Economic Policy Implications of the Midterms (November 13)

Update 312:  Economic Policy Implications
of the Midterms and the 116th Congress

The result of last week’s midterms will have important ramifications for economic policy during the 116th Congress.  Democrats have taken the majority in the House and will take majority control of key committees setting the legislative agenda.

More than 100 women were projected to win seats in the House of Representatives, easily shattering the record of 84.  Overwhelmingly, they were Democrats, including 30 candidates endorsed by 20/20 Vision (out of 40).

Below, a look at the economic policy implications of last week’s midterms.  

Best,

Dana

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Financial Regulation and Oversight

The Democrats’ winning the House gives Rep. Maxine Waters the gavel of the House Financial Services Committee (HFSC).  Depending on the final seat tally, between 10 and 12 new Democratic members will be added to the Committee. Waters’ vote against S. 2155 and continued opposition to deregulatory overreach will change the tone and direction of the Committee, making it unlikely that any new deregulatory bills get through the House.

Oversight is likely to be a central theme of Waters’ regime. Recent actions by the Financial Stability Oversight Council (FSOC) to de-designate the last remaining nonbank systemically important financial institution (SIFI), as well as staffing and budget cuts at the Office of Financial Research (OFR) are likely to be scrutinized. The HFSC under Waters will also be a bulwark against rulemakings and practices that increase systemic risk; regulators will likely be called in to testify, which will increase public accountability, and perhaps slow down the deregulatory agenda. Kathy Kraninger, a Mick Mulvaney acolyte, looks set to be confirmed as CFPB director by the Republican-controlled Senate, so a Waters-controlled HFSC will be a welcome check on the direction of the Bureau under Kraninger’s tenure.

Democratic Senators who supported S. 2155 didn’t fare well last week.  Sens. Joe Donnelly and Heidi Heitkamp both lost their reelection bids, leaving two vacancies to fill on the influential Senate Banking Committee. The loss of Donnelly and Heitkamp opens the possibility to get different Democratic voices on the Committee, which will hopefully provide some welcome dissent to the Committee’s deregulatory program during the last Congress.  Kyrsten Sinema, the recently-announced winner of the Senate race in Arizona, could wind up with a seat on the committee given her role on HFSC. With Republicans still at the helm, the Committee looks set to continue its confirmations agenda as well as push for a fast implementation of S. 2155.

Tax Policy

During the president’s post-midterm press conference on November 7, he highlighted some legislative areas where he may be willing to work with a Democratic House.  One of those areas was tax policy. In response to a question at Wednesday’s press conference about how he’d pay for his promised 10 percent tax cut on middle-income households, the President said, “if Democrats come up with an idea for tax cuts, which I am a big believer in tax cuts, I would absolutely pursue something, even if it means some adjustments.”

While the news cycle will focus mainly on the oversight that is sure to come, as well as the messaging bills that will be introduced, the main area in fiscal policy to watch will be the possible 10 percent tax break for middle class households. The main question now is how Democrats will propose to pay for the cut. Some have proposed bills to expand the Earned Income Tax Credit, financing an increase in the program with tax increases on corporations and big businesses.

The policy areas Democrats could mine here would be expanding tax breaks for retirement savings programs, healthcare, and tuition, but many seem to be skeptical of a major overhaul like we saw in the 115th Congress. We can expect several messaging bills and potentially some technical corrections to the Tax Cuts and Jobs Act (TCJA), but it is unlikely that much will pass the Senate, let alone the president’s veto.

Political Reform

Political reform and oversight will be at the top of the agenda for Democrats in Congress come January.  A large majority of Democratic challengers, several of whom will now move into junior roles in the House, made political reform a key platform item on the campaign trail, with almost 200 progressive candidates rejecting corporate PAC money this cycle.

