November 6th Looms

By Steve Kopperud, Policy Directions, Inc.

If you live and work in the policy swamp of Washington, DC, one of the questions an election year inevitably brings from folks outside the Beltway, airline seat companions, and that strange guy who’s always at the dry cleaner the same day you are, is “Does it really matter which party’s in the White House and/or which party controls Congress?”

The simple answer is “yes,” but the impact is relative depending on how or if that power/control is used and which broad issue area you’re talking about.

The current scenario – split power, as in one party controls the White House and the Senate, while the other party controls the House of Representatives – is a worst-case scenario for folks in the business/agribusiness community. Why? Because generally speaking, so-called progressive folks are less sympathetic to business of any stripe – socioeconomic issues tend to be nonpartisan – and no clear congressional majority means stalemates, political posturing, and finger pointing.

Ask any chief executive officer (CEO) what she/he thinks of the current regulatory/legislative situation – the assumption being the CEO will mentally weigh regulatory actions by the administration, blessed by the Senate, but vilified by the House. Then tack on the question every executive likes to hear, that being, “If you’re doing okay, and you’re making a profit, then why are you sitting on buckets of cash and why aren’t you hiring?”

The consistent and collective answer you’ll get to both questions is “Too much uncertainty.” That translates into street speak as “I’m not a gambler; I won’t invest a lot of money in expansion, hire a bunch of folks, only to have the administration and/or Congress do something stupid.”

The current administration came into office believing the universe blessed it and there would be automatic acceptance of this White House’s desire to fix all extant policies, programs, and regulations that do not fit its view of the world both present and future. As newbies, these folks proposed regulation after regulation, and if these efforts were blocked by regulated industry, attacked by half the Congress, or simply overruled by its own Office of Management and Budget, the administration would look to the Senate to do what it found itself incapable of doing. That, unfortunately, didn’t work out so well.

Meanwhile, the Republicans took the whole “loyal opposition” thing to new extremes, spending most of their time identifying “bad” rules and programs, calling these transgressions out on the floor of the House, but rarely offering specific programs, tossing out philosophical challenges rather than viable alternatives. It is one thing to complain; it is entirely another to complain, but offer no alternatives. Unfortunately, neither party generally provides options when opposing the other; both approach legislative and regulatory challenges with a “my way or the highway” mindset.

Hence, the result is confusion and uncertainty; the kind of uncertainty that leads to everyone in business running to the sidelines to await elusive consensus, looking for any light at the end of this stalemate tunnel.

As I type this in mid-September, composite polling shows President Barak Obama enjoying a four- or five-point bounce in popularity coming off his party’s national convention, with challenger Mitt Romney holding his own overall. Suffice to say, it is generally not a good thing for an incumbent president to be in a statistical dead heat with his challenger less than 60 days from the election – remember President George W. Bush, Al Gore, hanging chads, and the Supreme Court? However, this same polling reports much of the voting population says it’s generally decided on its candidate, meaning it’s those pesky independents and “undecided” who will decide the election. This scenario, of course, is based upon a lack of any major economic or foreign policy explosions before November 6, and we all know there’s plenty of time for such developments.

Yet at the same time, the same composite polling shows if the election were held today – mid-September – the House would remain under GOP control, picking up two or so new seats, with the whole Tea Party having lost much of its 2010 steam. The Senate would become majority Republican, picking up a likely four seats, giving the GOP a 51-47 edge. While there will likely be two Independents, such folks generally go to the Democrat side of the voting ledger. So while a two-seat majority helps with votes that need 51 ayes to pass, the increasing number of 60-vote majorities required for action becomes problematic, but not insurmountable. Let me restate the obvious – a whole lot of stuff can and will happen between now and the first Tuesday in November.

For business/agribusiness generally, a Republican White House and Congress would by and large be a dream outcome on November 6. However, if Obama wins reelection, a GOP Congress means it’s a whole new legislative ballgame.

When President Bill Clinton was confronted with just this scenario in 1996, he moved from far left to just left of center on the political spectrum, recognizing he would be twiddling his thumbs for four years if he continued to press for legislation and regulation not at least negotiable with the Republican Congress. At the same time, contemplate – just for grins – the collision of egos between Clinton and then GOP House Speaker Newt Gingrich. Those battles notwithstanding, both men were political pragmatists and the outcome of the last four years of the Clinton presidency was a balanced federal budget and robust employment.

Obama will face the same challenge if November 7 dawns, he’s still employed, and his Republican brethren are in control of Congress. The $64,000 question is whether Obama has the same perception of political reality as Clinton and whether achievement is as important to him as legacy.

Will the president move to political center? Will he opt to continue to push his reinvention agenda, defying Congress through increased aggressive use of the veto, or will he moderate his priorities and goals? He could, as some contend, expand what the Wall Street Journal has described as his “imperial presidency,” the use of executive orders to shift government operations when he fails to convince Congress of the wisdom of his agenda.

All of this will be put to the test during the November/December congressional lame duck session. Remember: The lame duck session is after the dust has pretty much settled from the election. There are several major challenges facing Congress and the White House before December 31, 2012, the greatest of which is the looming “fiscal cliff,” including action on the Bush-era tax cuts, a solution to the sequestration mandate, and whether/how to extend at least some part of the expired tax credits affecting business broadly. Other challenges include emergency aid for drought/disaster-affected farmers and ranchers, a farm bill – whether five years or a one-year extension of current programs – and various sundry spending issues.

If Congress goes GOP, look to the current Senate leadership to dig its heels in on the ugly issues, opting to kick the can, forcing the new leadership to deal with those challenges in the 113th Congress. Also, look for Obama to wield his veto pen mightily to assist in shifting the responsibility for legislative outcomes.

If Romney takes the White House, and his party controls Congress, the Republicans may actually decide certain key issues should be reserved for the new president, giving him at least the opportunity to show “leadership” on key issues once sworn in next January.

I’m hoping against hope, however, the lame duck will bring more adult behavior from Congress than it’s demonstrated over the last two years. I won’t share with you what I hope for November 6.

October 2012 RENDER | back