POST-ELECTION REPORT

Transcription

1 POST-ELECTION REPORT 2014

2 Friends, Partners, Colleagues: The people have spoken. The 2014 mid-term elections will bring about landmark changes not only in the next Congress, but in the years leading up to the 2016 election. On behalf of Hill+Knowlton Strategies, Wexler Walker and Public Strategies, I am pleased to share with you our analysis of the results. Republican strategist and H+K Strategies Senior Advisor Mark McKinnon puts the election in its historical context and provides thoughts on the macro impact the mid-term will have in the future. Democratic strategist and H+K Strategies Global Digital Practice Leader Andrew Bleeker shares his perspective on the role of technology in the campaign and what all organizations can learn from this. David Bowen, H+K Strategies Global Healthcare Practice Leader, outlines the impact the historic Affordable Care Act (Obamacare) had on the election, and what the election may mean for the ACA. And our colleagues at Wexler Walker Public Policy Associates provide a top-line overview of the results in each state, what they mean for the 114th Congress, and how the coming lame duck session is likely to play out. By all accounts, the GOP did a far better job of recruiting candidates that appealed to their true base and also to moderate Republicans and swing voters in the suburbs. They also did a better job this time around holding the Tea Party activists to the fringe. In fact, that group s influence may be waning, except for the strength and clout of one Rand Paul a likely presidential candidate. What s even more telling to me, however, is what the Democrats didn t do. The Obama coalition didn t seem to come together for the Democrats this year. Perhaps it really was just for Obama representing a unique time and the energy and draw of one special candidate as many GOP insiders argued and frankly hoped and prayed for. As pundits dive into the precinct-by-precinct, county-by-county voter turnout demographics, I suspect we re going to find that younger voters and African-American voters lost confidence in Democrats and failed to turn out in numbers significant enough to sway many elections. Why did they stay home? Where were the policies and programs this White House put together or brought forward that spoke to them?

3 Letter of Introduction That said, the Democrats and their leaders in Congress also have to blame themselves some too. Harry Reid, who will take much of the finger-pointing and outright blame, failed to give moderate Democrats anything they could vote on that would allow them to oppose the President and show their constituents that they are truly independent-minded, moderate politicians. And finally, where was the Democratic ground game a game many could argue they pioneered and have mastered in recent elections? They had the fundraising advantage so the money was certainly there. With regard to the Republicans and their new leadership opportunity, as my old boss once said as he took over the chairmanship of the Senate Budget Committee in 1994, It s easy to talk, but trust me, it s really damn hard to lead. It can be fleeting, so let s get to work. It was good advice then; it s good advice now. If you have questions on what the election results mean for your organization, I invite you to contact me personally. Our team of public affairs, grassroots and strategic communications experts stands ready to inform, counsel and help our partners and clients navigate the changing policy and political landscape. With best regards, James Fuller President, Public Strategies, Inc. H+K Strategies U.S. Public Affairs Practice Leader

4 THUMPING, SHELLACKING SHELLUMPING? by Mark McKinnon George W. Bush called the 2006 mid-term elections a thumping. Barack Obama called the 2010 mid-term elections a shellacking. So what to call last night s mid-term elections? A shellumping? The question now is whether we can expect anything different from Washington during the last two years of Obama s presidency. The results were clear. Once again, a sitting president takes a mid-term pounding. The only question is if and how he and the new Republican majority change their behavior moving forward. The Semantics aside, it s no surprise that Republicans election is not a mandate, but a rejection for the had a good night. And President Obama had a very status quo of gridlock. As a recent Wall Street bad night. With very few exceptions (like George W. Journal poll found, unlike four years ago when it Bush in 2002 post 9-11), president s parties suffer didn t even show up as an issue, voters care almost setbacks in mid-term elections, particularly during as much about ending the hyper-partisanship as their second term. And last night was one of the they do the number one issue, jobs and the worst since economy. But the bottom line is voters aren t happy with either Mitch McConnell, the new Senate Majority leader, party. The election was no mandate for Republicans. It and other Republicans were saying all the right was simply yet another refutation of Washington in things last night. And despite an early report last which the party in power suffers the greatest voter night from White House officials who were saying wrath. Obama would set a defiant tone even if he loses

