If the votes go well for them on Tuesday, Nov. 4, what will the Republicans do with their new power?
In case you haven’t been following the horse-race coverage in the U.S. media, all the signs point to a good night for Republicans on November 4 when the U.S. votes in another pivotal, mid-term election.
The key battlefield is the U.S. Senate where Republicans could win enough seats to have a simple majority. Everyone concedes that the House of Representatives will stay in Republican hands despite potential surprise victories for the Democrats.
How could this be happening only two years after a decisive Obama reelection? The conventional answer is that a spate of domestic and foreign policy mistakes by the Obama administration are helping Republicans. But another more troubling issue may be the problem.
There’s a sense that the phenomenon from 2008 who became commander in chief is disengaged at the worst possible time. The world faces a so-called Islamic group that beheads American and British captives and drags the U.S. back into war; an invigorated Putin planning his next invasion; the horrific Ebola virus steadily claiming more lives in Africa daily, threatening the U.S. and other parts of the world; Europe stumbling economically; tensions flaring up at home over how police target young black men; and the lack of a coherent U.S. immigration policy enraging all sides of that debate.
For the moment, it is not easy to be president of the United States. Even so, this is not the time for a U.S. president (from either party) to be absent. I think this is the lingering issue that may change the balance of power in Washington, D.C. for the next two years.
The conventional wisdom is that a Republican victory will be good for securities trading markets especially in light of all the bad news throughout 2014. The pundits cite the general perception that the pro-business policies of the G.O.P. will bolster markets and embolden investors. We will see if this perception has any evidence in reality. I suspect that the markets will react more positively if the Republicans present themselves as trying to actively revive the markets and opportunities for investors.
On the policy front, though, how will the Republicans change the regulatory onslaught that has ruled the day since the Great Recession? How likely are they to overhaul or revisit key parts of the Dodd-Frank Act?
My guess is that they are not likely to mount a major reversal because that train has already left the station. Mounting such an effort could quickly become all-consuming when there are other more-pressing priorities. There may be efforts to delay the actual enforcement of some provisions of Dodd-Frank that have taken a long time to become reality. Legislators may also provide relief where it makes sense. My guess is that instead of a new debate on Wall Street reforms the Republicans will try to make their mark by stimulating markets through targeted tax cuts.
However, the Tea Party tightwads are going to be at odds with the Republican establishment over the impacts of popular but budget-busting tax cuts.
One area where the Republicans might spend some of their new political capital is the Foreign Account Tax Compliance Act (FATCA). If the expected G.O.P. majorities in the Senate and the House cannot completely repeal FATCA, then legislators working in a bipartisan way may be able to ease some of the more controversial penalties, reporting requirements and deadlines that are burdening American expats and financial institutions that are caught in the middle.
Ultimately, it’s really risky to predict where the new balance of power may lead. It’s also possible that the Democrats may hang on to the Senate with the slimmest of majorities, leaving them weaker but possibly more prone to work with Republicans. We may not know for weeks what the balance of power will actually be.
However things turn out, Congress and the White House will have gotten the message that voters are very unhappy with their performance in these very difficult times.
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