In the 115th Congress, House and Senate Democrats developed a plan entitled “A Better Deal for Our Democracy” (BDD). They managed to tuck some BDD provisions into the spending bill in bipartisan areas like rural broadband access, child care assistance, and infrastructure improvement. In August, the week that Paul Manafort was convicted on eight counts of fraud, Sen. Warren introduced an anti-corruption bill that proposes toughening rules on conflict-of-interest, lobbying ethics, and campaign finance reform. In the Republican-controlled Senate, Warren’s bill has little-to-no-chance of passing. House Democrats, however, are making democracy reform their number one priority in January.

On Monday, Rep. Sarbanes (D-MD) announced that H.R. 1, the first vote in the House, will be a reform package removing obstacles to voting, closing loopholes in government ethics law, and reducing the influence of political money. H.R. 1 would establish automatic voter registration, shift redistricting power from states to independent commissions, overturn the Supreme Court’s Citizens United ruling, expand disclosure mandates, and establish public financing to match small contributions.  Rep. Sarbanes admits that though the bill is unlikely to pass the Senate, it will force political reform issues to the forefront of the legislative agenda for both chambers of Congress.

Other Policy Areas of Note

There are a few issues that emerged as major talking points during this election season that we should keep an eye on moving forward:

  • Infrastructure

Infrastructure spending appears to be the best hope for a bipartisan bill in the coming Congress.  Both parties and the president publicly seem to agree that fixing and modernizing America’s infrastructure is a high priority and point of cooperation. This issue has been ongoing for years because a key source of infrastructure funding, the federal gas tax, has not been raised or adjusted for inflation in the last 25 years. President Trump has voiced support for raising the tax, in addition to signing onto a comprehensive spending package, but it remains to be seen if any infrastructure bill will come to fruition. Many observers believe that the two parties are so far apart on key aspects of an infrastructure package that the likely outcome is no bill at all or only a modest one that falls well short of the nation’s infrastructure needs.

  • Education

Many Democratic candidates campaigned on improving education at the K-12 and university levels. For K-12 public education, the focus was mainly on increasing funding in general. At the university level, many candidates advocated for reducing the costs of a four-year degree and increasing options for job training programs. With Secretary Betsy DeVos at the head, national changes seem unlikely, but newly elected Dems can work within their districts to improve local public schools and universities.

  • Healthcare

Healthcare was a cornerstone of both Democratic and Republican platforms this cycle. Democratic victories in the House will, at the very minimum, mean that further attempts to repeal the ACA will be stopped. It is possible that we will see some proposals pass through the House, with select GOP support, calling for modest expansions in Medicare. There is also likely to be an emphasis on increased protections for the ACA, primarily through oversight rather than legislation. With the Senate firmly locked down by the GOP, it is unlikely that substantial overhauls will be adopted this term.

In the end, it is not clear whether the midterm elections this year saw a true “blue wave” or more of a harbinger of still greater things. The loss of seats in the Senate — all but inevitable given the map, which reverses and favors Democrats in 2020 and 2022 — somewhat obscures the fact that Democrats might end up with their biggest gain in the House since the post-Watergate election of 1974.  This resounding win will mean that Democrats have a strong mandate to press ahead with much needed reforms, forge a progressive agenda to challenge the current GOP status quo, and chart a path to 2020.

Economic Policy Issues Throughout the 2018 Midterms (November 2)

Update 311: Economic Policy Issues
Throughout the 2018 Midterm Campaign

As we look ahead to next week’s midterms, we take a look back at four of the key economic policy themes that have played out this cycle. Across the country this cycle we have seen common themes and policies resonating with voters in seemingly disparate districts — from Appalachia to rural California.

In a long series of change elections, Democrats in the House have been able to harness the energy of a strong, grassroots movement and advocate for progressive economic policies that throw down the gauntlet to Republicans. On Tuesday we will find out if this diverse, but united freshman class will make it into the 116th Congress.

If you would like to get involved this weekend, click here to see what you can do.

Best,

Dana

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Wall Street and Financial Regulation

2018 saw the passage of the broadest deregulation of financial institutions in the post-Dodd-Frank era. The enactment of S. 2155 in May showed how Republicans in Congress — and some Senate Democrats — are still beholden to the big financial firms on Wall Street and the mega-regionals.  While the issues can be arcane and unfamiliar to voters, many candidates acknowledged the ten-year anniversary of the 2008 financial crisis by campaigning in favor of Dodd-Frank — a refreshing change to the deregulatory drumbeat on the Hill.

