Midterm Power Shift Leaves Obama with Dilemma

At mid-evening [Nov. 2], the shape of the 2010 midterm elections is becoming clear. The Republicans will take over the House of Representatives, while the Democrats retain control of the Senate with a much-diminished majority. Whatever the final numbers and new leadership, the balance of power in the Congress has shifted decisively.

Looking forward, the Democrats preferred legislative strategy during the past two years — unify their party and then bargain for the support of a handful of moderate Senate Republicans — is no longer available. The alternatives now reduce to two: confrontation and gridlock, or a more serious negotiation between the two highly polarized parties than has occurred for many years. The most likely scenario is confrontation, only gradually giving way to the public’s demand for action on the myriad problems the US now faces.

Much depends on the strategy President Barack Obama himself adopts, and then announces in his 2011 state of the union address next January. Like Bill Clinton after his November 1994 mid-term defeat, Mr Obama must decide what balance to strike between conciliation and confrontation. He will have to give some ground he would rather not; if he resists everything the new Congress enacts, he risks a negative public reaction. He will have to pick his fights carefully, and with a tactical flexibility and attentiveness to the public mood that has not been his strong suit up to now.

When Mr Obama sends his next budget, House Republicans are also likely to declare it dead on arrival. If so, they will then have to craft an alternative, which means taking responsibility for a sizable budget deficit they have heretofore blamed on Democratic profligacy.

A more daunting upcoming issue is the “debt ceiling”, which establishes the maximum borrowing authority of the US Treasury. US debt is within a few months of bumping up against that ceiling, which means that Congress will have to vote to raise it. Republicans will be reluctant to do this, none more so than the large number of Tea Party-backed conservatives who will descend on the House next January.

Democrats are unlikely to provide the votes to help pass the bill in the teeth of Republican opposition, so new Speaker John Boehner will have to find a way to pass it on his own. Either way, the issue will be a test of the newly divided US government. Without it the Treasury will lack authority to issue new net debt, and might cease to do so — with incalculable consequences for America’s credibility in world markets.

Despite all of this, it is important to remember that, by historical standards, Mr Obama is not in bad shape. It would certainly be a mistake to leap from these results to inferences about the 2012 presidential election. The president’s is job approval is roughly equal to that of Bill Clinton and Ronald Reagan after the sizable mid-term defeats that preceded comfortable victories in their campaigns for second terms. And a higher percentage of the American people want Mr Obama to run for re-election than was the case for either Reagan or Clinton at comparable points in their presidency.

That said, it is also the case that Reagan and Clinton were the beneficiaries of accelerating economic growth during the last two years of the first terms. If leading economists are right, Mr Obama may not be so fortunate. If not, the American people will be even more discontented about the present and anxious about the future than they are today, and all bets will be off.