This Labor Day weekend just past opens the political homestretch to the U.S. November mid-term elections. With the House certain to stay firmly in Republican hands, the focus is naturally on the Senate, and in particular, on the odds of a Republican return to majority control for the first time since 2006.
The conventional wisdom is of continued if not intensified political gridlock between Tea Party-driven Republicans in full control on Capitol Hill and an embattled President Obama golfing his way through his remaining two years in the White House.
A couple of things about that.
*** The odds do indeed favor the GOP in the Senate, as they are already near certain to take three Democratic seats, meaning they only need to net three more turnovers of the eleven races most in play. For our part, we expect the GOP to net between four to eight seats, which would either leave the Democrats with the thinnest of a majority, or the GOP slipping in with nearly the same slimmest of margins, while a 50-50 split goes to a Vice Presidential vote and thus to the Democrats. ***
*** And therein lies the key: we think it is not so much which party wins the Senate that matters, but how narrow the majority is: there is a growing view within the Senate in recent months that a narrowed majority will free “deal-makers” from both parties, fueled by anxieties over their own Senate re-election in 2016 and for the presidential campaigns, to drive a more centrist legislative agenda built on a “Gang by issue” base of pent up bi-partisan support. ***
*** A noisy first few months of rhetorical posturing next year may reach a flash point in the vote for another debt ceiling increase (which will pass despite shrill sounding attachments). But we expect bi-partisan Senate bills to emerge by late spring, particularly in a desire by both parties to work around the sequester to lift spending in the FY2016 appropriation bills. That will go a long way toward neutralizing Tea Party dissidents in the House. ***
We would also be remiss not to note US fiscal policy may finally provide a tail wind to growth for the first time since the Budget Control Act was passed in 2011 — which the Federal Reserve will be factoring into its policy path by late next year and into 2016 when, one assumes, it will be debating how gradual its rate tightening should be.
Eleven Senate Seats in Play
It is easy to see how expectations are so high the Democrats will lose control of the Senate in November. Of the 36 senate seats up for grabs, 21 are being defended by Democrats with seven of those in Red States easily won by GOP Presidential candidate Mitt Romney in 2012. Only one GOP seat needs to be defended in a state won by President Barack Obama.
And it is equally easy to see why the GOP candidates are all essentially running against President Obama rather than their rivals, and indeed why most of the Democrats in close Senate races are also running against the President. Obama’s favorable ratings are at the lowest levels of his presidency, at barely 40% (Congress and the House GOP in particular fare even worse, but most House seats are safe short of nuclear attack), while some two thirds of the voters think the country is on the wrong track. Although the economy may be slowly picking up momentum, like 1992, the recovery remains more in the economic data than in the sentiments of voters pulling ballot levers in November.
And while Obama is energizing voters, it is Republican partisan voters who are being motivated against him, while the young, women, and African Americans supporters are showing little signs of pouring into the polling booths as they did in 2008 and 2012. It means the mid-terms will tend to be whiter, older, and more conservative than the country as a whole, and especially in the South, where three of the most closely contested races are being fought.
But it is still premature to assume the GOP will take the Senate. The odds do favor the Republicans, but the polling across the eleven of the races now in play are all within the margin of error, and the GOP should in fact be doing better if national trends were the only forces dictating the outcomes of the Senate seats in close competition.
Three current Democratic seats, Montana, West Virginia, and South Dakota, are all but certain to swing over to the Republican side. Democratic incumbents are holding onto slight leads in two races, in Michigan and New Hampshire where they have experienced candidates, but in two other Democratic-leaning races, in Colorado and Iowa, the Republican candidates have climbed to a dead heat. The latter is especially the case in Iowa, where the Democratic candidate, Rep. Bruce Braley was caught on video making disparaging remarks about farmers – in farm state like Iowa no less; so perhaps look at Iowa as insurance for the Republicans for a potentially unexpected win.
The same insurance policy is perhaps being written for Democrats in the three Republican-controlled seats that could possibly swing blue. In Georgia, Michelle Nunn, daughter of the popular former Senator Sam Nunn, is running an effective campaign against Republican David Perdue, a former CEO of Dollar General, and in Kentucky, despite his veteran status in a solidly red state, Senate Minority Leader Mitch McConnell is facing a resilient challenge by Democrat Alison Lundergan Grimes, the current Kentucky Secretary of State.
And in Kansas, Republican incumbent Pat Roberts is suddenly facing a tougher than expected re-election against Greg Orman, a businessman running as an independent, and Democrat Chad Taylor, a lawyer. Although the two are splitting the Democratic vote, Roberts has been hampered by Tea Party apathy over his willingness to compromise on certain bills.
