A Turbulent Political Outlook

The economy is doing well, unemployment is at or near all-time lows, major tax reform that lowered corporate and individual tax rates was signed into law and Republicans control the House, the Senate and the presidency. Considering what should be a position of strength going into the mid-term elections, one has to ask, “Why are Republicans in Washington not exuberant?”

When one talks to Republicans who are retiring or sees them interviewed on television, a fairly consistent answer is, “It’s just not fun anymore.”

The problems with the legislative process in Washington have been long in the making.

The problems with the legislative process in Washington have been long in the making. While the shift of power from the legislative branch to the executive branch began shortly after the Constitution was ratified, that process has been slow over time. The changes that have led to a breakdown in the legislative process have been going on for some time, but have accelerated rapidly in recent years.

After Republicans took over the House following the 1994 elections, Republicans centralized power within leadership to a degree that had never been seen before. That process has continued and increased under both Democratic and Republican led Houses since then. Scandals in the 2000’s led to the elimination of earmarks, which, for all of their faults, were undoubtedly the grease that made the sausage making machine work by allowing members to claim credit for improving roads and bridges in their districts. Increasing attention to optics led to less frequent and smaller congressional delegations to foreign capitals. These trips were often bipartisan, sometimes included spouses and were a critical tool for building relationships among members of Congress. Elections have become more expensive, meaning that members of Congress must spend more time raising money and less time working on policy matters or interacting with constituents. On top of all of this, add the explosion of social media and a camera in everyone’s pocket, and being a member of Congress starts to resemble living in a pressure cooker under a microscope.

These factors have affected both parties to a large degree, but Republicans seem to be suffering from this malaise inducement more so than their Democratic colleagues. A big part of this is due to the President. When Republicans want to be talking about tax reform or reducing regulations, they get asked questions about Russia. When they want to be talking about confirming conservative judges, they get asked about the latest tweets. The elephant has long been a symbol of the Republican party. To discount the effect that the President has had in causing Republican ennui is to avoid the largest elephant in a room full of elephants.

Then to add insult to injury, Republicans are looking toward the midterms, having just experienced a watershed election in Virginia, and having lost a U.S. Senate seat in Alabama and a House seat in Pennsylvania in a district that the President won by 20 percentage points. In light of the choppy electoral seas that they’ve just gotten through, they very clearly see a storm on the horizon, and many are simply deciding to retire, rather than try to navigate through what will be a very tough 2018 election cycle. To prove the point, nine of the 21 Republican Committee Chairman are retiring this year.

Interestingly enough, there are a few rays of legislative sunshine breaking through the clouds. Recently Republicans and Democrats teamed up to pass a banking reform bill in the Senate. And on the House side, a bipartisan bill was introduced to reform the IRS, which included an ELFA advocacy priority, which would make getting tax transcripts from the IRS much more efficient. One can hope that these efforts will trigger the muscle memory of how to legislate in a way that makes consensus legislating more of a common occurrence in the years to come.

ELFA Creates Tax Reform Industry Topics Page ELFA has launched an Tax Reform Industry Topics page on our website at www.elfaonline.org/industry-topics/tax-reform. Visit this page for articles about the impact of tax reform on the industry, a full recording of the ELFA webinar on tax reform from earlier this year and other information on this topic. This will be a dynamic page that will be updated as new information becomes available.