The American people voted Tuesday and the markets reacted Wednesday. The Dow Jones Industrial average fell 312.95 points, or 2.4 percent, the biggest percentage point decline this year. All 30 Dow component stocks fell, although coal companies, financial firms, and defense stocks were hardest hit.
“By returning a divided government to Washington, the electorate has given neither party a clear mandate to address the lackluster recovery, the fiscal cliff, and the looming debt crisis,” Brian Kessler of Moody’s Analytics told The Wall Street Journal. “When I look at what happened, I see a government that grew farther apart which might be worse than the status quo, Barry Knapp of Barclays added. “The risk of going off the cliff has just gotten huge.”
Some in the press, including The Washington Post, are claiming that Speaker John Boehner “is willing to break with the orthodoxy of many influential Republicans” and that he “opened the door to increased tax revenue as part of a bipartisan deal” in a post-election statement Wednesday afternoon. But a close examination of Boehner’s statement shows he did no such thing. Here is what he actually said:
For purposes of forging a bipartisan agreement that begins to solve the problem, we’re willing to accept new revenue, under the right conditions. What matters is where the increased revenue comes from, and what type of reform comes with it. Does the increased revenue come from government taking a larger share of what the American people earn through higher tax rates? Or does it come as the byproduct of a growing economy, energized by a simpler, cleaner, fairer tax code, with fewer loopholes, and lower rates for all?
As Americans for Tax Reform Director of Communications John Kartch later noted on Twitter this does not mean Boehner promised to raise taxes. “Boehner was very clear on the path: 1986 style reform, with revenue only from economic growth,” Kartch wrote [emphasis added].
Vice President Joe Biden was equally clear about the Obama administration’s insistence on higher taxes on the rich. “There was a clear sort of mandate about people coming much closer to our view about how to deal with tax policy,” Biden told reporters Wednesday.
Senate Majority Leader Harry Reid, D-Nev., was equally insistent that no deal touch entitlements either. “We’re not going to mess with Social Security,” Reid said. Sens. Patty Murray, D-Wash., and Chuck Schumer, D-N.Y., have also been equally insistent that tax rates must go up. Reid not only gained seats in the Senate Tuesday, but the Democrats added to the Senate are much more liberal than those that departed. The gap between the House and Senate on all issues has only gotten wider..
Both parties are seemingly more dug in to their old positions than they were before the election. Tuesday settled nothing. Only as the fiscal cliff gets closer, and the American people start blaming one side more than the other, will we see any movement. Until then, expect the economy to get worse.
From The Washington Examiner
Examiner Editorial: Republicans are often their own worst enemies
Joel Gehrke: Pro-life group vows changes after Akin debacle
Sean Higgins: The electorate has shifted
Phil Klein: A comeback for limited government conservatism
The Washington Post, Spending by independent groups had little election impact, analysis finds: A clutch of billionaires and privately held corporations fueled more than $1 billion in spending by super PACs and nonprofits, unleashing a wave of attack ads unrivaled in U.S. history. Yet Republican groups, which dominated their opponents, failed to achieve their two overarching goals: unseating President Obama and returning the Senate to GOP control.
The San Francisco Chronicle, Democrats get supermajority in Legislature: “California Democrats appear to have picked up a supermajority in both houses of the state Legislature Tuesday night, a surprise outcome that gives the party the ability to unilaterally raise taxes and leaves Republicans essentially irrelevant in Sacramento.”
The Washington Post‘s Chris Cillizza looks at the possible 2016 candidates from both parties.
In Other News
The Wall Street Journal, EU Slashes Growth Forecasts: “Europe’s official economists cut their growth outlook for the region on Wednesday amid turmoil spawned by the euro-zone debt crisis, forecasting deeper recessions in austerity-battered nations and lower growth in France and even Germany.”
The Washington Post, Legal battle looms over marijuana initiatives: “The approval of ballot initiatives legalizing marijuana in Washington state and Colorado left officials searching for guidance from the federal government on Wednesday, with major questions over whether the states could become the first in the nation to permit recreational use of the drug.”
The Washington Post‘s Charles Lane says, “Obama won re-election on a promise to maximize everyone’s lifestyle choice, while not really asking anyone except the rich to pay more for the benefits.”
George Will says the stats quo won on Tuesday.
The Center for Immigration Studies Mark Krikorian notes, “Even if Romney had gotten a similar share of the Hispanic vote [as Bush], he still would have lost the election.”
In The Washington Post, Erskine Bowles says, “Make a deficit deal now.”
Mother Jones‘ Kevin Drum predicts four more years of trench warfare.
Talking Points Memo promotes a poll by Latino Decisions showing that Romney lost among Latinos by even large margins than the exit polling says.
Think Progress identifies the seven states most likely to recognize same-sex marriage next.