Introduction

Stiftung Wissenschaft und Politik German Institute for International and Security Affairs

From “Change” to Gridlock? The US Midterm Elections 2010

Stormy-Annika Mildner, Henriette Rytz and Johannes Thimm SWP Comments

The decisive Republican victory in the election to the House of Representatives ended a brief period of “unified government” in the United States – the rare situation in which one party controls both the US Congress and the White House. While the new balance of power might result in political gridlock, it could also rouse Republicans from their legislative obstructionism. As the majority party, they now bear the responsibility to generate constructive solutions. However, since the next presidential election cam- paign is expected to start in late 2011, this window of opportunity might not be open for long.

It is not unusual for the party of the sitting dramatic with 54 seats lost in the House of president to be punished by voters in mid- Representatives. Contrary to Clinton, how- term elections. Every two years, all 435 ever, President Obama was able to keep the seats in the House of Representatives and Senate marginally under the control of his approximately one third of the 100 seats Party, with a slim 53-seat majority. in the Senate come up for election. Only once in the last 76 years has the president’s party avoided losing seats in the vote held The Swing of the Political Pendulum between two presidential elections. How- The political pendulum has thus swung ever, the losses of 2010 have been unusually back to the right, and it continues to gain severe. The Republicans gained at least six momentum. Congressional majorities are seats in the Senate (and the promise of now elected for increasingly shorter terms. Alaska senator-elect Lisa Murkowski to cau- While the midterm elections of 1994 ended cus with them). Moreover, in the House of a 40-year Democratic reign in the House of Representatives at least 63 seats went from Representatives, this time around it took the Democratic to the Republican Party, the Republicans only four years to win back which now holds the majority in this the majority. The increasing volatility of chamber (two electoral districts are still Congress will also become apparent when undecided). Even in 1994, in the first mid- more than one hundred freshmen join the terms after President Bill Clinton took ranks of the House of Representatives in office, the Democratic defeat was not as January 2011. Sixteen freshmen will enter

Dr. Stormy-Annika Mildner is Senior Fellow in the Directing Staff and researcher at SWP’s The Americas Division SWP Comments 29 Henriette Rytz is Doctoral Fellow at SWP’s The Americas Division November 2010 Johannes Thimm is researcher at SWP’s The Americas Division

1 the Senate, raising the number of senators Two years ago, the share of voters under 30 serving their first term to 40 (out of 100). years old was 18%, whereas in this election While incumbents used to have major young voters accounted for only 11% of the advantages in elections, challengers now vote. Ethnic minorities like African-Ameri- have much better chances of being elected. cans, Hispanics, and Asian-Americas con- Even long-standing, distinguished members tinued to support the Democrats in strong of Congress are no longer safe from elec- numbers, but their turnout also stayed toral defeat. After more than three decades below the levels of 2008. in the House of Representatives, Ike Skelton Unlike in the elections to the House of Missouri, chair of the Armed Services of Representatives, the GOP victory in Committee, lost his seat – as did Senator the Senate elections was limited to some Russ Feingold of Wisconsin. regions. The Senate Democrats lost seats in the battleground states of the Midwest in particular. They prevailed in the Democ- Mobilizing Voters ratic strongholds along the East Coast and In 2008, Barack Obama successfully mobi- in New England, in the western states of lized Democratic voters with his promise California, Oregon, Colorado, and Nevada, of “change” and thus helped his party make as well as in the southern state of West significant gains in the Congressional elec- Virginia. tions. In 2010, by contrast, Republicans The results demonstrate that Obama outperformed Democrats in motivating did not manage to sell his political reforms their supporters to participate in the elec- to the public. The Republicans won with a tion. 42% of all voters identified themselves promise to “change course” thereby replac- as conservative – the highest rate since the ing Obama’s message of “change.” Yet, even Reagan era. Many voting blocs that two Democratic candidates who had distanced years ago had contributed to the Obama themselves from controversial projects of victory now supported the Republican Party the Obama administration were voted out by a majority. This was especially true for of office. In particular, the fiscally conserva- independents, who are not clearly aligned tive “Blue Dog Democrats,” who occupy the with any political party. While in 2008 political center and align themselves with Democrats held an 18-point advantage the GOP on certain issues, suffered heavy among independents, this time around the losses. In the last Congress their caucus Republicans led by 15 points. Moreover, a comprised 53 members – more than half majority of women, the largest of all voting will not return to Washington. blocs, backed the Republicans – for the first time since regular surveys were started in 1982. The Republicans also received the An Expensive Election Campaign majority of votes cast by the middle class At almost $4 billion in total campaign and college graduates. spending, the Congressional elections of Most significantly, the “Grand Old Party” 2010 were the most expensive midterm (GOP) benefited from older voters, who did elections ever – in 2006, campaign spend- not only vote for the Party by a majority, ing totaled $3.1 billion. The Democrats but who also increased their overall share were ahead in terms of “traditional” fund- of the total vote. Many older voters are skep- raising, which is coordinated by a party tical about Obama’s health care reform, as committee and limits donations to a they already benefit from privileged access relatively modest amount. Republican can- to health care through the Medicare pro- didates, nonetheless, raised more money gram. At the same time, turnout among overall for their election campaigns. young voters – two thirds of whom voted Two years ago, the Obama campaign for Obama in 2008 – dropped significantly. received small donations in unheard-of

