New Congress, New Threats and Opportunities

Still Counting and "Lame Duck" May Set Tone for Next Year Click here to view the shift in power and AGC's projected changes in leadership. The voting is over, but the counting continues.  Republicans have secured a majority in the U.S. House of Representatives and there is a smaller majority of Democrats in the U.S. Senate. This year's wave election may have also washed out the old saying that "all politics is local." The local voters were driven by national issues like health care and spending, and were fueled by national media that focused on party conflict.  Incumbency and experience were the cause of significant losses for sitting Committee Chairs of the Budget, Armed Services and Transportation Committees. The conflict continued unabated when Nancy Pelosi (D-Calif.) issued a statement this morning celebrating the Democratic majority for "courageous action" and Jim DeMint (R-S.C.) issued a statement urging new members not to "fall into line."   The Republican majority and shrinking Democratic numbers will alter the legislative and regulatory issues AGC members face during a lame duck and in the future. While the change in power is clear, what exactly will come of it is not. In the coming weeks and months, AGC will work to analyze and interpret events in Washington, D.C., and will keep you updated on what the changes in Congress mean in practical terms. Republicans will start the lame duck session with 42 instead of 41 senators as a result of special elections held in conjunction with the general election.  The 112^th Congress will require bipartisanship to pass even small issues. The tone will be set early in the Congress by the interaction between the leaders of both parties, both chambers and the president - in fact, it may be set during the lame duck session beginning November 15.  Lame Duck The lame duck agenda will include the funding for the rest of fiscal year 2011 (nine months worth of federal funding) and the extension of SAFETEA-LU and FAA authorization, as well as deciding how to handle the expiring tax cuts, extension of the Medicare doc fix and extension of unemployment benefits.  It could also include the confirmation of Jacob Lew as the new Office of Management and Budget director. They could also vote on a bill to block the imposition of the greenhouse gas rule and the Defense authorization.  The productivity of the lame duck will likely signal the productivity of the 112^th Congress. Congress Overview The closely divided Congress will contrast with the large majorities Democrats held after the 2008 election. Some of the new members bring with them their own agenda and an anti-establishment mentality that could impact how leaders in both parties try to corral votes. The outstanding question is this: Will there be more partisanship or more bipartisanship? The agenda will be dictated by what the lame duck does or does not accomplish. Congress and the Administration may be able to work together on trade issues, education and deficit reduction. However, many members will be cognizant of the recent voter backlash against members of Congress who had moved more toward the center. The parties will elect leaders and committee chairs during the lame duck. Click here to see a run-down on who AGC anticipates will be the Congressional leaders in the 112^th Congress. Federal Construction Spending Both Republicans and Democrats have pledged austerity. Republicans in Congress and President Obama have put some specifics to where they feel construction spending should be. In his FY 2011 budget, the president proposed holding spending close to $112 billion in 2011 and a  three-year discretionary funding freeze. For 2012, he has instructed departments to cut their spending by five percent more. The Republicans have pledged to impose a hard budget cap, and  hold spending at about 2008 levels (Congress appropriated a little more than $107 billion for construction in 2008, very close to where the Obama Administration would be with a five percent cut for 2012).  The lower spending levels and the hard budget cap envisioned by the Republicans will likely create a battle for funds in a zero sum world.  In addition, AGC envisions a significant fight among Republicans on how to handle or how to limit earmarks.  Fewer earmarks could result in fewer votes for construction spending legislation in the future. Obama Administration Overview With President Barack Obama now halfway through his first term, his reelection efforts start today. Leading up to Election Day this year, he said his major priorities for the next two years were overhauling the nation's immigration laws, passing energy, education, transportation and climate-change legislation, and shrinking the federal deficit. Even with both Houses of Congress, Obama had difficulty winning approval of the health care and financial reform bills, and he failed to pass cap and trade legislation.  His goals will now be even more challenging. The president will need to decide if he will work with or work against a divided Congress.  President Obama will probably continue to advance goals that do not rely as much on Congress, such as making greater use of the executive branch's regulatory machinery. However, much of his agenda could be scuttled by the economy, and based on the election results he will have to address the jobs situation before the larger social issues.