5 THUMPING, SHELLACKING SHELLUMPING? the Senate, later he invited the leadership of both parties to meet at the White House on Friday, a good sign. Republicans should move forward quickly on issues where they are likely to get some level of White House support like patent reform, repealing the medical device tax, Trade Promotion Authority, and immigration reform. And they should move on the Keystone XL Pipeline where there may be White House resistance, but there is broad public support, and even union support. They might meet a veto, but given the numbers they now enjoy, Republicans could likely override it. Having chalked up some victories, they can move on to bigger, but important issues like corporate tax, entitlement and criminal justice reforms. Both the White House and Republicans would do well to recognize that the only mandate last night was for progress over partisanship. Mark McKinnon is a Senior Advisor for Hill+Knowlton Strategies

6 2014: THE TECH ELECTION THAT WASN T by Andrew Bleeker From the way the press has covered elections recently it sounds like campaigns are now totally robotic. We were told campaigns would have NSA like computers to track all communication. We were told they would be able to customize messages to each voter and make data-driven decisions. We were also promised hover boards. Yet, none of these have come to pass. In reality, 2014 was an evolutionary not revolutionary expansion. The most impressive transition was how quickly campaigns from State Senate on up to large statewides were able to adopt and adapt the techniques pioneered by the presidential campaigns in Techniques like modeling and individually targeted advertising are now commonplace. While Democrats still retain some technological advantages, the gap is clearly narrowing absent new innovation. The Democrats biggest asset is the simply larger talent pool of staffers working in the tech, digital, and analytics space. But that too can be fleeting. Adapting these tools for companies and campaigns in 2015 and beyond requires a combination of investing in net new technologies and focusing on how to get more out of what we have. To that end, here are three primary lessons organizations need to learn from 2014: 1. Put your money where your (voters) are Campaigns now have very sophisticated targeting programs. Unfortunately, these do not extend to resource allocation - one of a campaign s single largest decisions. Most campaign budgeting is done in silos, with a certain budget allocated to television, mail, or digital. There is very rarely any rationale for these decisions, let alone coordination between the actual programs once launched. Of course we

7 2014: THE TECH ELECTION THAT WASN T should spend more on TV when reaching older rural voters compared to urban 30-somethings. But even something this simple often still evades us. Because we can clearly measure how many Gross Ratings Points (notwithstanding the value of that metric) an opponent puts on TV, we will sell the campaign office to match point for point. This is often even worse in public affairs campaigns. Ask voters in target competitive states: was it that 40th television ad that put you over the top? Our data driven decisions need to extend to cross channel integration and being smarter about spending our marginal dollars, particularly in situations when we will be outspent. In almost all cases an integrated multi-channel strategy is more efficient than continuing to pile up the points on a single channel. This is only going to be more important as voters cut the cord and move on-the-go. 2. Avoid Paralysis by Analysis - Remember the old adage no one ever got fired for hiring IBM? This year, no one wanted to be the campaign that was not targeting with a model. On the whole, this is a great thing as campaigns embrace data and targeting. In fact, most public affairs campaigns have no idea who their real target audience is and would do well to start with a model. But targeting cannot yet replace judgment. With a limited number of analysts and models still being relatively new to most folks, this process proved time consuming for most campaigns. The result was that many early defining campaign salvos were delayed, not wanting to build messaging or launch campaigns until the targeting was finalized. While this came from a good place, we cannot let the desire for incremental improvement delay or impede critical strategic actions. 3. Your Technology Will Not Save You - Clay Shirky is famous for saying communications tools don t get socially interesting until they get technologically boring. Clearly there are many more problems technology needs to solve, notably cross-channel and cross-device issues. But as the volume of campaign communications increases, so must the quality. Breaking through in a crowded media environment requires standing out and adding value - utility as well as entertainment. This cycle we saw this thanks to viewability tracking. Now that we can see whether people actually watch online video, we learned that most television ads do not translate well to the Internet. A more tailored and creative approach is needed. The same will increasingly be true on television, even though we don t have the metrics to prove it yet. And yes, it is also true in our fundraising and the content of s. Technology will be a requirement, but vision and message should never become outdated. If as practitioners we would not want to engage with a piece of content, neither will our audience. Andrew Bleeker is the Global Digital Practice Leader for Hill+Knowlton Strategies.

