The More Things Change, the More They Stay the Same

As the dust settles in the aftermath of our nation’smost expensive political campaign season, welook forward to 2013 and the 113th Congressionalsession. The 113th will bring 95 new faces tothe city on the Hill. There are 12 new Senators and 83 Representatives.Of the 12 new Senators, nine are Democrats,five are women, three are Republicans, two are minorities,all-but one have held public office prior to their electionand not a single one has served in the military. Of the 83new Representatives, 48 are Democrats, 35 are Republicans,32 have not held elected office, 20 are minorities, 19 arewomen and 12 have worn the uniform.

If you dive a little deeper into these numbers, you find sometraditionally held stereotypes about the two political partiesremain true. Of the 22 newly elected minorities, only two areRepublicans, Texas Senator Ted Cruz and Oklahoma RepresentativeMarkwayne Mullin. Conversely, of the 12 new memberswith military service, only three are Democrat, two of which arewomen, Illinois Representatives Tammy Duckworth and WilliamEnyart and Hawaii Representative Tulsi Gabbard. Of the 34 newmembers who have never held public office, you might be surprisedthat 20 are Republicans — more than half of the new GOPMembers — compared to only 14 of the 56 new Democrats.

These demographics, however, don’t tell the whole story ofthe true winners and losers of the November 6 election. Thereare obvious winners: President Barack Obama, Senate Democratsand House Republicans. There are obvious losers: Gov.Mitt Romney and Republican Senate hopefuls.

Reader’s Input: Reader’s Input: Election Results and “Status Quo”

Q. In the November Inside Washington column,you referred to the election results as a “statusquo” election. Did you mean that we, the generalpublic, can expect more of the same name calling,blaming and partisan divide in 2013?

A.This is a great question, and one that is appropriatefor this month’s column. Unfortunately,the term “status quo” in my last column refersto the balance of power in Washington, and the partisanpolitics you refer to, will likely only get worse in the newCongress. A sharp decline in the number of moderatelegislators will make moving legislation through bothchambers of Congress very difficult.

First, fewer legislators are viewed as willing to workacross the aisles compared to the most recent Congress.As a result, you could see party leaderships taking theirpositions to the general public to build support. Thisis the arena where you see the political posturing andbickering you refer to on the news, the internet and airwaves.When there isn’t opportunity to agree in the hallsof Congress, look for both parties to lobby citizens forsupport of their positions in attempts to force the handsof their colleagues.

Second, think hypothetically for a moment. What wouldhappen if members compromise and how would that affecttheir re-electability. The number of members whorepresent districts or states composed primarily of theopposing party have been decimated, not because theygot along too little (we’ve seen very little compromise inthe 112th Congress), but because they compromised toomuch, upsetting the base they need to be reelected. Inthese races, the electorate didn’t replace these moderateswith different moderates, but instead with starklyideologically contrasting candidates. As Congressionaldistricts and states become more politically polarized inour representative government, it is only natural that ourelected officials do too.

I know this answer goes counter to the post-electionrhetoric we hear from both parties. But I pose two questions:Is it not always the case, in recent memory anyway,that both parties try to reach across the aisles afteran election? Yet how often does that actually lead tocompromise and action?

There are also less obvious winners and losers. Increasingtaxes on the wealthy was a winner. Throughout the electionseason, Obama made an argument for “fairness” in the tax system.In his argument, the president asserted that the wealthiestAmericans currently manipulate the tax code to pay an effectivetax rate smaller than middle class Americans. The Wall StreetJournal reported in April 2012 that the 400 highest earners inAmerica paid an effective tax rate around 18 percent. They furtherreported in August, citing IRS tax data that of those 400ultra-wealthy, six paid no federal income tax. The average incomeof these individuals was $202 million in 2009.

The IRS operates a tax system based on a progressive incomestructure. The lowest earners, up to about $18,000annually, pay 10 percent of their income in taxes, while thehighest earners, income over about $390,000, pay about 35percent of their income in taxes. It is important to note thatthese rates do not account for the hundreds of tax breaks,credits and loopholes the IRS allows, legally, to reduce whatan individual actually pays. At face value, it is not difficultto understand how the Presidents and Democrats constructedthis argument and sold it to the public. IRS data shows an effectiveincome tax rate lower than the prescribed income taxbrackets for most middle class taxpayers.

However, the devil is in the details. In the same IRS data,around 97 percent of Americans pay an effective tax rate lessthan the wealthiest few, and more than 58 million filers paidno income tax at all. Further, in 2009 the top one percent oftaxpayers paid almost 37 percent of the total taxes paid. If youexpand that to the top 20 percent of earners, the percentagejumps to 70 percent of total taxes paid. Conversely, the bottom20 percent of earners paid just three-tenths of one percent.The argument on fairness essentially depends on whetherrates or dollars paid takes precedent. Is it fair that high incomeearners pay a higher percentage of their income in taxes? Or isit fair for those high earners to pay a disproportionately highdollar amount of the tax burden?

In re-electing Obama, a slim majority of Americans believethat the wealthy should pay a higher percentage of their incomein taxes. How the President and Congress define “fairness,”“wealthy” and “tax rate” will affect any reform to the tax code.But it is clear that change is coming.

An under-the-radar loser of the 2012 election was the moderatelegislator. Of the 20 most centrist members in the 112thCongress, less than half (eight) won reelection. Districts thatlean more than 52 percent for one party that were representedby the alternative party were also decimated from 26 membersin 2010 to 10 in 2012.

The trend crosses chambers. In the Senate, high-profile moderateslike Scott Brown from Massachusetts and Richard Lugarfrom Indiana both lost their reelection bids to substantiallymore partisan candidates. The moderate Democrats, known asBlue Dogs, were 50 members strong in 2008, now only 10.

This decline in centrist legislators could have lasting effectson the country, as will increased tax rates for the wealthiestAmericans. These effects will be determined in the comingmonths and years, but look to the first six months of 2013 as anindicator of what’s to come.

In the first few months of the Congressional session, Congresswill need to address several issues that will affect everyAmerican, including the debt ceiling and tax reform. This assumes,and this is a big assumption, Congress is able to reachan agreement on the “Fiscal Cliff” issues of sequestration and taxextensions, which they effectively kicked down the road at thebeginning of the year.

Despite post-election discourse, the new electorate appears tobe moving further apart rather than coming together. This willmake legislating very difficult with such slim majorities in boththe House and Senate.

Although the dust has mostly settled since the election, thereis no doubt that both of these issues, higher taxes and the deterioratedmoderate, will substantially impact the Congressionalagenda and how it gets done.

Will Brown is NUCA’s Government Relations Manager