Yesterday, in the most sweeping change in the US House of Representatives since 1948, the Republicans picked up between 63 and 67 seats to bring the number of seats held by Republicans to over 240 and those held by Democrats to below 190. In the United States Senate, the Republicans picked up 6 seats with two races in Colorado and Washington still too close to call but likely to remain Democratic. In the House, three Democratic Committee Chairman lost their seats (Rep. Ike Skelton (Armed Services); Rep. James Oberstar (Transportation); and Representative John Spratt (Budget), while others lost who held key Subcommittee Chairmanships (such as Rep. Paul Kanjorski). In the Senate, Majority Leader Harry Reid (NV) easily defeated Tea Party candidate Sharon Angle, but he will have a much diminished Majority.
The fact that the Republicans failed to gain the Majority in the Senate may have been disappointing to them but it also creates a difficult governing situation for President Obama because he now cannot blame the entire Congress as “doing nothing.” The House Republicans will need to live up to the expectations of those who sent them into office and send legislation to the Senate which involves significant spending cuts in a number of areas. The likely new Speaker, John Boehner (R-OH), will seek to ensure that House Republicans do not overreach in their spending cuts so as not to repeat the same mistakes the Gingrich led House committed following the 1994 Republican takeover. Rep. Boehner made it clear last evening that the President sets the agenda, not the House. Nevertheless, when the Senate likely fails to act upon the spending cuts and other budget matters passed by the House, the Republicans can simply blame the Senate and the President for any lack of progress on deficits.
In the short term, the losses incurred by the Democrats in the House and the Senate probably mean a limited agenda in the lame duck. The current Continuing Resolution (CR) which funds the Government expires on December 2 and will be extended into next year. As for the Bush tax cuts, it appears that President Obama may support a permanent extension of the existing rates applicable to lower incomes and a two year extension of the existing rates applicable to higher incomes. It remains to be determined whether the Republicans will sign on to this deal. In addition, the extension of existing rates applicable to capital gains and dividends must be addressed, as well as the estate tax and the Alternative Minimum Tax. It is anticipated that a short term fix will apply to these matters as well.
The package of extenders which includes the New Markets Tax Credit and the Housing Credit exchange program (now apparently unnecessary since all state tax credits are being used) may be added to the extension of Unemployment Insurance (UI) when the current extension expires at the end of this month. The package would not be offset. Congress will also seek to address the extension of various energy related tax preferences passed by the ARRA, such as the section 1603 “grant in lieu.”
It will be the strong desire of the Members to keep the lame duck session as short and focused as possible. Majority Leader Reid has talked about passing immigration reform, but that is highly unlikely.
One other significant event will happen at the beginning of December when the President’s deficit commission is scheduled to release its report. The report conceivably could provide the blueprint for a bipartisan agreement on deficit reduction. It could provide cover to the Administration and the Congress if they wish to engage in serious spending cut negotiations and entitlement reform.
Insofar as the longer term is concerned, in the House, the Ways and Means Committee will likely be chaired by Rep. Dave Camp (R-MI) who has been friendly to the Housing Credit. Indeed, two projects in his Congressional District have received Charles L. Edson Tax Credit Excellence (CLETCE) Awards, and he has attended the CLETCE Awards luncheons. His likely new Majority Chief of Staff, John Traub, is at best neutral toward the Housing Credit but is not disposed to recommend to Rep. Camp that the Housing Credit be cut back in some manner. By the same token, he will be a hard sell on any measures which might be offered which would strengthen the Credit in some manner that would cost revenue.
Rep. Patrick Tiberi (R-OH) who is on the Ways and Means Committee is a strong supporter of the Housing Credit. Rep. Tiberi’s support is critical because he has a particularly strong relationship with Rep. Boehner. Moreover, Rep. Eric Cantor (R-VA) will likely be the new House Majority Leader. While Rep. Cantor has not taken a leadership role with regard to the Housing Credit, he is very familiar with the program and strongly supports it.
It bears noting that the number of Republicans and Democrats on the Ways and Means Committee will be reversed from the current Committee makeup. The new membership of the Committee is expected to be worked out over the coming weeks.
The new House Financial Services Committee Chairmanship is yet to be determined. There is some conjecture that Rep. Spencer Bachus (R-AL), who is in line to take over, may be bypassed to permit either Rep. Ed Royce (R-CA) or Rep. Jeb Hensarling (R-TX) to take over. If Hensarling, in particular, becomes the new Chairman, it is anticipated he will immediately turn his attention to the GSEs. They are very high on his list. Rep. Barney Frank (D-MA), who survived a relatively close election, will be the ranking Democrat. One of the current measures which is a favorite of Rep. Frank, the Housing Trust Fund, will not fare well under a new Republican Chairman.
As for the Senate Finance Committee, Sen. Max Baucus (D-MT) will remain Chairman, but Sen. Orrin Hatch (R-UT) will become the Ranking Republican and take the place of Sen. Charles Grassley (R-IA) who will become the Ranking Republican on the Senate Judiciary Committee. Sen. Hatch is a very strong supporter of the Housing Credit. It is unlikely that the reduced Democratic Majority in the Senate will have an impact on the support which the Housing Credit currently enjoys on the Senate Finance Committee. Indeed, new Members which will be added to the Committee could actually be opportunities to strengthen suport.
Senator Tim Johnson (D-SD) will take over as Chairman of the Senate Banking Committee for retiring Senator Chris Dodd (D-CT). Senator Johnson has not taken an active role with regard to the GSEs.
With so many new Members of Congress, it will be very important for the AHTCC to undertake a concerted “education” effort with regard to the Housing.
As the new Congress takes shape, many will be keeping an eye on the 2012 elections. Whereas both the Republicans and the Democrats each had 19 seats up in 2010, the Democrats will have 19 up in 2012 to the GOP’s 9. Many of these Democrats might be regarded as moderates elected in traditional or newly “Red” states: Bill Nelson (FL), Debbie Stabenow (MI), Claire McCaskill (MO), Jon Tester (MT), Kent Conrad (ND), Ben Nelson (NE), Sherrod Brown (OH), Robert Casey (PA) and Jim Webb (VA). With an eye to what just occurred yesterday, it will be very interesting to see how each of these Senators react to the new playing field.
It should be an interesting next two years.
If you have any questions concerning this initial election analysis or the Coalition’s priorities in the bill please contact Coalition legislative counsel Jim Miller (jfmiller74@gmail.com) or Coalition executive director Victoria Spielman (202-585-8162 or Victoria.spielman@taxcreditcoalition.org).
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