tax reform

Republicans Hold Their Breath; Democrats Keep Debating Themselves

The 2018 midterm election is just six months away, with congressional Republicans eager to defend their record in the face of unpredictable Trump tweets and Democrats still groping for the right mix of messages that will move America.

The 2018 midterm election is just six months away, with congressional Republicans eager to defend their record in the face of unpredictable Trump tweets and Democrats still groping for the right mix of messages that will move America.

With the pivotal 2018 midterm elections less than six months away, it is timely to assess likely Republican and Democratic campaign themes. They aren’t exactly obvious. And neither is the election outcome, which could be a blue wave or red dawn.

The one sure thing is that Republican candidates will be tethered to President Trump, whether they like it or not. His zig-zags on trade, immigration and diplomacy will vex GOP incumbents and hopefuls, especially in Farm and Rust Belt states. Trump’s doubling-down on culture war issues will buoy social conservatives and complicate campaigns for Republicans running in swing districts or blue states.

Democrats appear to be still arguing over their 2018 themes. Do they run against Trump and tout the prospect of his impeachment? Or do they focus on bread-and-butter issues such as health care, income security and retooling job training? And what about the ongoing Russia investigation?

Senate Majority Leader Mitch McConnell told NPR last week congressional Republicans should run on their record. “This is the best year and a half for right-of-center policies since I've been here,” he said. “Everything from tax relief, to repealing the individual mandate to 15 uses of the Congressional Review Act. We mentioned the courts, comprehensive tax reform.”

In the same interview, McConnell admitted the GOP faces a stiff wind to hold on to one or both houses of Congress. That’s largely because of the shadow cast by the Robert Mueller investigation into Russian meddling in the 2016 election, potential Trump campaign collusion with Kremlin-connected Russians and presidential obstruction of justice. The failure to reach a deal on immigration – from an expanded border wall to protections for DREAMers who were brought to the United States illegally by their parents, but have grown up in America. Then there is Trump going off message, even on the issue of the importance of the 2018 mid-term elections. 

Democrats are torn by deep divisions, which have clouded their 2018 campaign messaging and eroded what once was a commanding leaded over Republicans. The progressive wing of the Democratic Party wants the campaign to center on new initiatives such as universal health care insurance, a federal jobs guarantee, tougher enforcement of anti-trust regulations and allowing the US Post Office to enter the consumer lending business. Center-left Democrats worry that isn’t the political chemistry to turn red states into blue ones. In early-state contested primaries, progressive candidates seem to be carrying the day, but the question remains whether they can win in November.

If Democrats have an ace up their sleeve, it is the number of women running for office.

If Democrats weren’t confused enough, conservative commentators have egged them on, with political cracks about House Speaker Nancy Pelosi and identity politics.

The gang at FiveThirtyEight conducted an online chat about midterm election themes. Micah Cohen, the politics editor, put government corruption and Trump’s behavior at the top of his list and downplayed trade, the economy, education, Social Security and the Russian investigation. Nate Silver, the creator and editor of FiveThirtyEight, said Democrats should concentrate on health care, the Russian investigation and gun control because they are tangible issues. Senior political writer Claire Malone recommended centering on Trump administration corruption, ethical lapses and rollbacks of environmental and consumer protection.

Polling continues to show that Trump’s political base remains solid, even though there are some cracks beginning to appear among college-educated women and disaffected union workers. The same is true on the Democratic side, which has been energized by Trump policies and congressional attempts to repeal Obamacare. Republicans need to hold on to their moderates while Democrats need to hold on to their progressives. Both parties need to appeal to unaffiliated voters who think the country isn’t moving in the right direction and GOP control of all the levers of federal power hasn’t moved in the country in the right direction.

While the national stakes in the election are clear – control of the House and Senate, most congressional elections tend to boil down to local issues and candidates. But national politics does play a role. Texas Senator Ted Cruz’ role in a federal government shutdown earned him an unusually well-funded Democratic opponent. Democratic Senator Jon Tester of Montana is facing a stiff re-election test in the face of criticism by Trump on Tester’s role in blocking his nominee to head the Veterans Administration. If Trump can pull off a verifiable deal to denuclearize North Korea, that could sway voters in the fall.

Only 48 out of 435 House seats are regarded as competitive by political experts. To regain control of the House, Democrats need to flip 25 GOP seats and not lose any of their incumbents. Democrats will likely concentrate on the 25 House districts that gave majorities to Hillary Clinton in 2016, but are held by Republicans. A 25-seat switch in the midterm election following a presidential election is not uncommon historically.

Democratic chances to regain control of the Senate, which the GOP holds by a slim 51-49 margin, are complicated because they have far more incumbents to defends. Democratic hopes go out the window if they lose seats they hold now in West Virginia, Indiana, Missouri and Montana. Their best hopes to gain seats are in Nevada, Arizona, North Dakota and Tennessee,

Meanwhile, congressional Republican candidates will be holding their breath about the next Trump tweetstorm and Democrats will continue debating how to approach the American electorate as a preferred alternative to GOP control. For Republicans, six months can be like infinity. For Democrats, six months can go by in a blink of the eye.

 

Boehner Bombshell Shifts Capitol Landscape

Speaker John Boehner's bombshell resignation announcement shifted the political ground on Capitol Hill, making short-term issues easier to resolve, but creating some longer term obstacles that may be harder to move.

Speaker John Boehner's bombshell resignation announcement shifted the political ground on Capitol Hill, making short-term issues easier to resolve, but creating some longer term obstacles that may be harder to move.