8 Obamacare 2015: Repeal, Replace, or Get Over It November 5, 2014 by David Bowen, Global Healthcare Practice Leader for Hill+Knowlton Strategies Perhaps the biggest surprise of the election was that the Affordable Care Act figured so little in key races. While the 2010 mid-terms were focused keenly on the recently enacted law, and the 2012 election was, in part, a referendum on whether the Obama Administration should be allowed to continue to implement the ACA, the bogeyman of Obamacare appears to have receded as a pre-eminent issue this fall, except among the most fervent in the Republican base. That base, however, will exert extreme pressure on a new Republican majority to repeal the law, and to stop at nothing in trying to do so. The most immediate result of a change in Senate majority will be to transfer the gavel of key committees from the hands of ACA supporters to opponents, who would produce a steady stream of hearings and investigations designed to show the law in its worst possible light. As for legislation, winning those six seats may prove to be a mixed blessing for Republicans. Having spent years advocating a repeal and replace strategy for the ACA, Republicans in a Senate majority will face an angry base that demands complete repeal on Day 1 but gaining approval for even a veto-bait repeal bill will require some heavy lifting by Mitch McConnell, both procedurally and politically, as it will mean convincing the many Republican Senators up for re-election in 2016 from blue or purple states like Florida, Pennsylvania, and Ohio to vote to repeal popular ACA provisions like filling the Medicare doughnut hole or banning insurance denials for pre-existing conditions. The attack ads practically write themselves. The procedural dilemma is that a Republican majority has nowhere near the 60 votes needed to overcome a filibuster. The recourse may be to try to achieve major changes in the ACA through budget reconciliation or an expanded nuclear option under which legislative changes might be possible with only 51 votes. Using procedures to circumvent the filibuster could enable Congress to pass bills to repeal or make major changes to the ACA, those bills would need the signature of President Obama to become law and the chances of that happening are nil. Of course, a Republican Congress could try to force the President s hand by doing something truly drastic, like shutting down the government, but we ve seen that movie before and neither Mitch McConnell nor John Boehner is anxious for the sequel.

9 Obamacare 2015: Repeal, Replace, or Get Over It The likely result of today s vote is a lot of rhetorical drama but no fundamental changes to the ACA. Instead, we may see a chip here and a nick there as Republicans are able to find smaller aspects of the law that Democrats will support adjusting, and that can be rolled into bills the President is willing to sign, or where the new majority includes within a broader must pass bill a provision that the White House sees as objectionable, but not objectionable enough to merit a veto of the underlying legislation. While such bills might have major implications for particular sectors of healthcare, such as medical devices or Medicare Advantage plans, wholesale restructuring or replacement of the ACA seems impossible as long as a Democrat occupies the White House.

10 The Election Results November 5, 2014 Wexler Walker US Senate Prior to Tuesday s election the Senate makeup was 53 Democrats, 45 Republicans, and two independents that caucus with Democrats. 36 Senate races were on the ballot this year with Democrats defending 21 of these seats and Republicans defending 15. Of these 36 seats in play, there were 14 seats that were competitive and too close to call. Republicans needed to win at least 9 of the 14 seats to gain control of the Senate the first time since Senate Breakdown PRIOR to the Election: Democrats 55* Republicans 45 * Includes 2 Independents King (ME) and Sanders (VT) who caucus with Democrats With the political landscape and environment a challenge for Senate Democrats, Republicans gained control of the Senate by picking up 7 seats, including Arkansas, Colorado, Iowa, Montana, North Carolina, South Dakota, and West Virginia, while retaining 3 seats in Georgia, Kansas and Kentucky. Three Senate races Alaska, Louisiana, and Virginia are too close to call as of this writing and the Republican candidate in New Hampshire lost. Republican Senate candidates largely campaigned against President Obama, tying their opponents to an unpopular chief executive. Senate Breakdown AFTER the Election: Democrats 45* Republicans 52 * Includes 2 Independents King (ME) and Sanders (VT) that caucus with Democrats Three races Alaska, Louisiana, and Virginia are still pending

