The 2010 mid-term election is now history, and most every race has been decided. What does all this mean for business, manufacturing and energy? In the following presentation, our crack government relations team offers up concise analyses on the lame duck session and on the following topics:
Lame Duck Session
Industrial Owners and Operators
Labor, Employment and Human Resources
Offshore Energy Development
Energy and Environmental Policy
Trade Policy and International Commerce
Before we get to the details about specific topics, let's start with some general takeaways from the mid-term:
The results of the 2010 mid-term election were historic. Republicans gained over 60 seats in the House of Representatives — the biggest shift since the Democrats lost 75 seats in the 1948 election. While Republicans fell well short of the 10-seat shift needed to regain control of the Senate, and while the Senate Majority Leader was reelected by a surprising 5 percent margin, the Senate is almost evenly divided, making the positions of the Republican minority highly relevant to the conduct of Senate business.
The President, in a somewhat contrite November 3 press conference, stated that bipartisan cooperation on modest legislation will be a priority. The presumptive Speaker John Boehner and the Republican Senate Leader Mitch McConnell agreed in a separate, earlier conference, but warned that the agenda of the first two years of the Administration had been rejected.
The House of Representatives, its leadership, and committee structure have now changed hands. While this is the first time in 80 years that the House has shifted without the Senate doing the same, the Senate too faces changes in ratios and priorities.
1.The American public wants a more modest, cost-effective approach to legislation and regulation. There seems to be little tolerance for multiple-thousand page bills crafted with little input and placed on the floors of the Houses of Congress with unseen leadership changes. It is reasonable to assume that the same critique applies to major rulemaking. The President himself said last week the time for comprehensive legislation may be over. Perhaps a corollary to this concern is regulatory reform. It is now clear that the Congressional Review Act is not an effective check on major expensive rulemaking. The time for generic Congressional enactment with hard decisions left to administrative agencies should be past. Amending CRA to force positive Congressional authorization of very expensive regulation would be a good place to start.
2.Republicans need to guard against overreaching. Republicans won during the mid-term essentially by capturing the independent vote, which they did by a margin of some 18 percent over Democrats. Just two years ago, Democrats won independents by 8 percent. But did independents sign on for the whole Republican agenda? It's hard to make that case. While independents don't like the Obama agenda on the economy (some 57 percent think it hurts the economy), exit polls show that independents in almost equal numbers held unfavorable views of Democrats (58 percent) and Republicans (57 percent).
The good news is that Republicans seem to understand that. The best example may be rising star Marco Rubio, the Republican Senator-elect from Florida. Even with a 19 percent margin over Governor Crist, he reminded his party that the election was not "an embrace of the Republican Party." Instead, he styled the election as "a second chance" for the GOP to "be what they said they were going to be, not so long ago."
3.The Tea Party is a mixed blessing and a management challenge. It is too simplistic to say that Tea Party candidates cost the Republicans the Senate in the form of gaffes from the likes of Angle (NV), Buck (CO), and O'Donnell (DE). The excitement of the Tea Party also made material contribution to the so-called enthusiasm gap that arguably buoyed the GOP to the historic gains it made.
The more interesting question is how Republican leadership will deal with Tea Party candidates that were elected in either House, and the desire of incumbents to appear acceptable to Tea Party constituents in future elections. It is our view that most elected officials do change their perspectives the longer they are exposed to the Art of the Possible in Washington. Further, the incoming class also includes very seasoned political leaders like Boozman (AR), Coats (IN), Hoeven (ND), and Portman (OH).
So, while some dust up can be expected on issues like discretionary spending, there will be moderating influences that should reduce the general level of internecine strife.
4.The President has plenty of capacity to assert leadership. In many respects, the President sets the tone and agenda for Congressional leadership in his own party. The well-worn examples of Ronald Reagan after the 1982 election, and Bill Clinton after the 1994 election, are both asserted for the proposition that a President can seek out bipartisan cooperation and triangulation (or strategic agreement with your opponents at the expense of your supporters) to maintain control.
The Reagan and Clinton examples are not perfect, even though the President cited both in his post-election press conference. Reagan had a history of reaching out to Democratic leaders, having them as frequent White House visitors. Clinton's background was as a Southern governor and co-founder of the moderate Democratic Leadership Council; it's not clear that President Obama has the same triangulating pedigree. But he is a canny politician with good communications skills. He can do this if he tries, but he cannot go further than the coalition he put together in 2008 will tolerate.
While many have said potential legislative gridlock may free the Administration to push more and expensive regulation, we are not so sure. Cognizant of the lessons of the mid-term election (see number one above), and desirous of emulating Reagan or Clinton, it is hard to see how an overly zealous approach to advancing regulation can really advance the ball.
5.Oversight, oversight, oversight. Over the past two years, there has been precious little in the way of actual oversight of executive branch agencies. Such Congressional letters that have flowed to agencies over the last year or so have often been bipartisan in nature. There is a real pent-up reservoir of support for oversight of regulatory agencies on both sides of the aisle. The key to getting it done is seriousness of purpose, excellence in staffing decisions, and appropriate targeting.
But to what end? Does oversight ever really do anything? The answer is a wrong yes. Good oversight can create substantial public pressure on agencies to alter their strategies to the extent they are not based on direct operation of law. If they are, then good oversight can become the predicate for statutory reform, appropriations riders, and rifle-shot amendments.
Oversight is not, however, for the faint of heart. Hearings in particular give Administration officials the forum for defense of their rules, programs, and spending, and for the opportunity to demonstrate grace under pressure. That's why a good oversight agenda must be based on adequate planning.