How now, brown cow -- or what's next? Another election, another wave -- that seems to be the theme across the country. Republicans now hold 239 Congressional seats to the Democrats 185. Not since, 1948 have so many seats changed parties in a single election. In the Senate, the Democrats held onto their narrow majority.The state of the economy, general unhappiness with Obama and a conservative tilting voter base are all cited as reasons for the swing.
The head of the transition team for Congressional Republicans is certainly sending a positive message, referring to common sense as an endangered species in D.C. politics. Again, we can only hope this attitude continues as the new political normal in D.C. politics.
Some of the top issues we will be hearing about are as follows:
1. Avoiding tax increases.
This issue has been on the radar for both main street and wall street -- whether to raise income taxes across the board. John Mauldin, an economist whom I follow, had this to say,
"If the Bush tax cuts are not extended, in my opinion it is almost a lock that we go into a recession next year, unemployment goes to 12%, and underemployment gets even worse."
A recent New York Times article provides an overview of some of the political options that will be in play -- allow expiration of all tax cuts (expected to generate $260 billion per year in revenue); permanently extend all tax cuts; create a new tax bracket for those making over $1 million; or permanent extension of tax cuts under $250,000 (married) and a temporary extension of the tax cuts for incomes over $250,000. The last concept is referred to as "decoupling" and has been promoted by President Obama, although the White House recently indicated that they may be open to a broader approach.
This issue affects all working Americans as all of the tax brackets are set to increase at the end of this year -- Happy New Year! In addition, capital gains and dividend rates will increase and the marriage penalty and phase-outs will return. Read here for more.
2. Immigration reform.
Obama lobbed a bomb on this issue just prior to the election when he told Latinos to "punish our enemies" and effectively accused Republicans of being un-American. The current chatter from the new Republican leadership is that they hope to focus on "streamlined enforcement of current laws." The new Republican wave, however, is lead by a number of dynamic Hispanics, including Marco Rubio, Senator-elect from Florida, who are expected to help find a way to fix the immigration quagmire.
3. Obamacare.
Many Republicans campaigned on the "repeal Obamacare" platform. Now, there will be a push to repeal and replace Obamacare. Whether this resistance will be symbolic or actual will need to play itself out. Watch for the "defund Obamacare" motto as the initial step and repeal as hot topic for the 2012 Presidential run-up.
4. Political climate.
Another factor interjected into all of these debates is the release of the recent draft Debt Commission Report. There is enough in this report so that both sides have referred to the proposals as "dead on arrival." Deep cuts and an overdue review of the entitlement programs causes the left to bristle. The proposed tax increases are equally unacceptable by Republicans. If both sides are unhappy, that generally means its' a good compromise.
The final thing to be aware of -- the next election will be a humdinger. The Presidential election will consume reams of paper and bandwidth. Leaders in D.C. have a short window to actually address these important issues. Eventually, the politics of the Presidential election will force each side back to their respective corners.
____________________________
Welcome to Tilting Against! If you have not subscribed to receive posts via e-mail, you can do so by clicking on the following link: http://tiltingagainst.blogspot.com/2008_09_01_archive.html
Make sure to watch for the confirmation e-mail.
Posts