11 Election Results Key Takeaways from the Senate: Virginia Republican challenger, Ed Gillespie, had a much stronger showing than was anticipated. With nearly all reporting concluded, roughly 13,000 votes separate Gillespie from incumbent Senator Mark Warner. That represents less than 1% of the vote. Gillespie has not conceded the race and a possible recount is likely. Republicans retained two key seats Kansas and Georgia. Both states represented the best opportunities for Democrats. In Georgia, Republican David Perdue surprised many by exceeding the 50% threshold and avoiding a run-off. In Louisiana, neither candidate received a majority of the vote and a run-off will occur on December 6th. Most polls show that Republican challenger Bill Cassidy has a slight advantage in a run-off but some are speculating that incumbent Senator Mary Landrieu might benefit from Republicans already assuming control of the Senate. In 2002, Landrieu successfully won a runoff after Republicans took control of the Senate a month before. Key Senate Races: State-by-State Results Alaska * Sullivan 49.0% Begich 45.3% Arkansas Cotton 56.5% Pryor 39.5% Colorado Gardner 49.7% Udall 44.9% Georgia Perdue 53.0% Nunn 45.1% Iowa Ernst 52.2% Braley 43.7% Kansas Roberts 53.2% Orman 42.5% Kentucky McConnell 56.2% Grimes 40.7% Louisiana * Cassidy 41.0% Landrieu 42.1% Montana Daines 58.0% Curtis 39.9% New Hampshire Brown 48.2% Shaheen 51.8% North Carolina Tillis 49.0% Hagan 47.3% South Dakota Rounds 50.6% Weiland 29.3% Virginia * Gillespie 48.5% Warner 49.1% West Virginia Capito 62.1% Tennant 34.5%

12 Election Results Senate Committee Outlook: In the coming weeks, Senate GOP leadership will meet to determine committee sizes and ratios. Committee ratios will be determined by the ratios of Democrats to Republicans in the incoming 114th Congress. Once those determinations are made, Senators will receive their assignments and Committee Chairmen and Ranking Members will be elected. Senate Democrats will use a Steering and Coordination Committee while Republicans will use a Committee on Committees to assign the majority of their members {with one exception: the Republican Leader nominates Senators for assignment to some standing committees.} Democrats generally use a number of factors including seniority and committee category to determine committee assignments. Republicans generally stick with seniority and committee category. Below is a snapshot of key Senate Committees in the 113th and 114th Congresses. 113th Congress (Jan Jan. 2015) Cmte (D/R ratio) Appropriations (16/14) Barbara Mikulski (D-MD) / Richard Shelby (R-AL) Chairman/Ranking Member 114th Congress (Jan Jan. 2017) ***** Projected ***** Thad Cochran (R-MS) / Barbara Mikulski (D-MD) Armed Services (14/12) Carl Levin (D-MI) / Jim Inhofe (R-OK) Banking, Housing, and Urban Affairs (12/10) Tim Johnson (D-SD) / Michael Crapo (R-ID) Commerce, Science and Transportation (13/12) John D. Rockefeller (D-WV) / John Thune (R-SD) Energy / Nat. Resources Ron Wyden (D-OR) / Lisa Murkowski (R-AK) Environment / Public Works Barbara Boxer (D-CA) / David Vitter (R-LA) Finance (13/11) Ron Wyden (D-OR) / Orrin Hatch (R-UT) Foreign Relations (10/9) Robert Menendez (D-NJ) / Bob Corker (R-TN) Health, Ed, Labor & Pensions Tom Harkin (D-IA) / Lamar Alexander (R-TN) Homeland Security (9/8) Tom Carper (D-DE) / Tom Coburn (R-OK) Judiciary Patrick Leahy (D-VT) / Charles Grassley (R-IA) John McCain (R-AZ) / Jack Reed (D-RI) Richard Shelby (R-AL) / Sherrod Brown (D-OH) John Thune (R-SD) / Bill Nelson (D-FL) Lisa Murkowski (R-AK) / Mary Landrieu (D-LA) or Maria Cantwell (D-WA) David Vitter (R-LA) / Barbara Boxer (D-CA) Orrin Hatch (R-UT) / Ron Wyden (D-OR) Bob Corker (R-TN) / Robert Menendez (D-NJ) Lamar Alexander (R-TN) / Bernard Sanders (I-VT) or Bob Casey (D-PA) Ron Johnson (R-WI) / Tom Carper (D-DE) Charles Grassley (R-IA) / Patrick Leahy (D-VT)

