  The White House and most Democrats argue the economy is too fragile to begin making any significant cuts now.