27 October 2014

  |  CBI Press Team

News

America heads to the polls

One week out from the U.S. mid-term elections, many may be wondering whether the results could have an impact on this relationship or change the way British companies view America.

America heads to the polls

Whilst mid-term elections are dwarfed in terms of expenditure and turn-out by Presidential elections, this cycle is important as we could see a shift in the balance of power in Congress. Currently, the Republican Party is expected to retain their majority in the House of Representatives. However, the Senate races are showing that there is strong possibility for the Democrats to lose their majority, which they have held since the 2006 mid-terms.

While the polls may be tilting in favour of the Republicans, Democrats continue to be upbeat about their chances to sneak through a tiny majority in the Senate. The majority could even come down to a single Senate seat, which could draw out the results process as two of the closest races would have to go to a run-off if the candidates do not win at least 50% of the votes.

This is an amazing turn of events compared to twelve months ago when Republicans received the majority of the blame for the two week government shut down over failed negotiations to continue funding the federal government.

The major question around the outcome of the elections is whether either party can end the deadlock that has characterized the current Congress. Republicans have promised that if they win, they will push through a series of significant legislation, including overturning Obamacare and achieving comprehensive tax reform.

Although they will have a mandate to move forward on these issues, they could be hampered by the small margin of their victory – any Senate majority will be very small, meaning that they could face filibusters and other legislative processes that could scupper their effectiveness.

"The Obama Administration has set boosting trade as a key accomplishment before the President’s term ends."

- Simon Moore, CBI International Director

Democrats on the other hand, will be looking to secure the President’s legacy while moving forward to clarify their party’s messages ahead of the 2016 elections. The Administration has set boosting trade – specifically concluding successful negotiations on the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership – as one of the key items to accomplish before the President’s term ends.

Although many see this as an unlikely goal, Congress will need to decide whether to take action on Trade Promotion Authority (TPA), which would speed up legislative consideration of a deal.

The political excitement isn’t just confined to federal elections. Thirty-six states are also voting in Governors’ races. A large proportion of these campaigns are neck-and-neck and many incumbents could lose their governorship.

This is significant as Governors are often responsible for attracting inward investment to their state, and will set the legislative agenda on tax levels and issues like Buy America provisions. With jobs and economic growth a major issue in the State races, the winners of these elections will be expected to move quickly to ensure that the national growth levels trickle down to their constituents.

Don’t forget that all of this political drama is playing out as the 2016 presidential campaigns gear up for prime time. The mid-term elections will serve as a litmus test for both parties as they try to understand what is resonating with voters.

Although it is too early to tell what could actually happen on Election Day, one thing is for sure. The whole world will be watching to see how the American elections unfold.