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2 numbers by effectively employing modern Tea Party has been moderate. It is true that fundraising tools like online campaigning. in the primary elections a relatively large This time, the Republicans were particu- number of Tea Party supporters beat larly savvy at adapting to an altered incumbents or candidates favored by the campaign landscape. In the landmark Republican leadership. In the Senate elec- decision “Citizens United vs. Federal tions, however, only about half of all Tea Election Commission”, the United States Party candidates actually won a seat, Supreme Court ruled in January 2010 that among them Marco Rubio (Florida) and the right to free speech also covered Rand Paul (Kentucky). Moreover, several corporate funding of independent political radically conservative representatives of the broadcasts. While in 2008, the business movement were unable to prevail over their community supported Obama and the Democratic rivals because their positions Democratic Party, companies from the scared away independent voters in particu- health, finance, and real estate sectors now lar. Senate majority leader Harry Reid, for backed the Republicans. These companies example, managed to beat Sharron Angle are concerned that the health care and despite his poor approval ratings. Angle financial sector reforms as well as the wanted to abolish a host of government proposed climate legislation will burden institutions, including the Department of them with additional costs. The largest Education and Social Security – and thus share of corporate campaign spending went she was considered by many constituents to to GOP-leaning interest groups. Unlike be simply unacceptable. In the end, the Tea political parties, organizations such as Party candidates actually helped the Demo- these may accept donations in unlimited crats defend their majority in the senate. amounts and do not have to reveal the names of their donors, on one condition – the group may neither make political Voter Discontent activities its main purpose, nor explicitly More than anything else, the Republican recommend a voting decision in its victory was a protest vote against the cur- advertising or broadcasts. This way Karl rent policies of the Obama administration. Rove, Republican campaign strategist and Polls show that two thirds of all voters used former adviser to President George W. the elections to express their discontent Bush, alone raised $70 million through his with Obama’s political “balance sheet.” organizations “American Crossroads” and The major concern of voters was clearly the “Crossroads GPS.” economy, particularly with regard to the labor market. According to polls conducted by the CNN/Opinion Research Corporation, The Influence of the Tea Party in August 2009, 44% of US citizens felt that While segments of the Obama coalition of Obama’s policies had improved the eco- 2008 stayed home during these elections, nomic conditions in the country – in Octo- the newly emerged Tea Party Movement ber 2010, this rate dropped to 36%. clearly helped mobilize the Republican The recession is officially over in the base. The Tea Party rejected the bank bail- United States with the economy registering out, the stimulus package and the health positive growth in the last three quarters care reform bill as inappropriate govern- (3.7%,1.7% and 2.0% respectively), according ment interventions in the market. The to the Bureau of Economic Analysis. Yet, movement’s emergence reinvigorated in order to stabilize the labor market, the and reinforced the traditional Republican growth rate would have to reach 3.5% per voting bloc of white, male, affluent and year. For the month of September, the US Christian-conservative Americans. Bureau of Labor Statistics measured an Even so, the immediate success of the unemployment rate of 9.6%; however, the