Speaker John Boehner's surprise announcement to retire at the end of October has shifted the landscape on Capitol Hill and may presage an even more dramatic shift later this year.

No longer beholden to the "Freedom Caucus"  – the far right flank of the GOP, Boehner has the flexibility to push more moderate legislation through the House over the next 32 days. The question is, how much can he really get done and what are the short- and long-term implications for the next House Speaker?

In the short-term, the retirement announcement has provided breathing room for the Speaker. The chances of an October 1 government shutdown have nearly evaporated, bipartisan passage of a drama-free debt ceiling bill is more likely and there is hope for a compromise on a transportation/tax reform package. Without the constant threat of a motion to "vacate the Speaker," other bills could hitch a ride on a fast track, including reauthorization of the Export-Import Bank.

Don't get too optimistic. It's also clear the next Speaker will have to deal with the consequences of an unhinged Boehner. Next in line to the Speakership is Boehner friend and ally, Majority Leader Kevin McCarthy from California. The more bipartisan legislation that moves in October, the higher the level of conservative frustration later in the GOP caucus. To be elected Speaker, McCarthy can only lose 29 votes from the GOP ranks – 24 of whom already voted against Boehner in January. Thus, McCarthy can only lose five more Republicans to avoid an all-out scramble for the Speaker's position. 

If McCarthy is tied to the Speaker's actions over the next month, his ascension to Speaker could be put in jeopardy. So Boehner is still going to have to balance the risks and rewards of moving legislation in his final days. Bipartisan action would continue to stoke tensions within the Republican Party and could bring the confrontation past the boiling point to a full revolt. Boehner is a master politician though, so he may manage to clear the decks of some of the most contentious issues and leave the institution he loves on a high note.

Here is some quick analysis on how key provisions could be impacted by the Speaker's departure:

September 30 Budget Showdown/Shutdown – Boehner is no longer beholden to the far right and word from GOP leadership is the Speaker will offer up a clean Continuing Resolution (CR) to keep the government funded through December 11. The CR will not contain the controversial repeal of funding for Planned Parenthood. Without the Planned Parenthood funding repeal, the GOP will lose 30-50 votes for the CR and Republicans will need to rely on Democrats to pass the bill. The measure will likely pass by Wednesday evening, just in time for the September 30 end of fiscal year deadline.

Debt Limit Increase – Another casualty of Boehner's departure could be a showdown over the debt limit. With an historic debt of $19 trillion, the country needs to increase its credit limit once again before it defaults. Unfortunately, the debt limit increase is becoming an annual affair. 

The timeline for default is not exact, but will likely happen in November. It's expected Boehner will try to act before he leaves office to clear the decks for the next Speaker. Typically, the Freedom Caucus has been steadfast in its opposition to raising the debt limit without a dollar-for-dollar cut in spending. The Obama Administration meanwhile has said the debt limit is not a tool for negotiation, even though in 2011, that's how we got the Super Committee and Sequestration. 

Transportation and Tax Reform– The fate of the transportation bill also could benefit. Word out of leadership and the House T&I Committee is that Chairman Bill Shuster and Ways and Means Chairman Paul Ryan have a six-year package that is ready to be unveiled. With the blessing of the Speaker, a transportation/tax reform package could receive an expedited path to the floor of the House. Many Freedom Caucus members have opposed additional federal spending on transportation. October could be the perfect time to get a popular bipartisan bill through the House.

Sequestration Cap – Without another 2013 Murray/Ryan type of agreement, the two-year sequestration relief bill will expire October 1. Both Republicans and Democrats want to lift the cap, but for different reasons. Republicans generally want more defense spending, while Democrats want more non-defense spending. It is hard to be optimistic that the Speaker can reach a deal to lift the spending caps before he leaves. However, there will certainly be pressure on him to expedite negotiations and resolve the issue.

December 11 – The likelihood of a government shutdown on December 11 has gone up significantly. An emboldened Freedom Caucus, a lame duck President Obama and presidential politics are could conspire to make this a tumultuous December. It will take  fancy footwork from both sides to come together on the FY16 spending package.

Wyden Could Be a Tax Panel Kingpin

Oregon Senator Ron Wyden could find himself chairing the powerful Senate Finance Committee in the next Congress following if Democrats can hold on to control of the Senate in the 2014 elections.Oregon Senator Ron Wyden may be next in line to become chairman of the Senate Finance Committee, which overseas taxation, trade and Medicare. The one hitch is that Democrats will have to fight to retain control of the Senate in the 2014 elections.

Wyden's potential ascension is due to the announcement today that current Chair Max Baucus, a Montana Democrat, has decided not to seek reelection. Earlier, the ranking Democrat on the committee, West Virginia Democrat Jay Rockefeller, said he was retiring.

The bad news for Wyden is that it may be hard for Democrats to retain those two Senate seats and a few others in the 2014 mid-term elections when there isn't a presidential race to activate all Democratic constituencies.

Elected to the U.S. House in 1980, Wyden moved into his first major chairmanship this term by taking the gavel of the Senate Energy and Natural Resources Committee. It takes that long in seniority-based Congress to move to the front of the line.

For a small state like Oregon, having the chairmanship of one of the most powerful committees in Congress is a big deal. Former Senator Bob Packwood chaired Senate Finance in the early 1980s and engineered a major tax overhaul. At the same time, the late Senator Mark Hatfield chaired Senate Appropriations, which made the two Oregon senators among the hottest phone numbers in DC.