13 Election Results House of Representatives While Republican control of the House was a foregone conclusion for several months leading up to the election, the real question was how many seats would the Republicans gain? Most political pundits put the number between 9-13 seats. As of this writing, Republicans picked up 10 seats, with 17 races remain too close to call. Should Republicans pick up an additional 5 seats, they would have their largest majority in House since House Breakdown PRIOR to Election: Democrats 199 Republicans 233 House Breakdown AFTER to Election: Democrats 175 Republicans 243 * 17 races remain too close to call Key Takeaways from the House: Democrats suffered defeats from geographically diverse parts of country Rep. Nick Rahall fell in West Virginia; Rep. John Barrow (the only remaining white Democrat in the Deep South) fell in Georgia; Rep. Dan Maffei fell in upstate New York; and Rep. Brad Scheider lost in suburban Chicago Republicans added diversity to their ranks in Utah, Mia Love becomes the first black woman in the GOP Conference; in Texas, Will Hurd an African-American and former CIA officer defeated a Democratic incumbent in a border district; and in Florida, Hispanic challenger Carlos Curbelo was elected One positive for Democrats Democrat challenger Gwen Graham (daughter of former Sen. Bob Graham) defeated Republican Rep. Steve Southerland in the Florida panhandle

14 Election Results 113th Congress (Jan Jan. 2015) Cmte (D/R ratio) Agriculture (25/21) Frank Lucas (R-OK) / Collin Peterson (D-MN) Chairman/Ranking Member 114th Congress (Jan Jan. 2017) ***** Projected ***** Steve King (R-IA) / David Scott (D-GA) Appropriations (29/22) Harold Rogers (R-KY) / Nita Lowey (D-NY) Armed Services (34-28) Howard McKeon (R-CA) / Adam Smith (D-WA) Budget (22/17) Paul Ryan (R-WI) / Chris Van Hollen (D-MD) Education / Workforce (23/18) John Kline (R-MN) / George Miller (D-CA) Energy / Commerce (30/24) Fred Upton (R-MI) / Henry Waxman (D-CA) Financial Services (33/28) Jeb Hensarling (R-TX) / Maxine Waters (D-CA) Foreign Affairs (25/21) Ed Royce (R-CA) / Eliot Engel (D-NY) Homeland Security (18/14) Michael McCaul (R-TX) / Bennie Thompson (D-MS) House Administration (6/3) Candice Miller (R-MI) / Robert Brady (D-PA) Judiciary (23/17) Robert Goodlatte (R-VA) / John Conyers (D-MI) Natural Resources (26/21) Doc Hastings (R-WA) / Peter DeFazio (D-OR) Oversight / Government Reform (23/18) Darrel Issa (R-CA) / Elijah Cummings (D-MD) Rules (9/4) Pete Sessions (R-TX) / Louise Slaughter (D-NY) Science / Space / Technology (22/18) Lamar Smith (R-TX) / Eddie Bernice Johnson (D-TX) Transportation / Infrastructure (33/27) Bill Shuster (R-PA) / Nick Rahall (D-WV) Veterans Affairs (14/11) Jeff Miller (R-FL) / Michael Michaud (D-ME) Ways and Means (23/16) Dave Camp (R-MI) / Sander Levin (D-MI) Harold Rogers (R-KY) / Nita Lowey (D-NY) Mac Thornberry (R-TX) / Adam Smith (D-WA) Scott Garrett (R-NJ) / Chris Van Hollen (D-MD) John Kline (R-MN) / Robert C. Scott (D-VA Fred Upton (R-MI) / Frank Pallone, Jr. (D-NJ) or Anna Eshoo (D-CA) Jeb Hensarling (R-TX) / Maxine Waters (D-CA) Ed Royce (R-CA) / Eliot Engel (D-NY) Michael McCaul (R-TX) / Bennie Thompson (D-MS) Candice Miller (R-MI) / Robert Brady (D-PA) Robert Goodlatte (R-VA) / John Conyers (D-MI) Rob Bishop (R-UT) / Peter DeFazio (D-OR) oreni Faleomavaega (D-AS) Michael Turner (R-OH) or Jason Chaffetz (R-UT) / Elijah Cummings (D-MD) Pete Sessions (R-TX) / Louise Slaughter (D-NY) Lamar Smith (R-TX) / Eddie Bernice Johnson (D-TX) Bill Shuster (R-PA) / Eleanor Holmes Norton (D-DC) Jeff Miller (R-FL) / Michael Michaud (D-ME) or Corrine Brown (D-FL) Paul Ryan (R-WI) / Sander Levin (D-MI)