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3 unofficial unemployment rate, which in- Cooperation or Gridlock? cludes people who are not working full- As a result of the election, the conservative time but would like to and people who are wing of the Democratic Party has dimin- no longer registered as looking for work, ished, while the Republicans have collec- could be higher than 16%. The rising num- tively moved to the right with the Tea Party ber of long-term unemployed causes representatives joining the Party’s ranks. particular concern. More than 40% of all The next Congress will thus be even more unemployed have currently been out of polarized – the Brookings Institution work for longer than six months. One of already labeled the current Congress the the reasons is the decline in residential most polarized ever. Now the overriding mobility in America. As a result of the on- question is whether these conditions will going tensions in the real estate market, produce political gridlock. The US Con- many Americans refrain from moving to US gress’s ability to pass legislation will pri- states with stronger growth rates because marily depend on the actions of the new they would be forced to sell their homes members and the Tea Party representatives. for less than the value of their mortgages. The Tea Party members face a dilemma. In light of these circumstances, the OECD If they decide to stay true to their radical estimates that it could take years before the policy goals, it will soon be revealed that unemployment rate sinks back to its pre- these goals are not feasible. If, however, crisis level. the Tea Partiers move away from their prin- Against this background, Obama’s cipled positions in order to make compro- repeated rhetorical attempts to demon- mise possible, their credibility will suffer. strate that his policies saved the US from Both scenarios could have a negative im- an even more severe recession were of little pact on their chances for reelection. In any avail. The term “stimulus” has turned into case, the Republican leadership is afraid the taboo word of the year. Although the that the Tea Party representatives could Council of Economic Advisors estimates endanger the high level of party discipline that the $797 billion American Recovery and witnessed over the past few years and, Reinvestment Act of 2009 has created or therefore, they are placing the newcomers secured up to 3.4 million jobs, this bill under considerable pressure. along with other stimulus measures like Even if the Republican Party successfully the Hiring Incentives to Restore Employment Act integrates the Tea Party, the GOP’s willing- and the Small Business Jobs and Credit Act is ness to cooperate and hence the prospects highly controversial among Americans. for bipartisanship remain uncertain – given According to an October 2010 survey con- the experience of the past two years. Senate ducted by ABC News/Washington Post, as minority leader Mitch McConnel already many as 86% of Americans consider the announced that his top priority is now to stimulus money to have been largely deny President Obama a second term. By wasted. In addition to concerns about high virtue of its oversight function, Congress unemployment levels Americans are also may obstruct the work of the Obama greatly disturbed by the rise in the budget administration through subpoenas and deficit. When the fiscal year ended in Sep- investigations, for example. Republicans tember 2010 the budget deficit stood at will continue to have the filibuster at their 8.9% of GDP. According to a survey con- disposal by which they may block bills ducted by the CNN/Opinion Research Cor- introduced by the majority party. Con- poration 52% of US citizens believed that versely, the Senate Democrats will thwart Obama was handling the budget well in certain Republican legislative projects, such March 2009, while only 36% were of the as the proposal to repeal measures of the same opinion in October 2010. health care reform bill. President Obama can also at any time use his veto power as a

