James Pethokoukis

Politics and policy from inside Washington

Will Democrats lose 100 House seats?

Sep 2, 2010 17:54 UTC

Certainly the “whisper estimate” for Democratic House loses is now 50+ with plenty of upside risk. But my pal Andy Roth at the Club for Growth thinks the upside number could be quite large, indeed:

I’m tracking four of the prognosticators who rate House races — Cook, Rothenberg, Sabato and CQ.

There have been some updates since my last blog post, so I thought I’d update my rankings of Democratic seats in play.

Between the four an incredible 104 Democratic seats are in play, up from 103.  I think there are a few more seats that will come into play over the coming weeks.

– 36 (was 26) seats are very slightly to strongly leaning Republican.

– 21 (was 16) are pure toss ups to very slightly tilting Democratic.

– 29 (was 25) are leaning Democratic

That means an incredible 77 seats are very seriously in play.  Now, in fairness, I did change the methodology slightly.  I’m now using the most aggressive prognosticator.  I’m doing this because updates are slow in coming and the first one to call a race more competitive seems accurate.

Another 27 seats are rated likely Democratic but at least one of the four, and in 15 cases two or more of the prognosticators.

Obama’s Immaculate Concession?

Sep 2, 2010 17:25 UTC

The White House may be warming to the idea of using tax cuts to boost the U.S. economy. It’s a possible plan that could have scored loads of Republican votes had it been proposed in early 2009. But with the president’s popularity falling and congressional elections looming, support won’t be so easy to coalesce.

The Democrats must contend with a political crisis along with the possibility of another economic one. The November midterms could cost them losses on a scale of the 1994 defeats when Republicans took both the House and Senate. A Reuters-Ipsos survey shows more people now disapprove than approve of President Barack Obama’s job performance by 52 percent to 45 percent. And the GOP leads on issues such as the economy, spending and jobs in a new Gallup poll.

Not surprisingly, the administration would like to make a bold move on the economy. GDP growth has been decelerating, and unemployment seems stuck at close to 10 percent. But with Republicans blocking even a $30 billion small business lending proposal on Capitol Hill, more grandiose ideas seem like nonstarters.

On the surface, at least, tax breaks seem like potential logjam-breakers. Republicans already wants to extend all the 2001 and 2003 Bush cuts without paying for them. And cutting payroll taxes, an idea favored by many conservatives 18 months ago, may be one of the options the White House is examining. The approach makes some economic sense. The Congressional Budget Office ranks payroll tax cuts as one of the top ways to create jobs.

But the opposing philosophies haven’t yet gelled. The White House is still insisting on higher taxes for wealthier Americans, even though many Democrats are willing to extend those rate reductions. And Republicans are unlikely to go along with any plan that raises any taxes in 2010 – and they’re in position to just stall until 2011.

As it is, some critics are already calling Obama’s potential tax-cut embrace the “Immaculate Concession.” A really bad jobs report or a market plunge could help the two parties find common ground. But absent that, even tax cuts probably stand little chance in a hopelessly gridlocked Congress.

Obama’s September surprise?

Sep 1, 2010 14:12 UTC

A few initial thoughts on Obama considering tax cuts to boost economy (via WSJ story):

1) WH already has broad plans on drawing board for a $200-$300b stimulus plan, half tax cut, half infrastructure. I reported this a month ago.

2)  Payroll tax cut is not a bad idea for stimulus, but U.S. has longer-term job and growth problem that needs to be addressed.

3) Payroll tax cut for $400 billion in early 2009 would have been better than Obama’s $862 billion plan.

4) Any short-term tax cut should be coupled with long-term deficit reduction plan.

5) A really bad payroll number on Friday could change political dynamic on this.

6) How would this square with WH’s new focus on deficit reduction, the supposed reason why Bush tax cuts on rich should not be extended? Indeed, WH has doubled down on this with adviser Jason Furman making this point yesterday.

7) Here is how one smart Washington observer framed things for me:

If it’s a one-year extension of all expiring tax provisions (including extenders), it would be a very smart political move for him.  He would triangulate his base and appeal to swing indies.  It also undercuts one of the main GOP arguments.  The stock market would surge.  It’s a total no-brainer, unless you are just that ideologically-addled not to do it.

If it’s “tax relief” for non income taxpayers, or tax cuts that are so difficult to qualify for no one bothers (see: small business health insurance credit), it won’t go anywhere and he’ll get no bounce from proposing it. If he wants to use taxes to change the dynamic (or at least blunt the wave), it needs to be bold and he needs to piss off the Congressional leadership.

A one-year extension of all expiring tax relief would probably get 230 votes in the House and 55 in the Senate.  Ask a vulnerable House Dem off the record if he would vote for that, and see how quickly he says, “you bet.”

Update: This from the WH press office: “The President and his economic team are discussing several options to continue on the path to recovery, but any reporting on decisions made or timing is premature.”

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