Among them:

  • Katie Porter in CA-45 has experience as a consumer protection attorney and has witnessed first-hand some of the unscrupulous practices of banks without proper oversight. If elected, she will be a staunch defender of the imperiled Consumer Financial Protection Bureau.
  • Amy McGrath in KY-06 calls for greater oversight of payday lenders. Her position is in stark contrast to her GOP-opponent, Rep. Andy Barr, who voted for the Financial CHOICE Act, a bill which would repeal many provisions under Dodd-Frank. Rep. Barr has also received nearly $40,000 in campaign contributions from the payday lending industry.

Two-thirds of registered voters say they are more likely to support a candidate who includes regulating Wall Street as a part of their economic agenda and 69 percent agree that weakening regulations on banks that got bailouts after the financial crisis is an example of Washington corruption.

To this end, here at 20/20 Vision, we have put together a Banking Policy Pledge for candidates and incumbents this cycle to commit to protecting the welfare of taxpayers and rejecting the deregulatory banking industry legislative agenda.

Fiscal Policy

At the beginning of the election season, GOP candidates for Congress tried to run on the success of the Tax Cuts and Jobs Act, but quickly found out that message wasn’t playing out as well with voters as expected.  Republicans passed the bill nearly a year ago and many soon realized that the majority of benefits went to corporations, not middle-class Americans. Perhaps most importantly, there is the issue of the pending $1.5 trillion increase in the deficit.

Democrats have been using the TCJA as a successful weapon against their opponents this cycle. In the PA-18 special election, Republican strategists thought the TCJA message would take Conor Lamb down. Instead, voters paid much more attention to other issues like health care, the opioid crisis, and entitlements, propelling Lamb to victory. Specifically in terms of entitlements, Democrats have been able to use the TCJA, and the accompanying hole in the federal budget, to emphasize the risks to Medicare, Medicaid, and Social Security.

Senate Majority Leader Mitch McConnell said in an interview on October 16, “[the debt] is driven by the three big entitlement programs: Medicare, Medicaid, and Social Security.” In the next Congress, Republicans, suddenly and disingenuously promoting a fiscally conservative agenda, may talk about cutting entitlements to make up for the huge increase in the deficit. Fortunately, they won’t be able to pass bills to enact that agenda without a House majority.  

Political Corruption

Though typically not a conventional economic policy issue by definition, political corruption has played an outsized role in this cycle. In a 2015 Gallup poll, 75 percent of Americans saw corruption as “widespread” in Washington. Democrats are pushing hard for voters to see their party as one that will fight corruption and make government work for them:

  • House and Senate Democrats rolled out the Better Deal for Our Democracy in May as a general anti-corruption and citizen empowerment package to capture voters’ attentions early in the midterm cycle. 
  • Sen. Elizabeth Warren exercised leadership by introducing her Anti-Corruption and Public Integrity Act in August about lifetime bans on lobbying for members of Congress.

A large majority of Democratic challenger candidates this cycle have made democracy reform a top issue, with almost 200 Democratic candidates rejecting corporate PAC money. Democrats are also incorporating the GOP tax “scam” into this messaging, which folds in easily, as nearly 83 percent of the bill’s benefits go to the top one percent of income earners.

Progressive candidates have used Republican corruption scandals this cycle, including those of the President and his close colleagues, to bolster their notion that the Democrats will implement real anti-corruption and empowerment solutions.

Democrats have also focused on local corruption issues, such as Rep. Scott Taylor’s third-party fraud in VA-02 and Rep. Duncan Hunter’s misuse of campaign funds CA-50. In these key districts, Democrats are using this platform to win over minority constituents and independents, who are fed up with the status quo and looking for leadership to get government working for people, instead of wealthy special interests.