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4 last resort. Against this background, full Arguing that higher taxes and deficits political gridlock between both parties is strangle private business, Republicans, by not unlikely. contrast believe public spending destroys There are factors, however, which point jobs and hinders economic growth and towards cooperation. Since bills have to thus they reject any measures of this kind. pass both chambers, the new balance of In their “Pledge to America” agenda, Repub- power will force the parties to strive for licans call for an end to what they label the bipartisanship early on. On the one hand, Keynesian experiment. They want govern- the Democrats will no longer be able to ment spending to be reduced to pre-crisis push through bills against the will of the levels and view tax cuts (including tax cuts Republicans. This situation could dampen for wealthy Americans) as the appropriate the expectations of the Democratic Party’s means to increase domestic demand and left wing and open more room to maneuver stimulate the economy. for the Democratic leadership, thus im- The Republicans’ negative attitude will proving the prospects for compromise. On likely prevent new direct stimulus pro- the other hand, the Republicans will have grams in the next Congress. However, a to govern and hence to deliver: a blockade compromise appears to be emerging. The is an easy strategy for a minority party to Democrats may agree to extend the high- pursue, but a majority party will be ex- income tax cuts passed under the Bush pected to find political solutions. If the administration – which Obama has been Republicans want to keep their majority in rejecting so far. In exchange, the Republi- 2012, they will need legislative victories to cans may vote for an extension of unem- tout during the campaign. The new balance ployment benefits in the year 2011. Fiscal of power could thus actually force the two policy would subsequently stay mildly parties to cooperate. By voting for a divided expansive, while tending to increasingly government, the American people also cast turn restrictive with the phasing out of a vote for cooperation. the current stimulus packages. All in all, the consolidation of the budget will receive significantly more attention Economic Rejuvenation in the next two years. One major element The reinvigoration of the economy tops the of Obama’s plan is the ”pay-as-you-go prin- political agenda, but the Obama admini- ciple”: new spending programs must be stration’s options are limited. On the one compensated by raising revenues or lower- hand, high unemployment and weak eco- ing spending elsewhere. Most Republicans, nomic growth continue to require expan- however, vehemently reject tax increases sive fiscal policies. On the other hand, of any kind. They are, therefore, likely to neither Congress nor the population at welcome the recent recommendations by large will broadly support further stimulus Obama’s bipartisan debt commission, measures. In early September 2010, Obama which does not even stop short of cuts in introduced the Transportation Funding Bill, Social Security and Medicare. Instead of tax which would entail investments of $50 bil- increases, Republicans want to strictly cap lion into the development of public infra- government spending. In their “Contract structure – the construction and expansion from America”, Tea Party representatives of roads, airports, and railroads. Another even argue for making a balanced budget a idea is to extend tax credits for corporate constitutional requirement. Tax increases research and development. Finally, Obama should only be passed by a two-thirds majo- would like to keep the tax cuts for the mid- rity in Congress. dle class, which were introduced by George Whether Obama will succeed in balanc- W. Bush at the beginning of the decade and ing the budget will depend on his ability to which are set to expire in early 2011. reach the necessary compromises with

