Polls increasingly show gathering momentum for a Republican takeover of at least the House–and give Republicans an outside chance of taking the Senate as well–in November’s mid-term elections.
A study released last week by the bipartisan American University Center of the Study of the American Electorate indicates that Republican turnout in statewide primaries exceeded Democratic turnout by more than four million votes. The study said that the average percentage who voted in Republican statewide primaries was the highest since 1970.
While most of those involved in the insurance business are conservative, and probably elated at the coming results, history–and even top Republicans–are not as enthusiastic.
For example, top officials in the House Republican caucus recently noted that only one or two members of their caucus have even a slight grasp of economics, and are dependent on Rep. Paul Ryan, R-Wisc., to articulate the caucus’ position on economics.
And, they also point to September 2008, when, despite being warned by President Bush, Secretary of the Treasury Henry Paulson and other top Bush administration officials that without the Troubled Asset Relief Program the entire economy would fall off the cliff, House Republicans voted against the legislation establishing TARP. That caused the stock market to drop 500 points in one day, and the less radical Senate to go through many machinations to resurrect the bill.
In testimony before a House hearing on AIG in 2009, Paulson noted that if the banks hadn’t been bailed out with the money that has mostly been paid back, unemployment would have soared to perhaps 25% of the entire economy.
The current Republican momentum stems from emotion–a decision to punish the party in power–as Americans face the fact that unemployment will hover around 10% for an extended period, and that their certificates of deposit and bank deposits and money market funds will be yielding near zero for just as long a period of time.
Equally important, it is dawning on Americans that the homes they expected to provide the funds for a comfortable retirement will just not be there for them when they need it. For eight years, the Bush administration used low-interest rates and no-controls money supply to allow consumers to continue their spending while U.S. manufacturing jobs fled overseas. The de-leveraging process now underway will take six to eight years, economists predict.
Moreover, the Bush administration years were not good ones for the life insurance industry. Bush-era tax cuts hurt annuity and life insurance sales, impacting both industry revenues and market share. Meanwhile, low interest rates and market volatility hurt annuities even further.
Meanwhile, the phase-out of the estate tax had a clear impact on life insurance sales. House Republicans warned about the potential collateral impact of some of the tax cut proposals on government revenues, even considered limiting inside buildup to $3 million. This came to a head in a confrontational private meeting between House Ways and Means Committee staff officials and Rep. Bill Thomas, R-Calif., W&M panel chairman, on the one hand, and industry lobbyists, on the other. Under intense pressure, Thomas dropped the idea.
Even the default option of qualified default investment alternatives in pension funds was severely cut back in the 2005 pension modernization bill, with more than $100 billion in low-risk industry instruments effectively shifted to target date funds underwritten by the mutual fund industry.
Ultimately, it is looking like American voters, angry over the results of Bush-era policies and repudiating textbook efforts to deal with the worst economic downturn in 70 years, will vent their anger at the ballot box by handing control back to the GOP at a time when the party is even less able to manage the country’s finances than it was before. We can only hope for political stalemate, so the currently effective policy of slow deleveraging is allowed to continue.