Capitol Update: Blame Game in Full Swing as Clock Ticks

Apartment Industry Advocates,

As I write these words the clock is ticking down to the first shutdown of the federal government in 17 years. House Republicans want to defund, delay or otherwise defang the Affordable Care Act (ACA) in exchange for extending funding for the federal government through December 15. Senate Democrats and the White House refuse to consider any legislation that touches the ACA. If neither side relents, the government will shut down.

The inevitable blame game is in full swing. All of the usual media suspects are releasing polls showing who will face the greater public wrath – 1600 Pennsylvania Avenue or Republicans in the House of Representatives. So far, it appears the President has the advantage as polling indicates that the GOP will shoulder most of the blame for a shutdown and any economic fallout that results. All of this depends on the length and depth of the shutdown as well as its impact on individuals and families (especially those who make the evening news).

Ultimately, this fight is a warm up for this fall’s main economic policy event – the debt limit increase. As of October 17, the United States will hit its borrowing limit and the Congress will have to authorize additional borrowing authority. That authorization is where House Republicans feel they have leverage over the President to make a deal on other policy priorities. Thus far, their list is topped with a one-year delay of the ACA. It also includes approval of the Keystone Pipeline, rescission of new EPA rules on construction of new coal-fired power plants and a number of other items. I will resist the temptation to use a “kitchen sink” metaphor at this moment.

The Administration maintains that it will not negotiate on increasing the debt limit while House Republicans assert that if the President wants the increase, he will have to negotiate with them. Who wins on this one has much to do with what happens with the government shutdown debate. If the shutdown goes badly for the Republicans, their position in the debt limit fight could be severely weakened.

Thinking big picture for a moment, GOP leaders need to tread carefully so as not to endanger their hold on the House of Representatives overall. Economists of every philosophical stripe, Wall Street analysts, academics, and my neighbor who day-trades in his pajamas agree that a default on the debt would have immediate and lasting negative impacts on our economy. The 2014 mid-term elections are only 13 months away. Presently, the Democrats have a pretty slim chance of retaking the House while Republicans have a decent shot at taking back the Senate. If the GOP indeed takes the blame for fallout from a government shutdown or default on the debt, the odds could turn against them.

Based on everything above you might think that it’s all blue skies and roses for the President. As it turns out, frayed intra-party relationships are not the sole purview of the GOP. Congressional Democrats have complained for some time about the lack of a relationship with the President. So far, that has not translated into actual policy losses. However, within the past month the President has been turned down by his own party on two major requests. It certainly could be read as an end to the nearly automatic support from a large majority of House and Senate Democrats.

First, the President asked Capitol Hill to back his plan to attack Syria and enforce his “red line” on the use of chemical weapons. House and Senate Democrats rebuffed him. This put the President in a position of abiding by Congressional opposition and being viewed as weak on the national stage or ignoring the Congress and executing the strike anyway. That is a move fraught with all sorts of danger.

The second instance was during the process of selecting a nominee to replace Federal Reserve Chairman Ben Bernanke. The President floated a trial balloon for Larry Summers, former Treasury Secretary and past Chairman of the President’s National Council of Economic Advisors. Janet Yellen, Vice Chair of the Federal Reserve Board of Governors, was also a potential candidate although it was well known that Summers was the President’s first choice. This time a small group of progressive Senate Democrats pushed back and ultimately, Summers withdrew his name, leaving Yellen as the President’s likely nominee.

Is this just another bump in the rocky road of the Administration’s relationship with Capitol Hill or something deeper? Time will tell, however, it does seem to indicate that the power of the office and the role as leader of the Democratic Party are not enough anymore to ensure the President gets what he wants out of Democrats in Congress. For someone who does not focus too much time building relationships with members of either party in Congress, this could have big implications for the President’s last three years in office.

The apartment industry has a significant stack of policy issues at play in the remaining 15 months of the 113th Congress. Immigration, housing finance, tax reform and energy issues all are in play. The outlook for these and many other legislative initiatives will depend greatly on what happens with the twin fiscal fights of the federal government’s budget and the debt limit. Here’s hoping that a resolution in both cases is swift and definitive so we can move on.

That’s it for now. As usual, tell me what you think of these scribblings by emailing me.

Talk to you next month.

Regards,

Greg

Greg Brown is NAA’s Senior Vice President of Government Affairs. He joined NAA in the spring of 2010 to lead the expansion of the Government Affairs Department. Greg has been a housing advocate for 15 years, with a strong emphasis in multifamily issues. Tell him what you think about his musings.