WASHINGTON - Policy debates affecting every corner of the economy are likely to shift in major ways if Tuesday’s election, as expected, gives Democrats more power in Congress.
Hearings on boosting domestic petroleum supplies could morph into talks about raising energy efficiency.
Republican efforts to partially privatize Social Security and shield industry from liability lawsuits should lose steam as Democratic efforts to raise the minimum wage and reduce drug prices gain momentum.
And ambitious Pentagon requests for military hardware may be whittled down as Iraq war funding priorities shift.
Whether Democrat-led initiatives transform corporate America, or even make it past President Bush’s veto pen, is another matter. Neither party is anticipated to walk away with anything more than a slim majority in either the House or Senate, and that augurs the kind of legislative gridlock that Wall Street favors.
Consider: Even as Democrats’ election hopes soared following a sex-scandal coverup embroiling Florida Rep. Mark Foley and some Republican leaders, the Dow Jones Industrial average climbed to a new record above the 12,000 mark. That suggests one of two things, according to Prudential Equity Group LLC: “either investors don’t believe a shift is afoot, or more likely that they don’t think it matters.”
“Control of one house of Congress when the president is of another party is not particularly helpful,” said James Glassman, a fellow at the American Enterprise Institute. “That is even true if the Democrats take control of both houses.”
Glassman said there are two key areas where Democrats may assert themselves most effectively: trade and taxes.
Democrats could play a critical role in helping President Bush revive global trade talks that collapsed over the summer, he said, though they will be tempted for political reasons to withhold support.
On taxes, many Democrats strongly oppose the cuts Bush enacted in 2001 and 2003, but Glassman said the party might use its newfound power to force a “grand compromise” with Republicans that extends the cuts, which are set to expire in 2010, but with major revisions aimed at helping working families.
Because the Democratic party’s election success partly depends on victories by some conservative candidates in districts that traditionally elect Republicans, the ramifications on fiscal policy are not clear cut, lobbyists said.
“The easy criticism of the Democrats of an earlier era is not so easy to make anymore,” said David Resler, chief economist at Nomura Securities. “The Democrats are splintered politically.”
Still, traditionally left-leaning interest groups including trial lawyers, environmentalists and labor unions are optimistic about the consequences of Democrats gaining more influence in Congress, while industries such as energy, pharmaceuticals and defense are girding for a less friendly atmosphere in Washington.
“What will occur that will be most striking will be a reassertion of the congressional oversight function,” said Linda Lipsen, head of public policy for the Association of Trial Lawyers of America. “It’s going to affect every single committee.”
Rep. Barney Frank of Massachusetts, who is line to become chairman of the Financial Services Committee if Democrats win the House, said that issues topping his agenda include creating affordable housing and forcing public companies to disclose information on executive pay.
Bill Samuel, legislative director for the AFL-CIO, said the attention Democrats promise to pay to affordable housing, health care costs and minimum wage reflect the party’s concern for “the real economy.” For Republicans, Samuel said, “the economy is gross domestic product, stock markets and maybe monthly unemployment data.”
Organized labor has its sights set on bankruptcy law, which companies such as Delta Air Lines and auto parts supplier Delphi Corp. have used to their advantage to impose contract concessions from their employees. If the Democrats were to take back the Senate and House “they might have enough heft to stop companies from using bankruptcy laws to negate their labor contracts,” said former Clinton administration labor secretary Robert Reich.
Even if Democrats gain control of just one house of Congress, protecting the environment will “no doubt” gain status in Washington, said Tiernan Sittenfeld, legislative director of the nonpartisan League of Conservation Voters. “The current committee chairs,” she added, “are beholden to and in lockstep with the oil industry.”