Healthcare

This election cycle, candidates everywhere are referring to healthcare as the top economic issue for their constituents and therefore, for their campaigns.  For Democratic candidates, protecting what is left of the Affordable Care Act (ACA) has become the baseline priority of the cycle. The repeal of the individual mandate, further attempts to gut the ACA, and Trump’s continued calls for rescinding protections on pre-existing conditions threaten millions of Americans’ coverage and well-being.

In states where the effects of the opioid epidemic are felt, we are seeing Democratic candidates gain ground in typically safe GOP districts, such as PA-01 or VA-05.  In party strongholds, establishment figures have been upended in several primaries by grassroots challengers, like Alexandria Ocasio-Cortez, who advance progressive policies such as Medicare-for-all.

Republicans, in contrast, are divided. Many GOP candidates have found themselves in a bind and have shifted their positions after the failed attempt to repeal the ACA. Their campaigns have turned to focus on other topics, like immigration. GOP support from older constituents is particularly hemorrhaging over the issue of repealing protections against pre-existing conditions. At the party level, there is virtually no consensus by the GOP on healthcare. Candidates find themselves backtracking on earlier calls to repeal the ACA as their voters strongly rely on, or approve of, existing ACA provisions. Facing the prospect of millions of Americans going uninsured, the Republican party and the majority of Americans find themselves at odds.

Healthcare Weighs in at #1 Midterm Issue (September 18)

Update 299:  Still Unrepealed and Undefeated,
Healthcare Weighs in at #1 Midterm Issue

Plus ça change.  For the umpteenth cycle, healthcare is back on top among voting issues in the country.  No surprise. The stakes are high and are faced practically universally. But anxiety and a sense of chaos surrounding basic protections and health-related economic issues have perhaps never been higher.  

Today, we look at how healthcare is playing out on the campaign trail and offer an example of how the substantial and growing Democratic advantage on this central issue can be leveraged in the campaign context.  

Best,

Dana

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It’s the ACA, Stupid

Healthcare has been a hotly-debated area of policy among the American public long before the passage of the Affordable Care Act (ACA) in 2010.  Despite initial hesitations, the majority of Americans now support the ACA and are worried about the prospect of it being repealed.

There are three main consequences of weakening and/or repealing the ACA that voters fear the most:

  • Pre-existing condition protection loss: 133 mil. Americans under 65 have a pre-existing condition.  Before the ACA, insurers could deny these people coverage or charge them exorbitant rates.  Nearly three quarters of Americans want Congress to preserve the pre-existing condition protections codified in the ACA. Still, 20 states have signed a lawsuit against the federal government that, if successful, would render this provision and the ACA at large, unconstitutional.  Some in the GOP realize they may be on the wrong side of the debate. In late August, Sen. Thom Tillis, with nine other red-state Senators, proposed a bill to protect the pre-existing conditions provision even if the ACA is repealed (S.3388, Ensuring Coverage for Patients with Pre-Existing Conditions Act).
  • Skyrocketing premiums:  When it comes to the ACA, many Republicans are in full sabotage mode.  Last year, the October announcement by the Trump administration to end cost-sharing subsidies to insurers increased mid-tier “Silver Plan” premiums by between 7 and 38 percent. Last December, the individual mandate penalty was eliminated following the Tax Cuts and Jobs Act, taking healthy people out of the marketplace.  This year, the Trump Administration expanded short-term, non-ACA compliant “junk” plans, originally designed to be transitory coverage. The individual mandate repeal and the short-term plan rule change are predicted to raise premiums an average of 16 percent in 2019.

  • Higher out-of-pocket costs:  Before the ACA, there were no limits to out-of-pocket expenses, leaving many Americans at-risk of financial ruin if they had a serious accident or illness. With the passage of the act, “even high-deductible plans must limit out-of-pocket expenses to $14,300 for a family or $7,150 for an individual.” Since the introduction of the ACA limits, out-of-pocket healthcare expenses have fallen as a share of total health spending. If the Texas lawsuit is successful and the ACA is deemed unconstitutional, Americans are rightly concerned that it might spell the return of out-of-control out-of-pocket expenses.