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5 Republicans as well as his progress towards Act. Notwithstanding the Congressional reinvigorating the economy. Bill Clinton majorities, Obama may stop such proposals managed to consolidate the budget under a through his veto power. If he overreaches, similar distribution of power in Congress, however, Congress may withhold funding but he was able to profit from one decisive from the EPA. In any case, the President will factor, namely the economy was in great be able to move forward through subsidy shape and thus generated sufficient tax programs. Currently, the administration is revenues. supporting, for example, the development of smart grids and research on nuclear energy. Energy and Climate Energy and climate policy is likely to become one of the most difficult issue areas Foreign and Security Policy for the Obama administration. While the The Republican majority in the House of House of Representatives passed the Ameri- Representatives will have less of an impact can Clean Energy and Security Act by a narrow on foreign policy than on domestic policy. majority in 2009, the Senate Democrats While the wars in Iraq and Afghanistan still failed to assemble a filibuster-proof majo- dominated the midterm elections of 2006, rity of 60 votes. Republicans generally they were of hardly any relevance in this reject the creation of a cap and trade sys- year’s election campaign. As such, US citi- tem, which they regard as the equivalent of zens were not calling for a change in for- an energy tax. Instead they want to exploit eign policy when they were casting their domestic energy sources in order to become votes. Nevertheless, in the run up to the less dependent on foreign energy. However, next presidential election the Republicans even among Democrats, there are many will try to present themselves as hardliners who oppose an ambitious climate bill. Most on foreign and security affairs while declar- opponents come from the Manufacturing ing Obama’s approach of engaging even Belt (an area which contains many manu- unfriendly regimes a failure. facturing industrial enterprises), the South Less than 10% of all voters said the war and coal-mining regions. in Afghanistan was their primary concern The new Congress will certainly debate in this election. Even so, the debate over bills of limited scope, aiming, for example, the controversial mission will return as the to enhance energy efficiency and to pro- deadline to reduce troop levels approaches. mote renewable energy. Nevertheless, an- Both the future chairman of the Armed other attempt to pass an ambitious climate Services Committee of the House of Repre- bill is highly unlikely, given the balance of sentatives, Howard P. McKeon, and the power in Congress. Instead Obama is likely ranking Republican member of the Senate to focus on executive orders and federal Armed Services Committee, John McCain, subsidy programs. The US Environmental are criticizing Obama’s decision to begin Protection Agency (EPA), for instance, withdrawing troops on July 31, 2011. While recently announced its intention to set many Democrats argue for a rapid troop new fuel economy (CAFE) standards for the withdrawal, Republicans want to postpone period from 2017 to 2025. This strategy to the deadline. However, given the low public bypass Congress by setting new norms for support for the mission in Afghanistan, the greenhouse gas emissions through the EPA Republicans might do well to leave the is increasingly encountering opposition in responsibility for the Afghanistan approach Congress. Already in early 2010, Senator with Obama. Regardless, the ultimate Lisa Murkowski introduced a resolution decision regarding the use of troops rests to legally prohibit the regulation of green- with the President as Commander in Chief. house gas emissions under the Clean Air The withdrawal from Iraq, planned for late

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6 2011, is less controversial since it was Prospects for ratifying New START have codified in a bilateral agreement with the remained largely unchanged. Under the Iraqi government signed under the Bush existing balance of power Obama already administration. needed Republican support in order to From January onwards, US policy toward amass the two-thirds majority required to the United Nations (UN) will be determined ratify international treaties. The fact that by the dynamics between a UN-friendly now 14 instead of 8 Republicans will have administration and a Congress generally to vote for the treaty is less decisive than skeptical of the UN. Representative Ileana the position the Republican opinion-leader, Ros-Lehtinen, future chair of the House For- John Kyl, will take. His decision again will eign Relations Committee, is a strong critic depend on Obama’s ability to make con- of the United Nations, which could pose a cessions on other issues, such as the mod- serious obstacle to the appropriation of UN ernization of the US nuclear arsenal. membership fees by Congress. With regard to states perceived as rivals or threats, the Republicans call for a Trade Policy tougher approach. They contend Obama’s The field of trade policy offers the most cooperative approach has generated but room for compromise. While Obama vir- little outcome and call for increased eco- tually neglected this policy area in his first nomic and military pressure instead. The year in office, the announcement of his Republicans apply this perspective not only National Export Strategy in early 2010 to “trouble-makers” like Iran, Syria, North reinvigorated trade policy. Obama aims to Korea, and Venezuela, but also to potential double US exports by 2015 in order to partners like China or Russia. Finally, they strengthen the domestic economy, create reject Obama’s rather cautious attempts at jobs and reduce the budget deficit. In sup- rapprochement with Cuba. port of these goals, the president seeks to From a European point of view, Washing- expand the opportunities for federal fund- ton’s policy toward Russia is of particular ing of exports – which would affect in interest. Obama’s efforts to reset the US- particular the export loans and insurances Russian relationship have generated a new by the Export-Import Bank. The Obama positive dynamic, most visible through administration also wants to increase the the New START treaty and the debate over international promotion of US products. a new Euro-Atlantic security concept (in- Furthermore, the president wants to inten- cluding the integration of Russia into the sify his efforts at convincing other states planned missile defense system). The fragile to comply with trade regulation and to progress that was consolidated at the NATO- open their markets to US goods. He has Russia summit on November 20, 2010 could also become less critical of free trade agree- be threatened, however, if conservative ments. Negotiations over a transpacific hardliners call for more resolute dealings partnership (TPP) have commenced and, with Russia and for amendments to New moreover, the free trade agreement with START. A deterioration of US-Russian rela- South Korea (KORUS-FTA), which was signed tions would affect several important Euro- in 2007 already, will finally be put up for a pean policy projects including the cautious vote in Congress. The administration also rapprochement between Russia and Poland, plans to make another attempt at passing the reinvigoration of non-proliferation and the pending treaties with Panama and disarmament policy and efforts to integrate Columbia. Russia into solving the conflict with Iran Many Republicans welcome these devel- over nuclear capabilities through the UN opments. The future speaker of the House Security Council. of Representatives, John Boehner, has re- peatedly called for a ratification of the

