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2014 Election

From the Ashes: Potential Deals for President Obama And GOP after the Mid-Terms

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The Democratic Party performed poorly in the mid-term election, losing control of the Senate which it had held since 2007. The GOP won all 13 of their contested seats as well as picking up 8 seats[1] from Democratic incumbents; this will allow the Republicans to hold a 3-vote majority in the Senate at the commencement of the 114th Congress when it meets on January 4th, 2015.

election map

There are two important take-aways from this election, in my opinion:

  1. There is no disguising that this was a defeat for the Democrats and a win for the Republicans. As much as Democrats are attempting to spin the outcome, the fact remains that President Obama now faces a wholly hostile legislature. Democrats who cite low voter turnout need to examine precisely why they failed to motivate their own base, despite spending hundreds of millions of dollars on the task and a generally favorable economy, while Republicans were much more successful;
  2. Republicans should not overstate their victory and extrapolate results to the 2016 Presidential election. There are a number of reasons for this:
    1. An estimated[2]6% of eligible voters actually bothered to do so, which is 4% lower than the 2010 mid-terms and the lowest turnout since 1942[3]. Republicans certainly cannot count on a low turnout for the 2016 election – the 2012 election had a turnout of 58.2% – and the Democrats will be able to gather a proportionately larger share of their base at that time;
    2. This Senate class favored Republicans, with 20 Democrats facing reelection against only 13 Republicans[4]. The next class heavily favors Democrats, with only 10 facing reelection versus 24 Republicans;
    3. Finally, even a cursory glance at the electoral map shows that geography heavily favored a Republican victory. All of the Republican holds and most of the gains are from the South or the Heartland, areas which are traditionally GOP strongholds. It may be discouraging to Democratic strategists to have lost “purple” states like North Carolina, Iowa or Colorado, but hardly shocking. With the exceptions of Colorado, Iowa (where Democratic incumbent Bruce Braley retired) and Maine (which had an incumbent Republican Senator in Susan Collins), the Democrats held on to every state that voted for Obama in 2012.
    4. Importantly, Democrats held on to swing state Virginia, with Mark Warner squeaking by with the narrowest of victories against challenger Ed Gillespie. Virginia will remain a critical state in 2016 with favorite son Jim Webb announcing his challenge to Hillary Clinton for the Democratic ticket.

Democrats therefore have reasons this winter to be both depressed and confident: the next two years will be difficult, but 2016 holds the promise of winning the Presidency and recovering the Senate. Much will depend on how well President Obama and the now wholly Republican Congress manage to place the blame on the other side for the inevitable failure to work together over the next two years.

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That is the unenviable result of this election: very little will get done. The GOP will not want to hand the President any easy wins for his side, while the Executive is hardly going to allow Congress to overturn any pieces of existing legislation. In both cases, negativism is a two-edged sword that can turn upon the user. Democrats have been working hard to make the charges of “do nothing” stick on GOP legislators, and now that they control Congress the possibility of Americans agreeing with them goes up. On the other hand, the GOP is working equally hard to make the President look like an out of control Caesar, wielding Imperial fiat through Executive Orders and the veto to oppose the will of the people. Those charges may also stick, if the President is too free with either of those powerful tools.

At the end of the day, though, the President is not up for reelection while most of his Congressional opponents are. This opens a window of opportunity for Mr. Obama: he can – within limits – take unpopular stances knowing that they will be publically repudiated by his Democratic successors, whether they privately endorse them or not. It is far more difficult to imagine Mitch McConnell or John Boehner having the same flexibility, even though Mr. McConnell does not face an election for the next 6 years. If Republicans hope to win in 2016, they cannot rely on hatred of Mr. Obama, a trick horse they have ridden hard and successfully for the past 6 years. They are going to have to demonstrate a positive vision of America and have the President reject it; that is a far more difficult feat and I seriously doubt that they actually have one.

Yet against this uniformly depressing background, there are some cautious reasons for hope. Precisely because Mr. Obama is a “lame duck”, there are some deals that he could do with Republicans in Congress that a Democratic incumbent might hesitate to make, which might anger Democratic constituencies, but provide benefits to the country as a whole. Much depends on how willing and able Republicans are of being seen to make any kind of deal with Obama, a.k.a. the black Kenyan Muslim, a.k.a. Satan’s whelp. That will be a very great limiter of any potential deals.

  • Keystone XL Pipeline for Immigration Reform

One of the issues that has Republicans (and some Democrats) salivating is the Keystone XL pipeline, approval of which has been hanging fire since September 2008. Keystone XL would bring Canadian tar sands from Alberto to refineries in Texas and the Gulf. Environmentalists hate it and argue that the tar sands are not only even more damaging than regular oil production, but that the pipeline itself goes over the highly sensitive Sand Hills and Ogalalla aquifers in Nebraska and Kansas. Contamination of those aquifers could cause widespread damage to crops, livestock and people across hundreds of thousands of square miles of a multi-state area.

keystonexl

Senator Mary Landrieu (D-LA) proposed a Senate bill this month to force approval of the XL extension[5]. It gained the support of every Republican in the Senate and 14 Democrats, falling just 1 vote short of the filibuster proof majority that would have enabled its passage. Once the new Congress sits in January, Republicans ought to be able to easily marshal a 60-vote majority and might even be able to gather the 67 votes needed to overturn a Presidential veto. Senate Minority Leader Mitch McConnell has already promised that Keystone XL is one of the “very early” pieces of business that the new Republican Senate will address.

