Could Massachusetts Senate Results Derail Obama's Economic Agenda?

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Massachusetts has become a paradise of sorts for pollsters and local TV networks, but that all ends today. The question for the rest of America is whether the election of Republican State Senator Scott Brown -- who currently is close in the polls to Massachusetts' Democratic Attorney General Martha Coakley -- in the race to succeed to the late Ted Kennedy would alter the economic agenda of President Barack Obama. And the answer is, probably not.Before explaining why, it is worth exploring how Massachusetts became such a media paradise. Thanks to the tightening of the race, Massachusetts residents have been bombarded by TV advertisements and phone calls from groups buying TV time to pound residents with their messages. I received voice mail messages from Presidents Obama and Clinton and Kennedy's widow, Vicky. I also received several personalized messages from Brown's daughter Ayla, who competed on 2006's American Idol, as well as former Red Sox pitcher Curt Schilling

All this spending to influence Massachusetts voters has a very important objective: to shift control in Washington. The most immediate issue is whether the health care bill will pass. If Brown wins, he will be the 41st Republican vote in the Senate seeking to defeat health care. And, according to The New York Times, the White House will counter that outcome by encouraging the House to accept the Senate version of the bill and send it to the Oval Office for Obama to sign.

Based on interviews conducted by the Times, the White House plan will not go through easily. For example, Representative Bart Stupak (D-Mich) opposes the Senate bill in part because it provides insurance coverage of abortions. Stupak told the Times, "House members will not vote for the Senate bill. There's no interest in that."

If this level of division about the Senate bill exists on both sides of the aisle, the White House will need to conduct some fancy and fast footwork to get a health care bill to the Oval Office before a victorious Brown would take his seat.

Wall Street Tax Harder to Stop

Meanwhile, Obama's proposed $90 billion tax on Wall Street -- which represents what I estimate would be a mere 6% of Wall Street bonuses over the next 10 years (assuming they pay themselves an average of $150 billion a year) -- is less politically contentious.

Given the level of public anger towards Wall Street, it will be difficult for every Republican Senator to vote against getting Wall Street to pay this fraction of its bonuses to recoup the $117 billion in costs for the losses from TARP. This part of Obama's agenda is likely to pass, regardless of who wins the Massachusetts Senate seat.

Finally, Obama is likely to seek some regulatory reform for Wall Street. As I wrote earlier, given Wall Street's $500 million in annual campaign contributions and lobbying fees, this kind of long-term restructuring of the regulatory apparatus on Wall Street is not likely to end up with many teeth -- regardless of who wins in Massachusetts today.

There are reports that turnout for this election will be much higher than originally expected -- 50%. Given the snow in many parts of the state, the victory may go to whichever side is most determined to vote regardless of the challenges involved in getting to the polls.

A Brown victory could threaten Obama's health care reform plan -- but probably have little impact on the rest of his economic agenda. And if Coakley pulls off a victory, the uncertainty around passing health care will drop.

The drama around today's outcome should make for one final day of good TV and media action.
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