Why Democrats don't really control the Senate

The Democratic Party thought it had avoided a huge beating when they held the Senate on November 2nd. The firewall the DSCC built against a Republican Senate was mostly due to the meddling of Tea Party groups and a favourable mix of Democratic and Republican incumbents up for election. Neither of these factors is going to help them over the next two years. It is likely the Senate is going to be hardly recognisable as the body in which the Democrats hold a majority.

Even though 2012 is going to be the year President Obama (presumably) is on the ballot, there is little chance Democrats are taking their seats for granted. There are a total of 23 Democratic seats up for re-election (including independents) versus only ten Republicans. Not only are there more Democratic seats up for grabs, but they are also seats deep in red territory. Democrats such as Ben Nelson (D-NE), Kent Conrad (D-ND) and Joe Manchin (D-WV) are all conservative Democrats who will do everything they can to run against a president unpopular in their respective states. They will likely buck their party at every opportunity.

Many would counter by saying many Democrats from states such as Virginia and Missouri would tend to vote with the President more often because many young voters will be present during the Presidential contest. This is all but certain, however, as the electoral map is looking very different than in 2008 and core parts of Mr. Obama's base have been demoralised.

2012 is also an interesting year in which many of the prominent moderate Republican senators are up for re-election. Senators Scott Brown (R-MA), Olympia Snowe (R-ME) and Richard Luger (R-IN) will all face the prospect of running as a Republican in states Obama will likely carry. You may argue about Indiana, but this is definitely the case with New England. This will likely cause them to vote against their party. However, this automatically disqualifies them for winning their primary. This often trumps considerations for the general election (see Arlen Specter) and they will probably try to win their primary despite their past voting records.

All of these factors mean the Senate will be far more conservative than its partisan composition suggests. It is likely a good idea President Obama postponed debate over the Bush tax cuts until 2012, when Senators will have an incentive to make smart decisions.

Who created this deficit, really?

From the Center for Budget Policy and Priorities comes the unexpected news that the Obama Administration policies have had little impact on the federal deficit after all. A new report released shows the deficit would barely top 3 billion dollars if it were not for the policies of the Bush 43 Administration. The TARP program is projected to be close to deficit neutral as the money is paid back, the recovery measures will be paid for in increased tax revenue, and the economic downturn will eventually subside. The enormous tax cuts enacted by the Republican Congress will balloon the budget shortfall and the ongoing wars in Iraq/Afghanistan will further sink any hope of fiscal solvency.

The first implications of these findings is it builds a strong case for deficit hawks to allow the Bush tax cuts to expire. The UI extension in the senate would extend the tax cuts for all but the wealthiest of Americans. Both Harry Reid and Nancy Pelosi have shown an ambivalence about passing a tax extenders bill without an extension of Unemployment Insurance. The second implication of this data is it could somehow translate into an opportunity for the Democrats to regain the upper hand on spending and the deficit. However, the Republicans will likely criticize the "liberal media" for twisting the data as usual.

So a budget resolution fails to move, is it the end of the world?

In February, the administration released its budget proposal for the 2011 fiscal year. There was significantly less press surrounding the President's release of the budget than there was for the 2010 budget, mostly because of the health care debate. Since its release, the budget has gone absolutely nowhere. Nancy Pelosi (D-CA) has said she is looking for a way to satisfy her diverse caucus, but that it was proving very difficult. Many have wondered if a budget resolution will pass through Congress at all. Kent Conrad (D-ND), the chairman of the Senate Budget Committee, has said the prospect for a 2011 budget resolution is "fading". Congress has not failed to even consider a budget blueprint since 1974. If Congress does not end up passing a budget resolution, will this be a major setback for the Obama Administration?

The fact of the matter is it probably would. The 2011 budget blueprint does a lot of things which would be very good for the country. It allows most of the Bush tax cuts for the wealthy to expire, creates a $90 billion dollar bank tax, increased infrastructure spending, and major reductions in oil/gas/coal subsidies. These are things that will not likely come up for consideration this year, due to the huge number of legislative items currently waiting to be marked up in committee. Furthermore, the failure of the 2011 budget resolution would send a message to voters that Democrats cannot govern effectively, even with one of the largest congressional majorities for decades.

Congress has until October 1st of this year to complete the budget process, though if the ball is not rolling yet, it is unlikely they will have enough time to complete it.