It's uncertain what the biggest-ever Republican gains in Congress ultimately will mean for business and manufacturing when it comes to public policy and legislation.
But in the aftermath, two things are obvious.
First, the Obama administration and the Democrats won't be able to push their agenda forward without compromising. Second, the change in Congress represents an unprecedented opportunity for manufacturers to get their views across to nearly 110 new members of Congress — almost 90 percent of them Republicans.
In the midterm elections Nov. 2, Republicans gained 61 seats to convincingly wrest control of the House by a wide margin and gained at least six Senate seats to narrow the Democratic majority there to 52-46, with two seats still undecided.
“What is obvious right now is that there are more doors open today to listening to what manufacturers have to say than there were last week,” said Michael Lynch, vice president of government affairs for Illinois Tool Works Inc. in Glenview, Ill.
“It is incumbent on manufacturers to knock on doors and invite people to their plants, because the receptiveness of the people behind these doors is greater than it has been in years. Shame on us if we're not knocking on the doors.”
The results also give manufacturers a reason to believe that the climate in Washington will be more supportive of the business community.
“The election results provide reason for optimism for U.S. manufacturing and the plastics industry,” said Bill Carteaux, president and CEO of the Society of the Plastics Industry Inc. in Washington. “Congress, and particularly the House, will most likely have a more pro-business outlook and take a renewed interest in oversight of [the Environmental Protection Agency, the Occupational Safety and Health Administration, the Food and Drug Administration] and the other federal agencies that deeply impact our industry.”
“Legislatively, I think some of the key issues that SPI has advocated against — card check, rigid carbon taxes, and unworkable [Toxic Substances Control Act] revisions — will not be top priorities for the new Congress and will lose momentum,” said Carteaux.
Short term, the dramatic congressional shake-up increases the possibility that many of the Bush administration's tax cuts, which are set to expire Dec. 31, might be extended at least into early next year, until the new Congress wrestles with that issue.
“The voters' anti-tax message came loud and clear and reinforces our advocacy efforts toward extension of tax cuts [that were] enacted at the start of the last decade,” Carteaux said.
According to Lynch, the new changes in Congress might force Senate Majority Leader Harry Reid “to severely limit the agenda for the lame-duck session.”
Several sources said one likely scenario is that Congress may pass a continuing resolution for 60-90 days, keep planned excise tax changes from going into effect and also pass many of the tax extenders including the Bush tax cuts.
“The results of this election signal a strong rejection of the out-of-control spending, federal government expansion and mis- management of the economy over the past two years,” said Jim Elmer, chairman of Arlington, Va.-based trade group Associated Builders and Contractors Inc. and founder and president of James W. Elmer Construction Co. in Spokane, Wash.
“A cloud of uncertainty has hung over the construction industry as projects remain on hold while business owners brace for the next big government mandate or tax hike,” he said.
“It is our hope that this new Congress will bring fresh ideas to Washington and pave the way to create jobs, cut taxes and halt the big government assault on America's small businesses so that construction and all other industries can get back to work,” Elmer said.
“Improving the nation's business climate, while restoring fiscal discipline, is the real change we need to get the country moving forward,” Elmer said.
Sen. Mike Enzi, R-Wyo., agreed. “The shift in the makeup of Congress is a direct result of the American people and reflects their desire for more accountability and transparency in Congress,” he said. “Congress needs to focus on cutting spending, creating jobs, reviving the economy, lowering the deficit and fixing the faulty health-care law. I hope both parties have learned a lesson about setting priorities.”
But President Barack Obama, while acknowledging the Democratic Party took a “shellacking,” hasn't given any signs just yet that he is willing to back off from his agenda.
“What yesterday told us is that no one party will be able to dictate where we go from here, that we must find common ground … in order to make progress on some uncommonly difficult challenges,” Obama said in a news conference after the election.
He added that government has to show it is doing the things necessary “to boost and encourage our business sector and make sure they are hiring.”
However, it seems clear that the cap-and-trade approach to climate change — which died in the Senate this year — is likely to remain dead, as the president has already said he plans to work with Republican leaders to achieve climate change using a different approach.
In addition, new House Speaker John Boehner, R-Ohio — former president of a manufacturers' representative for the plastics and packaging industry — has said he intends to focus on the budget deficit and a proposed repeal of the health-care reform passed earlier this year, which he called “a monstrosity.”
“The people have sent an unmistakable message to the president — and that is 'change course,' “ Boehner said in a post-election news conference. “To the extent he is willing to do that, we will work with him.
“Our new majority will be prepared to do things differently. It starts with cutting spending instead of increasing it, reducing the size of government instead of increasing it and reforming the way Congress works.”
Prior to the election, House Republicans had said they would work to return federal spending to 2008 levels, meaning they would need to shave at least $100 billion in spending.
“Whatever comes over from the House will be looked at more carefully in the new Congress,” said Lynch. One reason: Democratic Senator Ben Nelson from Nebraska and independent Joe Lieberman from Connecticut sometimes side with Republicans.
But don't expect the Republican legislative wins to have much of an impact on the agendas of federal regulatory agencies.
“I don't see a whole lot of change there,” said Lynch. “The individuals in charge of the regulatory agencies will still be individuals who report to czars in the administration, and these czars are the people Obama listens to the most.”
But that could change, Lynch said, if a bill introduced by Rep. Geoff Davis, R-Ky., becomes law. The bill would require any regulation from an agency to be reviewed by a joint legislative committee to ensure it meets, but does not exceed, the intent of congressional legislation.
“It would be the legislative version of OMB,” the Office of Management and Budget, he said.
Republican Party gains weren't confined to Washington. Republicans gained at least 680 seats nationwide, the largest gain by either party since 1966, even surpassing Democrats' gains in the post-Watergate election of 1974, said the National Conference of State Legislatures.
Republicans now hold 53 percent of the total legislative seats in the U.S. — the most since the Great Depression, said NCSL. It also said the Republican Party controls 54 of the 99 state legislative chambers, its highest level of control since 1952.
“The plastics industry will also be served well by pro-business gains in the governors' races of Ohio, Pennsylvania and Michigan, as well as by gains in key state legislatures,” said Carteaux.
“2010 will go down as a defining political election that will shape the national political landscape for at least the next 10 years,” said Tim Storey, elections specialist with NCSL. “The GOP … finds itself now in the best position for both congressional and state legislative line-drawing it has enjoyed in the modern era of redistricting.”
NCSL said that when legislatures start redistricting next year, the Republican Party will have unilateral control of about 190 U.S. House districts, its best position since 1962, when the requirement that districts be redrawn every 10 years went into effect.
Significantly, the Republican Party now controls 18 legislative chambers and 54 percent of the seats in the South. What's more, in the Midwest, a Democratic stronghold, only 38 percent of the legislative seats belong to Democrats — the lowest percentage for that region since 1956, NCSL said.