If politics is the art of the possible, Mr. Obama should recognize that opposition to Keystone XL is going to become almost impossible to maintain. A quick canvassing of Democratic Senators ought to tell him whether or not a veto will stand; but far better not to put it to the test. Keystone is one of those issues that Republicans can easily turn against the President and the Democrats in 2016 since many more Americans care about jobs than about the Ogalalla Aquifer. That’s the simple truth. Even some important Democratic constituencies are in favor of the pipeline extension, including unions of workers that would benefit from the $8 billion in construction and the additional refinery work. It is worth mentioning that there are already oil pipelines that run across both aquifers; another pipeline adds to the risk of contamination, but doesn’t create it.

There are additional, indirect benefits from the pipeline. The increase in oil production doesn’t directly benefit American consumers and industry like the increase in natural gas production from fracking does, because oil is a more globalized market[6]. Yet more oil in general lowers the market price for everyone. This is also an important consideration as the US faces off with an increasingly hostile Russia: Mr. Putin’s state is heavily dependent on the price of oil to fund its budget and pay for its military modernization. If oil falls below $100/barrel for a sustained period of time, the Russian economy will suffer, but more importantly, the Russian government’s scope for action will be constrained. So too that of Iran; and both are key to Mr. Obama achieving important foreign policy objectives.

That doesn’t mean Mr. Obama should roll over either. The President can and should threaten to veto the bill and pressure Senate Democrats to back him publically. The objective would not be to kill the bill, but to have it include some important legislation that is near and dear to the President’s heart, namely immigration reform. On Friday, the President signed an executive order prioritizing the deportation of criminals while delaying that of undocumented people with over 5 years in the country or who have children who are American citizens.

The immediate Republican response was as vituperative as could be expected. Contrary to GOP claims that the President is “counterfeiting immigration papers”, the Executive Order doesn’t actually legalize anyone. It gives “prosecutorial direction” which means that the deportation of these immigrants is delayed; hopefully until an immigration bill can be passed that allows them to stay permanently. This is a far cry from Republican accusations of government by fiat; but it is not a solution to a very pressing need.

Why should Republicans compromise on immigration reform or join it at the hip to Keystone XL? The GOP is deeply divided over this issue, with a number of moderate Republicans from states like Florida and Texas highly sensitive to the need to win the immigrant, especially the Hispanic vote. GOP presidential prospects change significantly if they can be seen to champion a reform bill that gives “a fair path to citizenship”. The President’s action has cleverly laid bare these divisions by focusing on two groups that it makes perfect economic and political sense to protect: people who have already been here and working for more than 5 years with no criminal record, and the parents of kids who are already Americans. Separating families is not going to help Republicans appear less heartless than they really are; and characterizing hardworking, law-abiding immigrants as “drug mules” – as Iowa Congressman Steve King did last year[7] – is going to drive Hispanic voters in droves straight into the arms of smiling Democratic Party bosses.

Last year’s immigration reform bill had substantial bipartisan support in the Senate. House Speaker John Boehner refused to bring it to a vote in the House for fear that is might actually pass and hand the Democrats a big win before the mid-terms. Republicans with Presidential ambitions, like Ted Cruz of Texas, ought to thinking of 2016 and the millions of Hispanic votes such legislation could bring. Even Senator Lindsey Graham (R-SC) acknowledged that his party’s inaction was damaging to the GOP and the nation: “Shame on us as Republicans for having a body that cannot generate a solution to an issue that is national security, it’s cultural and it’s economic. The Senate has done this three times,”[8]

immigration

Linking these pieces of legislation would ensure that both parties would vote for it overwhelmingly. That makes everyone look good, since Americans are desperate for some – any – demonstration of bipartisanship to improve the country. The mark of a good legislative compromise is that it doesn’t make anyone completely happy; and this agreement would achieve that. Republican extremists would be upset that Congress is affirming the President’s action rather than trying to impeach him; while Democratic extremists would fume at the environmental damage of Keystone XL.  Both parties could spin it to their constituencies as a necessary measure that will assure victory in 2016. For the President, it means that his Executive Order can simply be overturned by the next person to sit in the Oval Office and would be another important step in securing his legacy of social achievements.

  • Fast track TPP and TTIP

Another area where Congress and the President could potentially work together is on trade negotiations. President Obama and the US Trade Representative have been hard at work negotiating the terms of two transformative trade deals. Known as TPP (Trans-Pacific Partnership) and TTIP (Transatlantic Trade and Investment Partnership), these deals could cement the United States firmly in the center of the global economy for decades to come.