15 Historic Election for Republicans Key Takeaways? November 5, 2014 Wexler Walker The 2014 mid-term elections were an overwhelming success for Republican candidates vying for the Senate, House of Representatives and governorships across the country. With two Democrat-held Senate seats still too close to call (Alaska, Virginia) and one (Louisiana) headed for a run-off, Republicans have captured more than enough seats to gain control of the U.S. Senate. House Republicans also enjoyed a successful outing and are poised to increase their majority by historic numbers. The last time Republicans controlled both houses of Congress was in the 109th Congress ( ) and 1980 was the last time Republicans toppled two incumbent Democrat senators. While the big contest of the election was control of the U.S. Senate, Republicans re-elected governors in key battleground states such as Florida, Michigan, Wisconsin, Kansas and Maine and Governorships in deep-blue states like Maryland and Massachusetts also fell to Republicans. Without question, the 2014 elections represent a major win for Republicans particularly Senate Republicans. Overall, Republicans were successful in exploiting President Obama s unpopularity across numerous races and overcame Democrats historic investment in turnout. Ok, so Republicans were the big winners. Got it. But what are the big trends or highlights of the election? Here s our take: The Democratic Senate strategy of protecting their incumbents in Republican leaning states by avoiding tough political votes was an abject failure. It left many thoughtful moderates with no record, except the Republican s favorite statistic of Voting with Obama 97% of the time, and allowing the election to be a referendum on gridlock a recipe for disaster for Democrats defending 40% more Senate seats than their Republican counterparts. A second string Obama White House played defense after the meltdown of the ObamaCare website rollout, never taking credit for positive economic news and being reactive in most areas, letting media events dominate the perception of what was being done in Washington. The Republican majority in the House is now at historic levels, and logic would offer that Speaker John Boehner will have more Republican votes to work with. However, the House Republican caucus is likely to be just as restive and diverse as it has been the last two

16 Key Takeaways Congresses. Only time will tell whether a new Republican majority in the Senate will offer enough potential for collaboration and synergy to allow Republicans to govern effectively or if they will get in their own way. What is the GOP brand identity? For a number of years, Democrats have held the upper hand in defining the Republican brand as not what the majority of America wants. This ended in the 2014 election. This election was about Americans concerns with competency, and the Obama brand--and Democrat s inability to put any distance between themselves and him--suffered greatly by not having coherent answers for ongoing issues such as the VA crisis, Ebola, and ISIS. Will the new Republican Congress lead on these issues and others or will they squabble among themselves for the direction (soul) of the party. The Republican Party has established itself as a national party. With wins in the Northeast and gains in the Midwest, the GOP is no longer a southern-based regional party. As such, GOP leadership will have to make decisions based on a national constituency. On the flip side, the Republican Party is now in complete control of the South. Arkansas saw Republicans win a Senate seat and Governorship. The Democrat nominee for Texas governor was crushed by over 20 points. Despite predictions of Georgia turning purple, Senate candidate Republican David Perdue easily exceeded the 50% threshold to avoid a run-off and Republican Nathan Deal bested Jimmy Carter s grandson by 8 points. Republicans near and far are exuberant at the thought of a Republican Senate changing the gridlock dynamic, and working with the House to send the President a stream of legislation, and challenging him to justify continual vetoes. However, Republicans largely won the Senate by eliminating many of the moderate Democrats who would have otherwise been the most inclined to help Republicans meet the 60 vote threshold they will need to move legislation. Senate Republicans have indicated a desire to reopen the amendment process to allow the Senate to work its will, but it remains to be seen whether offering amendments will be enough incentive for Democrats to vote with Republicans on motions to proceed so that legislation can actually pass. Too much money chasing too few undecided voters made the election a caricature of an informed electorate. With no real accountability, independent expenditure campaigns repeated erroneous claims that had been debunked by media fact checkers but which made good clips and which stuck.

