November 17, 2014

In Case You Missed It: Read Bob’s Post-Election Analysis

Last Thursday, MSCI President and CEO Bob Weidner sent an email to members analyzing the results of the 2014 midterm elections. Here’s the email in its entirety:

The conventional wisdom coming into Election 2014 was that Republicans would prevail, but Republicans won even more races than expected. Among the surprises the governor’s races in heavily-Democratic states like Maryland (a state President Barack Obama won by 25 points in 2012) and Illinois and Massachusetts. Republicans now control the executive branch in at least 31 states. (Two races have yet to be called.)  

Republicans have gained eight U.S. Senate seats and could pick up one more: the seat in Louisiana where there will be a runoff on Dec. 6. In the U.S. House, the GOP will have its largest House majority since 1930. Republicans now also largely control the state legislative landscape; the GOP controls both legislative houses in 30 states.

What does the GOP sweep mean for policymaking in Washington?

Republican leaders could argue they have a policy mandate, but that assertion wouldn’t be entirely correct. In the five states where a minimum wage increase was on the ballot, these measures passed overwhelmingly. While I’m not endorsing a minimum wage increase, these results show Americans are still feeling deeply uncertain about the economy—and they want action on an agenda that will create jobs and raise their standard of living.  Republicans have steadfastly opposed a federal minimum wage increase.  Democrats, as the president did in his post-election press conference, will repeatedly make this point in an effort to get the GOP to compromise.

I think it’s safe to conclude the results were not a mandate for either party, but rather a message to Washington: get to work. In the coming year, MSCI will continue to repeat this message to our representatives in Washington and, at times, we will call on you for help. Some of the issues we will be working on:

  • Keystone Pipeline Approval. It is likely that a bill to give Congress (instead of the president) the power to approve this project has a veto-proof majority in the Senate and, when asked, the White House’s top spokesperson wouldn’t declare that the president would veto this measure. Given those facts, look for Republicans to bring up this measure in the early days of the 114th Congress.
  • Tax Reform And Trade. President Obama and Sen. Mitch McConnell (R-Ky.), who will likely be elected Senate majority leader this week, both offered these issues as a potential area for compromise in their post-election press conferences. These two matters are very important for MSCI: while we support tax reform, we believe it must be comprehensive, tackling both the personal and corporate income tax regimes, and that it must not include LIFO repeal. We will also join efforts to rework legislation that gives the president fast track authority to negotiate trade bills to ensure it includes strong mechanisms that combat currency manipulation.
  • Regulatory Overreach. In the 113th Congress, the House passed several bills giving Congress increased oversight over federal rulemaking. The party will push these bills again in the 114th Congress and may also use federal spending bills to limit executive branch activity, including National Labor Relations Board and Environmental Protection Agency rulemaking.
  • Health Care. Republican leaders intend to ask lawmakers to repeal the Affordable Care Act (ACA). The president will veto full repeal (and Republicans don’t have the votes to override this veto), but there is significant bipartisan support to repeal aspects of the ACA—including the medical device tax and perhaps even the individual and employer mandates—which is why, after the symbolic full repeal vote, we expect the party to move on to these piecemeal measures.

While the election's results will limit President Obama’s legislative influence, his actions will set the tone in Washington. House Speaker John Boehner said if the president issues an executive order suspending millions of deportations, it would “poison the well” and make it difficult to pass comprehensive immigration reform. While we hope Republicans wouldn’t stop all legislative business at this point, it’s clear if he truly wants to find areas of compromise, President Obama will have to rethink the “pen and phone” strategy he said he would use to implement his preferred agenda.

The president’s goal when he ran eight years ago was to create change by bringing compromise and new ideas to Washington. We believe he still has the opportunity to unify lawmakers—and we hope President Obama and the new Republican majority will work together to make this nation stronger than it’s ever been. Washington must pass an agenda that will provide U.S. job creators with the certainty they need to invest and expand. Sen. Mitch McConnell has promised Washington will “function.”

To make this marriage work, we'll need that – and more.