But the balance of power in the Senate is most likely to turn on the outcome in four, too close to call races: in Arkansas, Democratic Senator Mark Pryor is being challenged by Tom Cotton, an Army veteran and a Congressman only since 2013; in Alaska, Senator Mark Begich is defending his seat against the Republican challenger Dan Sullivan, who beat out two rivals in the last GOP primary contest of the season including Sarah Palin’s pick; in Alaska, Senator Mark Begich is defending his seat against the Republican challenger Dan Sullivan; in North Carolina, Democratic Senator Kay Hagan is running her first re-election campaign against Republican State House Speaker Thom Tillis, and; in the deeply red state of Louisiana, Democratic incumbent Mary Landrieu is defending her seat against a split Republican challenge from Congressman Bill Cassidy, a doctor running hard against Obamacare, and Rob Maness, a tea party-aligned insurgent with an endorsement from Sarah Palin.
Perhaps the two most tightly contested and high stakes races are the latter two, in North Carolina and Louisiana. In the Tar Heel state, Republican Tillis has had to back pedal a bit from some of the controversial Tea Party-backed state legislation, but to win; Democrat Hagan especially needs to ensure a high turn-out among African-American voters who provided the margin of difference for Obama in narrowly winning the state in 2008. Ominously for Hagan, Obama lost North Carolina to Romney 48.4 to 50.6 in 2012.
Louisiana is interesting, if for any other reason that its results may not be known until December. The November election is essentially a “jungle primary,” in which the top two candidates square off again in December if no one clears 50%, which seems likely, as front runner Landrieu has been polling around 42% for several weeks now.
Return of the Senate Dealmakers
In weighing the odds in the individual Senate races, the key number to keep in mind is four: that is the minimum number of seats we think the GOP needs to gain in November to change the political dynamics in the Senate next year, even if the Democrats do retain a majority.
The same logic likewise applies if the Democrats lose six or eight seats, ceding majority control to the Republicans. Even if the GOP wins a net of eight seats, thereby gaining a margin of 53-47, the Republican Senate will still need to steer to the center in order to keep their own moderates, such as Maine’s Susan Collins, and to win seven (or more) Democrats to get to the 60 vote threshold to close out filibusters.
The reason is the likely leverage that will accrue to the Senate “dealmakers”– be they from the more conservative or liberal wings of their respective parties — who will drive a much more centrist legislative agenda next year and in 2016, when campaigns will be gearing up for the demographics that tend to go with a presidential election year as opposed to the low turnout, more partisan-charged mid-term elections. Seven Senate GOP dealmakers will face the electorate in 2016, among them two centrists, Mark Kirk of Illinois and Lisa Murkowski of Alaska.
While it is certainly true that much of the polarized dysfunction since 2011 can be attributed to the high-profile antics and purity politics of the House Republican conference, the Senate has also had its fair share of Democratic-driven dysfunction. In large part, that was due to what we have termed Senate Majority Leader Harry Reid’s “goalie strategy” to block debate and amendments to protect vulnerable Democratic Senators – think those four most competitive seats just mentioned – from being forced to vote on amendments which are embarrassing “gotcha traps.”
The power to do so lies in the Senate Majority Leader’s prerogative to be recognized before all others on the floor. This enables him to file all of the allowed amendments to any bill with his own proposals — therefore filling the so-called “amendment tree”– and sharply limiting the number and range of debates allowed to reach the floor.
But a narrowed majority will loosen the grip of the Majority Leader, whether it is Reid or for that matter, McConnell (assuming he keeps his seat in November).
For one, Reid’s “goalie strategy” has hurt Democrats as much as it was intended to deny Republican opportunism. Among those Democrats chafing the most under Reid’s iron rule were some of those same vulnerable Democrats as well as scores of other centrist Democrats wanting to pitch bi-partisan bills.
Alaska’s Begich, for instance, complained bitterly he has not been able to offer any amendments in three years, while Oregon’s Ron Wyden, himself quite liberal, was frustrated by Reid in his efforts to work with Utah’s Orrin Hatch on a bi-partisan highway funding bill.
For another, if Reid is still Majority Leader, he will have less incentive to block debate and amendments. That is because just as 2014 has far more Democrats who are most vulnerable to a swing to the Republican column, that math reverses in 2016.
More than twice as many Republicans will be facing re-elections, many in swing or “purple” states, such as Ohio Republican Ron Portman or New Hampshire’s Kelly Ayotte, where the more extreme polarized politics plays less well once past a primary challenge. There is going to be pressure on the Republican side to deliver 2016 campaign themes that they can govern, not just block legislation over purity of principle.
In contrast, there will be only one Democratic moderate facing re-election in a purple state, Michael Bennet of Colorado. Virginia’s Mark Warner, who we expect to win reelection this year, was one of the co-leaders of the “Gang of Six,” the failed effort to craft a bi-partisan budget compromise in 2012. We are told these two Democrats (and we can count six more such Senate Democrats) share frustration over the do-nothing Congress and intend to show they can lead and are ready to cast aside the dictates of broader party demands.