17 Key Takeaways What happened to the Democrats vaunted ground game? Bad execution or bad strategy? Does the black box of turnout fool you into coasting when you can t afford to If you are down 3%, can social media turnout algorithms really save you? Ask Colorado Senator Mark Udall. The war on women messaging failed. Both Sen. Mark Udall (D-CO) and Texas Gubernatorial candidate Wendy Davis ran one issue campaigns focused on women s reproductive rights. In Udall s case the single issue focused campaign appeared to many as a worn-out playbook. It was used successfully in the past but back-fired this election. Udall was also up against Gardner one of the best candidates this cycle. The good news is that TV will now be watchable in 49 states and DC have some pity for the residents of Louisiana who will bear the burden of both parties sole attention. And it should be noted, that Senate Republicans are now in a similar position as Democrats heading into Republicans have more vulnerable members than Democrats. Can Majority Leader McConnell help tame the House Republicans so his majority can actually pass things, even if Obama vetoes them? Sixty votes is a hard number to get to and with only 10 Democratic incumbents up in 2016 and only 2 of them in somewhat challenging states, NV and CO, his room to maneuver is very constrained.

18 Republican Outlook, Lame Duck & First 100 Days November 5, 2014 Wexler Walker Over the last several weeks, Republican leaders have acknowledged that they see the election (in large part) as referendum on President Obama and Democrats rather than a mandate of Republican Party ideals. We believe this is a positive and practical view as it likely signals that Republicans are less inclined to misread the election results and overreach in pushing an agenda next year. However, there will remain a divided Republican caucus, with Tea Party and libertarian Republicans pushing their agenda to repeal ObamaCare and for a hard line on immigration, while moderate Republican s will look for issues such as trade agreements, budget bills, energy policy to build bi-partisan support around. As Congress returns after Thanksgiving for the lame duck session, the primary concern will be pass a long-term spending bill to keep the government open through next year. The current CR (and Presidential authority to train and equip Syrian rebels) expires on December 11th. While the leadership Appropriations committee would like to make this an Omnibus 1 / full-year CR, and so would House Leadership, we see this unlikely in the current environment. Past experience with CR extensions is mixed at best for the functioning of the new Congress. With a Republican switch in the Senate, a considerable amount of time will be spent figuring out committee ratios, gavels, staff, and other perks. This will certainly complicate any quick passage of bills in the new Congress (2015). With the ISIS issue looming and other pressing costs, a short term CR may be the default option. Several years ago, the date March 15th was used for a mid-short length CR. For 2015, this date would mean that funding the government would coincide with raising the debt limit always a hot button issue for conservatives and possible a recipe for a return to brinksmanship. However, some in leadership are looking to make sure the debt limit and CR stay uncoupled i.e., no return to cliffs and crisis management. As Republicans will have a sizeable majority in the next Congress, we see many issues being held over until Those issues include: 1. Tax Extenders: Discussion: Senate s Expire Act takes all 50 or so current expiring tax provisions and extends them for two years, through House has passed a subset of those provisions that they have made permanent, with the others expiring. Included in this package is also the Doc fix, or Medicare Sustainable Growth Rate (SGR).

19 Republican Outlook, Lame Duck & First 100 Days Some in the Senate see a likely deal as: 47 of the 50 get a 1 or 2 year extension, and 3 are made permanent (e.g., R&D tax credit, stimulus tax provisions that expire in 2017). There is some question about viability of inversions provision sought by Democrats as a trade for permanency on something Republicans want. We are picking up some optimism on Senate side about getting a deal done. House Leadership has told us that this is an issue that must get done. Note: Some of the expiring provisions have in fact expired already at the end of 2013, and the question of what goes into the package and for what duration will be a complex and politically difficult issue. This question will again be kicked to the Leadership. 2. Terrorist Risk Insurance Act (TRIA): Industry has been getting out its message, and Members have been hearing about it back home. We believe Leadership will continue to give the Chairman of House Financial Service Committee room to negotiate, but that at some point the pressures to act will be enormous. 3. National Defense Act Authorization (NDAA) for FY15. House passed a bill as did the Senate Armed Services Committee, but not the full Senate. Pre-conferencing is going on now. Both the House and the Senate will try to move this in November with a no amendment strategy. ISIS, Ebola, and other war-related issues are now front and center, so fast movement in lame duck is likely not possible. 4. Capital Standards (Collins): There is a high degree of understanding in House Leadership and at the Committee about the importance of this issue. We believe Leadership will give the Chairman room to pursue his policy goals, but as with TRIA, there will be enormous pressure to act as we get closer to Sine Die. 5. Medicare Sustainable Growth Rate a.k.a. the Doc Fix Medicare SGR, a.k.a. physician payment, is currently patched through March 15th When it expires, physician payments will plummet by over 20% because of the flaw in the formula. Some would like to do the permanent fix in lame duck and get it off the table so that they can deal with health care and other tax issues in a clean manner. Agreement on how to fund the fix remains elusive, and may be a bigger issue than can be solved in a short and chaotic lame duck session.

