A Bad Night for the Democrats; A Good Night for Shulmaven

As we predicted on Sunday the Republicans did very well last night as Democratic hopes of forestalling a Republican turnover in the Senate crashed and burned. As of this morning the Republicans have picked up seven seats and are likely to win Alaska later today. Along with a likely win in the Louisiana runoff in December the Republican majority will expand to 54. Its better to be lucky than smart, but it looks like we were on the money. Moreover we noted, contrary to conventional wisdom, that the races in Virginia and New Mexico would be close. with a recount coming in Virginia we were dead right there, but not so right in New Mexico where Udall won by 10 points.

In the governor races the Republican did far better than what we thought. We had an above consensus pick-up a net gain of one governorship. As of this morning the Republicans are up 3. We were right on Scott Walker and were pleasantly surprised to see Republican wins in Democratic Massachusetts and Maryland. With Democrat Gina Raimondo winning in Rhode Island and Republican Bruce Rauner winning in Illinois, the public employee "Blue State" model suffered major defeats. Unfortunately education reformer Marshall Tuck lost to teachers union backed Tom Torlakson in the Superintendent of Public Instruction race in  California. It is clear that the Republican Party in California is still not ready for prime time.

In the House it looks like the Republicans will pick up between 15-20 seats. We had them up by 10-15 seats. A big loss for the Democrats and look for Nancy Pelosi to step down as Democratic Leader. The other big Democratic loser was Harry Reed whose $100 million PAC outspent everybody. Look for Schumer to challenge him in January.

On the Republican side the big winner was John Kasich who reelected Ohio governor by 30 points. He will be much talked about in the coming weeks as presidential candidate. Just to note he expanded Medicaid in his state. Also a big winner was Chris Christie whose leadership of the Republican Governors Association brought in a $100 million and provided the sinews of victory.

The Republican was victory opens the way for real legislative progress in 2015. Why? The Republicans have to govern and President Obama needs a legacy. If cooler heads prevail, admittedly an heroic assumption, there is the potential to do corporate tax reform, trade promotion, Keystone Pipeline, partial immigration reform, a minimum wage increase and some relief on student debt. Remember Mitch McConnell is a deal maker and he has worked very well with Vice President Joe Biden. Of course if the Republicans go after Obamacare on day one or if President Obama does a major executive order on immigration the well will be poisoned. As of today the ball is in the President's court. Watch his news conference this afternoon.

The Battle of Madison

Governor Scott Walker's epic showdown with Wisconsin's public employee unions is being played out on the Madison streets I know so well. Walker is rightfully seeking to reign in runaway public employee health and pension benefits to help bring the state's $3.6 billion projected deficit into balance. To be sure he may have over-reached in seeking to rollback a host of collective bargaining perquisites that the unions have long enjoyed, but as Barack Obama taught us so well, "elections have consequences."

Walker is fighting the good fight against one of the most reactionary elements of our society, the public employee union leadership. Pure and simple they represent "producer" over "consumer" interests. Where the 21st Century calls for flexibility the union leadership clings to obsolete work and retention rules making it all but impossible to fire incompetent workers and to organize work in a cost effective way.

Perhaps what is surprising is that the so called "liberals" are standing with these hidebound reactionaries. Simply put if public employee pension and health (current and post retirement) spending along with Medicaid remain on their current tracks, the will be no money left for "the liberal project." All of the wonderful education and environmental programs that the liberal community desires will fall by the wayside as employee benefits and Medicaid gobble up state budgets.

So I salute Governor Walker and wish him luck in rounding up the the recalcitrant Democrats who fled the state to avoid a vote on his proposals.