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Conclusion:  The outlook for the 112th Congress looks as contentious as we’ve seen.  The sleeper political move of the year could be an increase in the popularity of President Obama as the public gets increasingly frustrated with the political statements in Congress and the President stays above the fray.

An interesting thing has happened since the midterm elections, President Obama’s popularity has improved despite the devastating loss of seats by his party.  According the Real Clear Politics aggregate, President Obama’s disapproval rating reached its highest on September 26th, 2010 at 51.2.  While on October 17th, his approval rating reached the trough of 44.2.  While there are likely a number of mitigating factors, President Obama’s disapproval rating is well off its peak and his approval rating is well off its trough as they are now at 48 and 46.2, respectively.

Undoubtedly a major reason for this improvement is simply due to the fact the election is in the rear view mirror and Republicans have stopped their constant assault on the Obama administration and an evaluation of its performance.   Meanwhile, the approval rating for Congress remains at abysmal levels.  In fact, the most recent poll for Congressional approval from Gallup showed 17% of respondents approving of Congress and 83% disapproving for a negative spread of -66%.

This poll coincides with polls relating to whether voters think the country is on the right track or wrong track, which are also making all-time lows.   Below we’ve highlighted a chart of the aggregate right direction / wrong track polls and these ratings are at the lowest of the Obama administration with a full 65% of respondents suggesting that the country is on the wrong track.  Interestingly, the results of these polls comes at a time when Obama’s approval is improving, albeit marginally, and Congressional approval is staying close to all-time lows.  The implication of this is that whether Congress is controlled by Republicans or Democrats is somewhat irrelevant, their job performance is weak and is viewed as such.  Therefore the question with the beginning of the 112th Congress is . . . now what?  (Symbolically, and perhaps ironically, the Republicans started the new congress with a reading of the Constitution.)

A New Congress . . . Now What? - RCP Poll

From the Republican perspective, there seem to be a number of key priorities, which include:

1)      Reining in spending -  Speaker Boehner has already made some aggressive statements on the spending side of the U.S. budget ledger and has indicated that no legislation will be passed with any earmarks.

2)      Repealing healthcare – After addressing spending, the key focus of the Republican-led Congress will clearly be to either repeal or defund the healthcare reform bill.

3)      Jobs – While both parties approach this from different perspective, the 9.4% unemployment rate in the United States is the key economic issue facing the nation.  It is also the issue that will likely lead to the most direct evaluation of the success of Congress.

Certainly, the first two priorities are hot button issues.  Reining in spending will be unpopular as it will likely require some dramatic cuts to current government programs and employment and a hard look at mandatory programs, such as Social Security.  It will also require a serious discussion about expanding the federal debt ceiling from $14.3 trillion as spending and federal debt have become a real focus of the electorate.  While an expansion will surely occur, it will only come after serious public debate and discussion.  Already, the White House has thrown down the political gauntlet saying it would be “catastrophic” if Congress did not raise the ceiling.  

The repeal of the healthcare bill will be challenging since the Republicans do not control the Senate or the Presidency, but they have so far indicated that it is their intention to push this issue as far as possible.  Interestingly, the U.S. electorate is not overwhelmingly supportive of a repeal according to the most recent Gallup poll, which showed that 46% of those polled wanted it repealed, 40% wanted it to stand, and 14% had no opinion.  The Democrats and, in particular, the President are not going to let the landmark legislative accomplishment of the last two years go away without a fight, despite its low popularity.  In recent days, House Majority Leader has drawn the line in the sand saying:

“At a time when we need to everything in our power to encourage job creation, the healthcare law hangs around the necks of businesses small and large.”

This was responded to by Stephanie Cutter on the White House website where she wrote:

“Repealing the Affordable Care Act would hurt families, businesses, and our economy.”

Most interesting from the early days of the new Congress is that neither party has offered a comprehensive plan to improve the dismal employment numbers in the U.S., which is likely the most pressing economic issue and the most important political issue as it relates to future approval of Congress. 

In the coming weeks and months as we see heightened political debate over the budget, debt ceiling, and potential repeal of the healthcare bill, we should expect Congressional approval to continue to remain mired at absurdly low levels, if not track lower.  As of now, it is difficult to expect much from the new Congress other than continued ineffective politicking.   This could lead to the sleeper move of the political year, which is a gradual uptick in approval of the man in the oval office, who may just be able to stay above the fray.

Daryl G. Jones
Managing Director