20 Republican Outlook, Lame Duck & First 100 Days First 100 Days What to Expect One clear mandate for Republican majorities in both the US Senate and the US House is to make the legislative process work. The American people have made their disgust with Washington gridlock quite obvious. Therefore, within the first 100 days of the new congressional session beginning in January, the Republicans will need to have an action plan to move some consequential legislation. The first order of business is likely to be a joint meeting between the House and Senate Republican Conferences to begin discussing a mutually agreed to legislative program. That meeting will probably take place during the present Congress s lame duck session, probably yet this month. The general opinion seems to be that this initial program will consist of bills having broad bi-partisan appeal and which fit the overall Republican theme of economic growth. One such bill would be to insist on approval of the Keystone Pipeline without further delay. Another such bill could be to remove the tax on medical devices. When the new Congress convenes, it will have at its disposal dozens of bills that passed the House, often with bi-partisan support, but were never considered in the Senate. Several of those bills could be resurrected as early legislative initiatives. Repeal of the Affordable Care Act was so widely discussed in the political season that it could also emerge in the earliest days of the new Congress. However, there is recognition that a Presidential veto of such legislation is a certainty with no hope to override the veto. However, that action will set the stage for a series of smaller bills addressing the multitude of problems that have plagued ACA. Many of those reform bills will have broad support and some may even pass muster at the White House. The whole exercise in the first 100 days will be to demonstrate that the Congress can move legislation designed to address national priorities. The President will be forced to decide whether he wants to be a part of this activity or whether he is determined to stop any efforts that do not fit inside his agenda. Twenty years ago, President Clinton figured out that it was in his best interest and the country s best interest to find ways to work with a Republican Congress. It will be one of the interesting political dramas of the first 100 days to see if President Obama takes that same route. The first 100 days also will see the groundwork laid for the more comprehensive agenda that will follow. Speaker Boehner has said that a Republican Congress would have five major goals: Fix Our Tax Code, Solve Our Spending Problem, Reform Our Legal System, Rein In our Regulatory System and Improve Our Education System. Majority Leader McCarthy has laid out his ideas for economic growth citing tax reform,

21 Republican Outlook, Lame Duck & First 100 Days expanded energy production and government reform. The new Majority Leader of the Senate, Mitch McConnell, also has emphasized energy initiatives and regulatory reform as keys to economic growth. Committees in the House and the Senate will begin work in these arenas very quickly. There is also likely to be a push for some reforms of congressional procedures at the outset of the new Congress. Many observers feel that the way the House and Senate have been managed in recent years has led to the gridlock problem. Several outside groups have been working on concepts for legislative reform that they intend to present to the congressional leaderships. The hope is that some of the reforms will find their way into the rules packages that are adopted on opening day. Most of these reforms are aimed at opening up the legislative process by permitting more debate and insisting on more time spent legislating. Since the rules packages are usually adopted with partisan votes, it will fall to the Republicans to decide how far they want to go in reforming the congressional process. Proving that a Republican Congress can develop and enact an agenda, which speaks to the concerns expressed by Americans during the campaign season is a big challenge. Republicans will have to act early while the country is still paying attention to demonstrate their capacity to meet that challenge. White House Reaction Productivity in Washington will be affected by how President Obama reacts and adapts to Republican control of both house of Congress. It is too early to say how the White House will respond to a unified Republican control of Congress. Some speculated after the 2010 mid-term elections that President Obama would replicate President Clinton s move to the center after the 1994 midterm elections, but President Obama did not significantly change course. That was largely due to the fact that Democrats still controlled the Senate and there was little need for him to compromise, knowing that Senate Democrats would block legislation not backed by the White House. Republican control of both houses of Congress will likely cause the Administration to re-calibrate its strategy but to what extent?