eNewsletter - 13 november 2006
INITIAL ELECTION ANALYSIS
The results of the recent midterm elections will bring major changes to Congress and state houses, with potentially important implications for housing and community development. Shifts in party control are especially significant because the majority party controls the policy agenda, and in legislatures, the committees.
Congressional Overview
* The House. Democrats took control of the House, picking up 28 seats, 13 more than the minimum needed, and nine other seats are still too close to call. Republican moderates suffered severe losses, leaving conservatives in greater control of the Republican minority. Many of the new Democratic members are moderates, leaving the incoming Speaker, Nancy Pelosi (D-CA) a challenge in forging and maintaining a working majority.
* The Senate. Democrats also won the Senate by taking six Republican seats, achieving a 51-49 majority, including two independents - former Democrat Joe Lieberman (I-CT) and former Rep. Bernie Sanders (I-VT). In all, there will be nine new members. Under Senate rules, most major legislation effectively requires 60 votes, so bipartisan collaboration will be needed.
Housing and Community Development Policies
Most Housing and Community Development policies, except tax policy, are written in the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee.
* House Financial Services Committee. Barney Frank (D-MA) will be the new chairman. Frank plans to make housing a priority, is a strong supporter of the Community Reinvestment Act, and is likely to push for legislation regulating Fannie Mae and Freddie Mac. Maxine Waters (D-CA) is expected to chair the Housing Subcommittee. Spencer Bachus (R-AL) and Richard Baker (R-LA) have been contending to lead Republicans on the committee, although other candidates could emerge.
* Senate Banking, Housing, and Urban Affairs Committee. With the current lead committee Democrat, Paul Sarbanes (D-MD) retiring, Chris Dodd (D-CT) is expected to become chairman. Jack Reed (D-RI), an active supporter of housing and community development, will probably chair the housing subcommittee. The current full committee Chairman, Richard Shelby (R-AL), and the housing subcommittee Chairman, Wayne Allard (R-CO), are expected to become ranking members. Except for a bill regulating Fannie Mae and Freddie Mac, the committee has been relatively inactive on housing and community development issues in this Congress, but that could change under the new Democratic leadership. One key committee Republican was defeated: Rick Santorum (R-PA), who was also the Senate's third ranking Republican.
Tax Policy
Tax policy is the responsibility of the House Ways and Means Committee and Senate Finance Committee. These committees are also responsible for entitlements such as Social Security, Medicare, and Medicaid, as well as welfare and trade legislation
* House Ways and Means Committee. Charles Rangel (D-NY), a leading supporter of Low Income Housing Tax Credits and New Markets Tax Credits, will be the new Chairman. Rangel has expressed interest in putting housing on the 2007 agenda, and is already conferring with Frank, the incoming Financial Services Committee Chairman. Rep. Ben Cardin (D-MD), the lead Democrat sponsor of the proposed homeownership tax credit, was elected to the Senate. Rep. Jim McCrery (R-LA) is the committee's likely next lead Republican. Democrats will probably add several new members.
* Senate Finance Committee. The committee's two leaders will switch places, with Max Baucus (D-MT) becoming Chairman and Charles Grassley (R-IA) the ranking Republican. Grassley and Baucus have worked closely before and will probably do so in the next Congress. The defeated Santorum was also a member of the Finance Committee, and was the lead Senate Republican sponsor of the homeownership tax credit. Current speculation says Democrats will add three new members and Republicans one.
Program Spending
The Appropriations Committees are chiefly responsible for deciding how much money each spending program will receive. Incoming Democrats will try to close large budget deficits, so there will be little room for major spending increases.
* House Appropriations Committee. Rep. David Obey (D-WI) is poised to become Chairman of the full committee. Rep. John Olver (D-MA) has been the lead Democrat on the HUD subcommittee and Rosa DeLauro (D-CT) on the USDA subcommittee, but subcommittee responsibilities can change. All are supportive of domestic spending generally, including for housing and community development, subject to budget constraints.
* Senate Appropriations Committee. Here too, the current leaders will switch places: Democrat Robert Byrd (D-WV) will become Chairman and Republican Thad Cochran (R-MS) the ranking member. Similarly, Patty Murray (D-WA) will take over the HUD subcommittee and Kit Bond (R-MO) will become the ranking Republican. There is a tradition of bipartisanship on this committee.
The States
Though it received relatively little media attention, this was a big year for gubernatorial elections, with 36 of the 50 seats at stake. Democrats gained six governorships (Arkansas, Colorado, Maryland, Massachusetts, New York and Ohio), and now hold a 28 - 22 lead. Only one incumbent lost - Bob Ehrlich (R-MD) - but there were also 10 vacancies, so substantial policy shifts are certainly possible. Many of the victorious governors are moderates. Regarding housing and community development:
* Voters approved major housing bond issues in California ($2.85 billion) and Rhode Island ($50 million). These are major victories for affordable housing. However, a separate bond issue for Los Angeles attracting a majority of voters, but fell just short of the 2/3 needed for passage.
* Voters in eight states approved restrictions on the use of eminent domain: Florida, Georgia, Michigan, Nevada, New Hampshire, North Dakota, and South Carolina. In addition, Arizona voters approved a measure combining eminent domain restrictions with a "regulatory takings" requirement-- i.e., a state must either waive any regulation that cause a loss in property value or provide compensation to owners. Because compensation costs could be prohibitive, states would feel pressure to waive many regulations. Voters in California and Idaho rejected combined eminent domain/regulatory takings measures, and Washington voters rejected a stand-alone regulatory takings proposition.