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WRRDA Biggest Hurdle: Washington’s Dysfunction

Jim Wiesemeyer Senior VP, Farm & Trade Policy Informa Economics, Inc. WRRDA Biggest Hurdle: Washington’s Dysfunction. Could Washington Be More Dysfunctional?. Obama: Second term woes Declining approval rating Healthcare reform timeline slips – Election-year angle

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WRRDA Biggest Hurdle: Washington’s Dysfunction

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  1. Jim WiesemeyerSenior VP, Farm & Trade PolicyInforma Economics, Inc. WRRDABiggest Hurdle: Washington’s Dysfunction

  2. Could Washington Be More Dysfunctional? • Obama: Second term woes • Declining approval rating • Healthcare reform timeline slips – Election-year angle • Intelligence snafu: A sense that U.S. is losing clout • Executive orders: Climate change, other issues • Regulations: A growing backlog at OMB • Farm Bill: Discord between farm groups, lawmakers, Obama • Foreign policy issues: Egypt – Syria – Iran – North Korea

  3. Could Congress Be More Dysfunctional?

  4. Could Congress Be More Dysfunctional? • Budget: Compromises needed • FY 2014 spending – CR - Gov’t shutdown • Why this one is different from 1995/96 shutdown • Financial impacts if shutdown lingers • Debt limit hike talks… A big financial watch is on • Sequestration issues • Tax extenders, tax reform • GOP overreach? Obama/Dem plan?

  5. Could Washington Be More Dysfunctional? • Immigration reform: Some bipartisanship, but… • Obama legacy or 2014 election issue? • Senate passes | House bill will be different • Ag/seasonal workers accord

  6. Path Forward for WRRDA

  7. WRRDAPath Forward Factors Ahead forWRRDACompletion… • Get through gov’t shutdown • House bill vote • Conference • Settle key differences quickly • Most focused on finishing WRRDA this year– by Christmas

  8. WRRDA’s Bottom Line Issues • Key issues: Not policy, but funding • Infrastructure bank – User fees… what, TAXES? • Both versions allow millions of dollars into water navigation projects. Senate bill puts more money into them over time • REFORM: Tightens reins on Corps of Engineers’ ability to decide which projects to move forward at what pace • REFORM: Penalty-enforced deadlines on impact reviews • Biggest hurdle: Dysfunctional Washington • Will intense budget fights poison the well? • Poster child? Congress needs a quick success after shutdown • Solution: Leadership

  9. Why WRRDA is Needed • Potential key market changes ahead: In 2015, 2016… • Higher interest rates: Federal Reserve strategy • Higher U.S. dollar: Impact on exports • Deficit going down now, but:Will go back up soon • Trade agreements ahead: Competitors at the door

  10. Trade Policy • Trans-Pacific Partnership (TPP) – Obama wants negotiations to conclude in 2013 • 12 countries: focus on Asia/Latin America • 40% of global GDP • 33% of world trade • Trans-Atlantic Trade and Investment Partnership (TTIP) – EU/US • 50% of global GDP • 33% of world trade • Negotiations to continue for years • Trade Promotion Authority (TPA) • Time limited/only on TPP

  11. Why the Political Dysfunction? • Governing from the left and reactions to it • Polarization of the Electorate

  12. Roots of Dysfunction 2008: The election of Barack Obama • Chose to govern from the left • Major Domestic Policy: Healthcare Reform/Partisan vote • Senate Vote - 60 to 39 - all R’s voted against • House Vote - 219 to 212 - all 178 R’s and 34 D’s voted against 2010:Backlash: R’s capture the House– net gain of 63 seats • 29Republican governors – net gain of 6 • Flipped state legislatures – net gain of 19 Net Result: R’s controlled redistricting process

  13. Political Dysfunction • President’s Approval Rating: • 86% D’s vs. 10% R’s • 76-point partisan gap: largest in history • Schism within the GOP (Pew Poll – Aug 2013): • Among registered Republicans: 54% believe GOP needs to be more conservative 40% believe more moderate

  14. Elections:New Normal? A Reversal • Democrats: Natural advantage in statewide races (President & maybe Senate) • Republicans: Coalition is tailor-made to win the majority of House districts

  15. Problem: Today, (unlike the 1980s), Almost No Incentive for Bipartisan Dealmaking • Moderates have been “washed out” in recent wave elections. 47% of House GOP was elected after 2009 by running against their party’s leadership. • No Deadline: Partisans wait until 11th hour to strike deals or risk being seen as “giving in” by base. Or, if no looming catastrophe, why strike deal at all? • Law of unintended consequences: Moratorium on earmarks has weakened House GOP leadership’s ability to whip votes. • The next election: Democrats think they can take back the House in 2014, Republicans the Senate. Why compromise now, when you can get it all later?

  16. 2014: The House Today: 234 Republicans, 201 Democrats (Democrats need +17 seats to win control) Cook Outlook: GOP gain of 2-7 seats

  17. 2014 House Elections Only 66 Competitive or Potentially Competitive Seats in the House in 2014 Number of House seats in the 113th Congress, by party 218 Only 66 seats currently competitive or potentially competitive Source: Cook Political Report.

  18. 2014: The Senate Today: 54 Democrats (including 2 Independents caucusing with Democrats), 46 Republicans Cook Outlook: GOP gain of 3-5 seats. Senate control in 2015 is a Toss Up.

  19. Democrats Must Defend 7 Seats in States Romney Won: • Retirements in MT (Baucus), SD (Johnson), WV (Rockefeller) • Incumbents: Begich (AK), Pryor (AR), Landrieu (LA), Hagan (NC) Source: Cook Political Report.

  20. Just As in the House, Democrats Have Few “Real” Opportunities to Play Offense • Question is, will GOP primary voters “blow it” like they did in 2012? Look to Georgia, not Kentucky, for clues. Source: Cook Political Report.

  21. 2016: It Began Before 2012 Ended

  22. GOP Grappling With a New Demographic Reality Source: Cook Political Report.

  23. So What Changed? • Obama won 71% of Latino voters & 73% of Asian-Americans • But is the GOP doomed in 2016? Not so fast… Source: Cook Political Report.

  24. No RNC “Outreach” Programs Will Fix GOP’s Problems. Only a New Nominee in 2016 Can. • The “Can Wins” (Rubio, Christie, Bush) • The “Can’t Wins” (Cruz, Paul, Santorum) • The “Maybes” (Walker, Ryan, Jindal) Source: Cook Political Report.

  25. Meanwhile, on Democratic Side…Will She or Won’t She? • For all of Republicans’ current problems, remember: it’s Democrats may be lacking in “new blood” come 2016. • If not Hillary or Joe Biden, who? Cuomo, O’Malley, Warner, Hickenlooper, Gillibrand?

  26. On Election Night 2016, Watch… 2012: Obama 19,712 Romney 19,369

  27. QUESTIONS

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