Senators of both parties, moderate or not, facing their own re-election challenges in 2016, will owe little loyalty to a broader party agenda, which will be dictated by each party’s unknown 2016 presidential candidate. There will be far less willingness by the entire caucus of Senate Democrats to defend the Obama legacy and they are more likely to instead focus on their own agenda and bills they believe will help them get re-elected. The same goes for those moderate to conservative Republicans who will fiercely resist the Senate Republican agenda being hijacked by the more conservative firebrands in safe seats – Texas Senator Ted Cruz comes to mind.
Senate “Gangs by Issue”
So while Federal Reserve Chair Janet Yellen may talk about pent up wage demand, there is a pent up demand of a different sort building in the Senate, on both sides of the aisle. There have already been more than a handful of discreet meetings between Republicans and Democrats on key committees such as the very important Finance Committee to start building support to move bi-partisan bills next year.
Centrist bi-partisan bills are in the Senate hopper but few have reached the Senate floor. We expect them to move in 2015; the tip-off could occur in early May when the Highway Bill needs to be extended. Ohio Republican Portman and New Hampshire Democrat Jeanne Shaheen are co-sponsoring an energy-efficiency bill, for instance, while Virginia Democrat Warner and Missouri Republican Roy Blunt are seeking to revive a proposed bill to fund a new national infrastructure bank.
What makes the Warner-Blunt bill especially interesting is the unusually broad base of bi-partisan support it has garnered to date, including Republicans like South Carolina’s Lindsey Graham, Nevada’s Dean Heller (who co-sponsored the Democrats’ minimum wage bill earlier this year), and Mississippi’s Roger Wicker (a dealmaking, conservative in the Trent Lott tradition), as well as Delaware Democrat Chris Coons, New York’s Kristen Gillibrand, and Missouri Democrat Claire McCaskill.
The talk in the corridors as Senators drift in from the August recess this week is for more of these sorts of “Gangs by issue” — bi-partisan groupings dedicated to a single legislative item. But rather than the more ambitious bills like the “Gang of Six” efforts a few years ago, this time round they are likely to focus on bills with a far less ambitious scope.
That is likely to become much more apparent by the late spring and early summer when much of the bi-partisan efforts in the Senate will be centered around the FY2016 budget resolution and more so in the composition of the individual spending bills. In particular, there is no love lost by either party on the restraints of the sequester. We have already seen Republican appropriators being unable to produce defense spending bills that hit their capped top line targets, and the same obviously goes for Democrats chafing under the deep cuts in social programs.
A critically important aspect of the House and Senate GOP leaderships and for all but a small fraction of its rank and file is that they have pretty much lost their passion for budget cuts for the sake of cuts. Most Republicans don’t even acknowledge the term “fiscal drag” let alone accept responsibility for it. Nevertheless, we do see enough Republican Senators putting economic growth and the 2016 elections at the top of their “to-do” list for 2015 in place of “cut, cap and balance.”
The recently passed bill reforming the Veterans Administration, a bill that blew through the limits of the Sequester by $17 billion, provides a good indication of which way the political momentum is going by next summer.
Deliverance in the House
One last point is that this “new” Senate will put enormous pressure in the next House on Speaker John Boehner (if he survives a leadership challenge brewing in the GOP House conference, see SGH 6/11/14, “Capitol Hill: The Cantor Reverberations”) to deliver the votes to pass the bi-partisan legislation and get it to the White House for Obama’s signature. And that means finally reining in the small but unruly Tea Party faction of his conference who have delivered so many setbacks and outright failures during his stormy tenure as Speaker.
He will have a few new cards to play at that point such as picking the committee assignments of the incoming class and appointments to House-Senate Conference Committees, which have been absent in recent years but we expect to return. A conference committee is the best forum for resolving policy differences between the chambers. Winning a slot on a conference committee is more than a feather in a cap; it is a whole new wardrobe for a politician.
But at a minimum, the Senate model of a “Gang by Issue” bipartisan bills means Boehner can either turn to, or threaten to turn to, a handful of moderate and conservative Democrats to cross the aisle to meet centrist-leaning deal makers on the Republican side on specific bills.
Doing so will, in theory, help to finally neutralize the hard core of 15, gusting at times to 20 or more, House Republican Tea Party dissidents now seemingly being led by Senator Cruz. In fact, we think the Texas firebrand has turned to the House ideological purists due to the lack of support for his brand of chaos within his own Senate Republican caucus, whose eyes are on their own re-elections or concerned for their party’s 2016 presidential campaigns.
Indeed, while this November’s elections may determine some in the cast of characters to the Shakespearean play that will unfold on Capitol Hill next year, it is the pressures and anxieties over the next election in 2016 that will drive the legislative plot.