Democrats nearing 'sweet 60' in Senate
Pennsylvania Senator Arlen Specter's defection Tuesday to the Democratic Party puts the Democrats one vote shy of a filibuster-proof majority in the Senate, and if Sen. Norm Coleman( R-Minnesota) eventually ends his seemingly endless appeals of his 312-vote loss to Democrat Al Frankin, the Democrats will be at the magical 60-vote majority needed to cut-off a filibuster.
It takes 60 to govern
It takes 60 Senators to govern in the U.S. Senate because, unlike pre-modern times when the filibuster was used sparingly, lawmakers today 'go nuclear' and routinely abuse the Senate's unlimited debate power to oppose any legislation -- particularly budget and tax legislation -- that does have 60 votes, the amount needed to invoke cloture, or end a filibuster. The practical effect of the filibuster in the modern era has been that a dedicated, cohesive, numerical minority can undermine the will of the majority.
But if the Democrats reach the 60-Senator plateau they can move forward with legislation knowing that only their party, not the Republican Party, can stop legislation via endless debate, and that fact that could put Limbaugh on a plane headed to the Far East. Limbaugh, who opposed the fiscal stimulus package and said he hoped President Obama's plan to jump-start the U.S. economy failed, said if Obama succeeded he would buy property in New Zealand. So far, Obama's doing o.k., and a 60-Senator Democratic majority will further support his efforts to move tough legislation through the Senate.
Does the 60-vote majority for the Democrats mean socialism is up ahead for the United States? Of course not. But if you listen to the Limbaughs, Hannitys, and Laura Ingrahams of the world, the United States is already a socialist state. But cast aside their rhetoric. The United States remains a private sector-based, dynamic, corporate capitalist economy with broad freedoms where nearly all, key, economic decisions (at least up until the financial crisis) are made by private firms. And that's not the analysis of some liberal, public policy think tank: it's the view of the Central Intelligence Agency.
Investors should also keep in mind that although the Democratic Party leadership is comprised of liberals, the party contains many moderates, and for obvious reasons moderate Senate Democrats have considerable clout. These moderates, among others, will serve to rein-in liberal lawmakers if they push economic legislation that has little chance of being backed by middle America. (The Democrats already hold a large majority in the U.S. House.) Hence, the perennial congressional question: Will it play in Peoria?
Powerful private interests remain
Further, the economic space is contested space. There are also powerful interest groups in oil, agriculture, pharmaceuticals, and most certainly in defense, that are ready to oppose and defeat any bill that challenges the status quo, their vested interest. It doesn't matter if the policy is in the public interest and represents an improvement: almost always, current stakeholders will oppose any decrease in their slice of the economic pie.
The most likely, near-term economic impact of Sen. Specter's decision? It will probably move the nation toward the start of universal health care. It's still too soon to say whether the first step will rely more on private-sector insurance companies or on the public health care system to enable those uninsured to access health care, but Specter's move will prompt health care industry players to see the shift in the political landscape: the Democratic Party continues to grow, and it's best to cut a deal now, lest one be shut out by an even more-liberal Democratic Senate in the near future.
The Specter defection probably won't result in major changes to energy policy beyond current Obama administration alternative energy / fuel efficiency efforts funded by the stimulus package and auto bailout policy. Concerning income taxes, again, no change is expected at this time, as both Obama administration and lawmakers are reluctant to raise taxes during a recession.
Economic Analysis: Specter's move further demonstrates the shifting political landscape in the United States, something we have discussed here frequently. The U.S. has entered a period of government activism that has little to do with Obama; if Obama had not burst upon the scene, the economic and social factors and problems propelling change would not have disappeared. Some Republican political watchers remain fixated on Obama and liberal Democrats, but that is a fruitless exercise. Rather, Republicans should investigate why it is that their party is getting smaller and smaller, and why more states, such as Specter's Pennsylvania, are becoming 'advantage Democrats.'
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.