Election 2010: What does the Democratic debacle mean for fiscal policy?

Despite paying lip service to 'working together' and deficit reduction, Boehner and Obama won't do much of either. Here's why.

Pete Souza / The White House / AP
The voters spoke loudly, but their message is still conflicted: they want more government services but lower taxes, more jobs but less stimulus, and deficit reduction with tax cuts all around. In that environment, there's little to push Rep. Boehner (R-Ohio) and President Obama towards cooperation. In this image released by the White House, Obama makes an election night phone call to Boehner, likely the next House Speaker, from the Treaty Room in the White House residence.

Angry voters have spoken, and have fired pretty much every congressional Democrat they could. Republicans gained control of the House and substantially narrowed the Democratic majority in the Senate. But what will last night’s results mean for economic policy?

Washington is divided into two camps—those who believe divided government will open the door to compromise on tough fiscal issues, and those who don’t. Put me squarely in the second camp. We are already hearing conflicting messages from both President Obama and House Speaker-to-be John Boehner (R-OH). They give lip service to "working together" and the need for deficit reduction, but will do little of either. Here are five reasons why:

1.The voters: We know voters are angry. But they are also deeply conflicted. They think government is too big, yet they want government to do more to create jobs. They deeply dislike the health law, but strongly support many of its key elements. They want to cut the deficit, but don’t want Washington to shrink popular programs that soak up most tax dollars. And, of course, they favor both deficit reduction and low taxes. In short, they want compromise, but not if it means they will pay higher taxes or receive fewer government benefits or services. In such a perilous environment, pols will tread very carefully.

2. GOP politics: Senate GOP leader Mitch McConnell (R-KY) said it all the other day when he told the National Journal, “The single most important thing we want to achieve is for President Obama to be a one-term president.” Give McConnell credit for candor, though it would have been nice if he had put, say, making the U.S. a better place to live, work and invest at the top of his to-do list.

So how would you accomplish such a goal if you were McConnell? You’d want the economy to remain weak two years from now. You’d want the health law to fail. You’d want to block any White House initiatives that make Obama seem successful. In other words, you would continue to do what you have done for the past two years—a tactic likely to be embraced by new take-no-prisoners GOP lawmakers such as senators Rand Paul of Kentucky and Marco Rubio of Florida. The handful of moderate Republicans who did win, such as new Ohio Senator Rob Portman, are likely to be drowned out by all the noise.

3. Democratic politics: The Democratic base is furious and frustrated at Obama, who (not surprisingly to anyone paying attention) fell far short of their stratospheric expectations. Their take-away from this election: Obama compromised too much, not too little. With moderate Democrats massacred in yesterday’s races, the party’s House caucus will be far more liberal in January than it is today. In the Senate, Democratic lawmakers who were inclined to reach across the aisle, such as Russ Feingold of Wisconsin and Blanche Lincoln of Arkansas, have been run out of town.

4.The 2012 Election. Obama may run to the middle to reengage those independents who supported him in 2008 but abandoned Democrats in droves yesterday. Republicans, however, face an uncharacteristic bloodbath to determine their party’s 2012 nominee. Given the clout of the tea party movement within the GOP rank-and-file, it is hard to imagine that the many of party’s presidential hopefuls will be touting their credentials as compromisers in the 2012 primaries.

5.The legislative calendar. Congress does not usually get in gear until February or March. It may very well end up spending the first few months of next year in ugly battles over two huge left-over issues from this year: the fate of Bush-era tax cuts and the 2011 budget. That will leave perhaps three months to address issues where some compromise is possible, such as energy, trade, and education, before Congress heads off to its summer recess. Once that break ends, the GOP battle for the 2012 nomination will dominate all else and any window to compromise will slam shut.

Add/view comments on this post.


The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

You've read  of  free articles. Subscribe to continue.
QR Code to Election 2010: What does the Democratic debacle mean for fiscal policy?
Read this article in
QR Code to Subscription page
Start your subscription today