A Gallup poll earlier this year reported that Americans have listed the availability and affordability of healthcare as their number one concern for the past five years — above crime and the national debt.  A once-unpopular law, recognition of the positive effects of the ACA and endless threat of repeal by the GOP have altered the political tide.

A Midterm Malady for Republicans

Republican attacks on key ACA provisions, such as pre-existing condition protections, have proven to be increasingly unpopular with Americans:

Screen Shot 2018-10-03 at 3.13.48 PM.png

Source: Washington Post

Republicans face electorates who are angered by the slew of sabotaging measures enacted by the Trump Administration and GOP Congress over the course of the past two years. Democrats across the country are campaigning on an antithetical message to Republicans as they vow to protect Americans’ healthcare. In fact, over half of political ads for pro-Democrat candidates have focused on their healthcare message, compared to just 20 percent for pro-Republican candidates. Candidates are tailoring their messaging according to their regional zeitgeist, but whether it is Medicare-for-all or protecting the vital provisions in the ACA, their difference from the GOP on this issue is stark.

Since 2013, Americans’ views of the ACA have shifted steadily from unfavorable or unsure, to supportive. In February 2013, 36 percent of Americans supported the law, 42 percent did not, and 23 percent were unsure. This compares to a poll in August of this year where 50 percent of Americans said they supported the ACA, 40 percent did not, and just 10 percent were unsure. In the past five years, as the number of unsure Americans has halved, a majority of those uncertain individuals have come to view the 2010 reform bill favorably. Among Democrats, ACA support remains high at 77 percent of individuals polled. Slowly but surely, the public consensus on healthcare is rising and Republicans are increasingly finding themselves on the wrong side of the issue.

Democrats United Against the GOP

The common thread among Democratic candidates and incumbents is clear: protect healthcare. The way candidates are getting to that core message varies by district. Sen. Sanders’ campaign in 2016 brought Medicare-for-all into the mainstream. A policy idea once thought of as too radical for America, single-payer healthcare has become a more salient concept in unexpected parts of the country. In NE-02 and CA-45, both R-leaning districts, Kara Eastman and Katie Porter won their primaries running with healthcare, specifically Medicare-for-all, at the forefront of their campaigns. However, running on Medicare-for-all seems to be an exception rather than the rule.

In the majority of districts across the country, constituents are concerned with protecting the status quo and lowering costs rather than transforming the whole system. In MI-11 and TX-23, another two R-leaning districts, Haley Stevens and Gina Ortiz-Jones are running on an affordable healthcare message with the intention of defending and strengthening the ACA as opposed to replacing it with Medicare-for-all.

The Dakota Experience

In July, a local healthcare advocacy group, Dakotans for Health, deployed a strategy in North Dakota to drive home a pro-ACA message. Using a local report on the impact of ACA repeal and focusing specifically on the implications of taking away the pre-existing condition protections, Dakotans for Health created a buzz in the local media. Prominent figures such as former Congressman Earl Pomeroy, and former Sec. Mary Wakefield, Secretary of HHS during the ACA implementation years, took to the airwaves with the pro-ACA message.

Over the course of 10 hours, Earl and Mary gave around 15 interviews to local news and radio stations. After this 24 hour earned media drive, the initiative created a cascade effect, bringing the healthcare issue to the fore and creating a strong platform for Democratic candidates in the state to positively discuss the issue with the electorate. This same kind of model is not just marketable in the Dakotas. The Dakotans for Healthcare media blitz is replicable in smaller, more-rural districts all over the country. The model helps to amplify Democratic messaging on an issue that is proving popular with voters — a Pew Foundation poll in June found that voters trust Democrats over Republicans on the issue by a 16-point margin.

Don’t Forget Healthcare

During this election cycle, healthcare is playing out on center stage as an economic issue.  Household budgets are being squeezed by rising premiums and any wage gains are being negated by the rising cost of healthcare under the Trump Administration and a GOP-led Congress. Regarding healthcare this cycle, Democrats are light years ahead of Republicans in the polls and policy.  Candidates should double-down on their healthcare messaging ahead of November in the race to win back the House.