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7 three free trade agreements. Nevertheless, field does not offer many opportunities for it will not be easy in either chamber of members of Congress to distinguish them- Congress to assemble the necessary majo- selves. Likewise, US Afghanistan policy, rities to pass these agreements, which which is of high importance to Europe, is were signed by President Bush under the only marginally affected by the outcome (then still valid) Trade Promotion Authority of the election. (according to which Congress must accept A different picture is presented by rela- or reject the bills without the privilege of tions with Russia and in areas like climate adding any amendments). Although Demo- and trade policy which offer Congress crats are not protectionist per se, they tend direct channels to exert influence. Obama’s to be critical of free trade and they support cooperative approach to dealings with linking the opening of markets to labor and Russia is increasingly met with resistance environmental standards. Due to the high in US domestic politics. Europe would be unemployment in the US, some Republi- wise to help sustain the recently emerged

© Stiftung Wissenschaft und cans also oppose free trade agreements. positive dynamics in order to counter criti- Politik, 2010 In the past few months, numerous bills cal voices in Congress. Furthermore Euro- All rights reserved revealed the protectionist sentiment in peans will have to give up hope for a new

These Comments reflect Congress – none of which have been passed comprehensive climate bill in the near solely the authors’ views. so far. In September, for instance, the future; all they can expect is a step-by-step

SWP Senate voted against the anti-outsourcing policy. In the field of trade policy, however, Stiftung Wissenschaft und bill Creating American Jobs and Ending Off- the Republican election victory opens a Politik German Institute for shoring Act which was proposed by Democ- window of opportunity to advance the International and ratic Senators Richard Durbin and Charles global free trade regime. Yet, the issue of Security Affairs Schumer as a tool to punish firms that macroeconomic imbalance will remain Ludwigkirchplatz 3−4 move jobs abroad. Many members of Con- controversial. As long as the US continues 10719 Berlin gress are particularly alarmed by the trade to struggle with a rising trade deficit, it Telephone +49 30 880 07-0 Fax +49 30 880 07-100 deficit with China. In September, the House will call upon surplus countries including www.swp-berlin.org of Representatives passed the China Currency Germany to pursue domestic economic [email protected] Bill by a large and bipartisan majority. efforts aimed at boosting domestic con- ISSN 1861-1761 According to the bill, the U.S. may impose sumption and imports.

Translation by Henriette Rytz protective tariffs on Chinese goods if it becomes evident that the undervaluation (English version of SWP-Aktuell 77/2010) of the Chinese currency has the same effect as export subsidies. However, the Senate is seen as unlikely to vote in favor of the bill.

Outlook: Cooperation with the United States The change in US foreign policy, which Obama initiated two years ago, has been widely applauded in Europe. But many elements of the new approach, which were hailed by the Europeans, have been met with less enthusiasm in Congress. Even so, this sentiment has a decidedly minor effect on transatlantic current affairs, which are predominantly handled by ministerial insti- tutions. The interest of the US public in transatlantic relations is low and thus, the

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