November 8, 2006
Election ’06: What Will Change in the Economy?
For Immediate Release: Wednesday, November 8, 2006
Contact: Lynn Erskine 202-293-5380 x115
Washington, DC: The Center for Economic and Policy
Research today released the following analysis of the election's impact on
Election '06: What Will Change in the Economy?
By Dean Baker
The 2006 Democratic electoral victory substantially alters the
political environment around several important economic issues. Democrats in
Congress can be expected to follow through on several policy items featured in
their agenda during the campaign. Their victory is also likely to knock several
items off the Bush administration's agenda.
Key Democratic Agenda Items
1. Reforming the Medicare prescription drug benefit
Democrats can be expected to follow through on their pledge to allow Medicare
to offer its own drug plan in which it negotiates prices directly with the
pharmaceutical industry. This is very popular with the public, which means that
Senate Republicans will be reluctant to filibuster the measure, and President
Bush will feel considerable pressure to sign it.
See CEPR's report, Savings from an Efficient Medicare Drug
2. Raising the minimum wage
The Democrats have pledged to push
through a minimum wage increase and are virtually certain to make good on this
promise. An increase in the minimum wage is very popular as demonstrated by
both polling data and the victory of 6 ballot initiatives that raised state
See CEPR's report, The Impact of Proposed Minimum Wage Increase on Low-Income Families
3. Initiatives to extend health care coverage
The rising cost
and insecurity of health care insurance continues to be a major national
concern. The Democrats are likely to put forward proposals that will at least
put them on record as doing something on the issue. These proposals could
include measures that would extend coverage to more children, for example by
expanding SCHIP, or lay a basis for structural reform, such as allowing
employers and individuals to buy into Medicare.
Health Care page.
Items Off the Legislative Agenda
1. Privatizing Social Security
2. Making the tax cuts permanent
President Bush has said that he
wants to bring back his plan to privatize a portion of the Social Security
system. He clearly lacks the ability to get this through the new Congress and
members of his own party would almost certainly rebel if he were to try.
Social Security page.
There is likely to be a
stalemate over the future of President Bush's tax cuts, including the repeal of
the estate tax. He will almost certainly veto any Democratic proposals to
reverse the tax cuts, however, the Democratic Congress will not go along with
extending them beyond their 2010 expiration date.
Federal Budget/Taxes page.
3. Far-reaching trade proposals
Many of the Democrats elected made the Bush (and Clinton) administration trade
policy a major issue. The Congress was already unsympathetic to new trade
agreements. It will be much less friendly following this election.
See CEPR's Globalization/Trade page.