In both cases, the impacts are BIG. The Pacific trade deal would impact 12 economies, with 800 million consumers, and $28 trillion in GDP or 39% of world GDP. The Transatlantic deal would be even bigger, as Europe and the US are each other’s biggest trade and investment partners: 60% of global GDP, 33% of world trade in goods and 42% of world trade in services. The United States could benefit tremendously from these free trade agreements, with an estimated 1 to 1.5 million new jobs created and a rise in real incomes of up to 13%[9].

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Critics cite the lack of transparency in the negotiation of both deals and accuse officials on all sides of attempting to “lock-in” a neoliberal model of free trade and investor rights that benefit big corporations and wealthy oligarchs at the expense of small businesses, labor unions and even national sovereignty. Much if not all of this criticism is coming from the left: European Socialists and the far left of the Democratic Party. Republic criticism has mainly revolved around not wanting President Obama to take credit for anything, much less big trade deals that might actually create jobs. The fact that Republicans are actually keen on these deals may be cause to suspect that they really do favor big corporations and wealthy plutocrats; but there are plenty of reasons to think that the wealth creation effects are large enough to benefit a broader segment of Americans.

There are other good reasons for supporting these free trade deals, and one of the key ones is geopolitical. Increasingly, the United States and the liberal democratic order that we have helped build since the Second World War are being challenged by “illiberal” states: nations that have benefited from the system, but who reject many of its basic tenets. China and Russia of course top the list, but other states are on the borderline. These are nations that view democracy as messy populism and Western concerns for human and civil rights as annoyances; they prefer the lure of “authoritarian markets” championed by the highly successful People’s Republic of China. Even states that should be secure from temptation, like Turkey and Hungary, are increasingly falling into the orbit of market illiberalism.

One of the surest ways to counteract this trend is to revitalize the West and underline our own successes, both economic and political. Economic liberalization, reduction of non-tariff barriers and the enhancement of trade and investment flows would help Western companies and Western economies compete in an increasingly difficult global environment. Although there is always the possibility of deleterious side effects, such as some of those that opponents describe, the solution is not to jettison the good with the bad: the solution is to mitigate the bad while attempting to maximize the good benefits of increased wealth on Western societies[10]. Given the challenges faced by European social democracies in funding their increasingly burdensome welfare systems – a challenge the US also faces, though to a lesser extent – the opportunity to increase the total pool of wealth should not be dismissed out of hand.

President Obama has made negotiation of these two deals a central piece of his Administration’s economic and trade policy. Republicans are also largely in support of the deals. Many Democrats on the Hill would be as well if they weren’t afraid of a potential backlash from their more left-leaning constituents. If US negotiators are able to bridge the admittedly still wide gulf between the prospective members, Mr. Obama might be able to sign one or both of these highly transformative partnerships before he leaves office. In order for him to accomplish this, however, he needs to begin laying the groundwork for getting Congressional approval on fast track authority now. “Fast track” will be necessary for the President to take the opprobrium of the anti-trade deal groups on his own shoulders; in effect, falling on the grenade for his Democratic colleagues. Republicans may not want that: but they will be pressured by their corporate backers to support the deals.

It is probably too much to hope that Republicans will be able to put aside their visceral hatred of Mr. Obama to work with him in any way, shape or form. However, the opportunities exist; they would benefit the country; and with any other politicians but Mr. Obama and the current GOP, these deals would probably get done.

Americans certainly deserve a bit more bipartisanship in the national interest.


 

Sources and Notes:

 

[1] The Louisiana Senate race is still undecided with no candidate taking more than 50% of the vote. A run-off election between Democratic incumbent Mary Landrieu and Republican contender Bill Cassidy will be held on December 6th. The outcome of this election will not affect the balance of power in the Senate.

[2] Lindsay Cook, “Midterm Turnout Down in 2014,” US News and World Report, 05 November 2014

[3] Catalina Camia, “Voter turnout could be lowest since World War II,” USA Today, 06 November 2014. Americans had other things on their minds in November 1942…

[4] It should be noted that there were three Class 3 special elections held, with two Republicans (SC, OK) and one Democrat (HI) appointed to replace the elected officials facing challengers. All three incumbents won the election, and will sit the remainder of their term (until 2017).

[5] Timothy Gardner and Susan Cornwell, “Keystone XL pipeline bill dies in Senate,” Reuters, 19 November 2014

[6] All oil pumped out of the ground is by no means the same, and different types of petroleum are not perfect substitutes; but in general, the world market for oil is far more integrated than that for natural gas, because of the far greater ease in transporting the former than the latter.

[7] Laura Cañupan, “Congressman Steve King Stirs Controversy Again, Suggests Undocumented Immigrants are Drug Mules,” Latinos Post, 28 July 2013

[8] Darlene Superville, “Obama Defends Immigration Executive Order,” Huffington Post, 23 November 2014

[9] Gabrield Felbermayr, PhD, Benedikt Heid and Sybille Lehwald, “Transatlantic Trade and Investment Partnership: Who Benefits from a Free Trade Deal?” Bertelsmann Stiftung,

[10] A more appropriate means of reducing the negative impacts of these trade deals would be to negotiate global tax treaties and fiscal Information sharing as well as improve global regulation of financial flows, labor and environmental standards.

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