United States / mid-term elections 2006
Bush loses in mid-term elections
At last, the time for saying good-bye to Mr. George Bush uni-partisan neo-conservative regime in US. The era of one-party Republican rule in Washington came to an end with a bang in yesterday’s midterm elections, putting a proudly horny president on notice that the people want change, especially on the war in Iraq.
Mr. Bush now confronts the first Democratic majority in the House in 12 years and a significantly bigger Democratic caucus in the Senate that were largely elected on the promise to act as a strong check on his administration. Almost any major initiative in his final two years in office will now, like it or not, have to be bipartisan to some degree.
In the bellwether states of Ohio and Pennsylvania, two Republican senators, both members of the legendary freshman class of 1994, were defeated by large margins. Across the Northeast, Republican moderates were barely surviving or, like Senator Linconl Chafee of Rhode Island, falling to Democrats who had argued that they were simply too close to a conservative president.
Control of both the U.S. House of Representatives and the Senate shifted to Democrats on Wednesday, with Defense Secretary Donald Rumsfeld the first victim of heavy Republican election losses fueled by voter anger at President George W. Bush and his Iraq policies.
Democrats, who gained about 30 seats to seize control of the House and had moved to within one seat of a majority in the Senate, won the contested seat of Virginia Sen. George Allen, an incumbent whose narrow race over Democrat James Webb had come down to within thousands of votes. NBC television and the Associated Press awarded the race to Webb on Wednesday.
The AP said it had contacted election officials in all 134 localities where voting occurred, obtaining updated numbers on Wednesday.
Earlier on Wednesday, Rumsfeld, a lightning rod for Iraq war critics, resigned after heavy Republican election losses.
Rumsfeld told reporters at the Pentagon the new political environment helped fuel the decision for him to step down.
"It'll be a different Congress, a different environment, moving towards a presidential election, and a lot of partisanship, and it struck me that this would be a good thing for everybody," Rumsfeld said.
Democrats applauded the move and called for "a fresh start" on a new war policy.Most critically, perhaps, Republicans lost the political center on the Iraq war, according to national exit polls. Voters who identified themselves as independents broke strongly for the Democrats, the exit polls showed, as did those who described themselves as moderates.
Bush conceded voter discontent with Iraq played a role in Tuesday's election "thumping" by Democrats. He acknowledged his Iraq policy was "not working well enough, fast enough" but refused to back down.
"I'm committed to victory," he said at a news conference.
Mr. Bush’s allies could argue that history was working against Republicans, that in a president’s sixth year in office, his party was ripe for big losses. They could also argue that Congressional Republicans brought their own vulnerabilities and scandals to the table. But this was a nationalized election, and Mr. Bush and Iraq were at the center of it.It was a remarkable turnaround for a president who just two years ago emerged triumphant from his re-election campaign, declaring that he had earned political capital and intended to spend it.
That capital slowly drained away with an ill-fated fight on Social Security, a furor over the government’s mishandling of Hurricane Katrina, an aggressive intervention for conservative causes like the right-to-die case of Terri Shiavo, and, more than anything, pollsters said, the war in Iraq. In the final days of the campaign, Mr. Bush’s travels to some of the most Republican and least competitive regions in the country were a portrait of his political isolation.
An important feature of this election, with implications for 2008, is that the center of the electorate clearly doesn’t like to be ignored in an era of base politics. The Republicans played to the base at their great peril among the middle.
After a campaign that only escalated the tension between Mr. Bush and Congressional Democrats, the president will now face overwhelming pressure to take a more conciliatory approach. For example, he will be under increasing pressure to re-evaluate his support for Defense Secretary Rumsfeld, which he so publicly restated in the closing days of the campaign.
Analysts pointed out that on issues like energy and immigration, Mr. Bush can find common ground with many Democrats. But much of Mr. Bush’s domestic agenda, which was not exactly gliding through the current Congress, will face even tougher prospects now. That includes any effort to overhaul entitlement programs like Social Security, already heavily shadowed by his failed effort to push through private investment accounts for Social Security in 2005, as well as any effort to extend all of his tax cuts, which Democrats say were heavily skewed to the most affluent.
Moreover, with a greater Democratic presence in the Senate, Mr. Bush will have far less latitude in his judicial nominees.
Even if Mr. Bush makes the grand gestures, Democrats heading into the 2008 presidential campaign may not be in the mood to reciprocate. Still, on Iraq, some change is almost inevitable, analysts say.
There is already a vehicle for a new bipartisanship, experts noted. A commission headed by James A Baker, former secretary of state, and Lee H. Hamilton, former Democratic representative from Indiana, is exploring policy alternatives for Iraq and is expected to make recommendations this winter.
House Democratic leaders have already indicated that they will not cut off financing for the war; in many ways, their greatest power will be their ability to investigate, hold hearings and provide the oversight that they asserted was so lacking in recent years.
House Democratic leader Nancy Pelosi and Senate Democratic leader Harry Reid said the American people voted for change in Tuesday's elections.
"I hope that he (Bush) will listen," Pelosi said at a news news conference after receiving a congratulatory telephone call from Bush, who also called Reid.
"I told him (Bush) what I said last night -- that I looked forward to working in a bipartisan way with him, that the success of the president is always good for the country and I hoped that we could work together for the American people," Pelosi said.
Reid said: "It is time to put partisanship aside and find a new way forward - at home and in Iraq. Today, I ask the president to convene a bipartisan Iraq summit with the leaders of Congress."
With the Iraq war a dominant issue, Democrats swept Republicans from power in the House of Representatives and were only one still-contested seat away from dominating the Senate.
After more than two decades, young Americans voted in the largest numbers in congressional elections, energized by the Iraq war and giving a boost to Democrats, pollsters said on Wednesday.
About 24 percent of Americans under the age of 30, or at least 10 million young voters, cast ballots in Tuesday's elections that saw Democrats make big gains in Congress. That was up 4 percentage points from the last mid-term elections in 2002.
"This looks like the highest in 20 years," said Mark Lopez, research director of the Center for Information and Research on Civic Learning and Engagement, which compiled the data based on exit polls. "Unfortunately, we can't say if it's a record because don't have good comparable data before 1986."
Rock the Vote, a youth-and-civics group, said young voters favored Democrats by a 22-point margin, nearly three times the margin Democrats earned among other age groups and dealing a potentially decisive blow to Republicans in tight races.
"The turnout was awesome," said 21-year-old Katryn Fraher, a political science major at the University of New Mexico who helped build a giant map of local polling stations for her school and was among a group of students walking the campus on Tuesday with a blackboard that counted down the time to vote.
Dems will be targeting energy, insurance, pharmaceutical and defense:
The stocks most vulnerable to the Democrats' congressional gains are crowded in the defense, pharmaceutical, oil and insurance sectors, while alternative energy providers are clear early winners from the change.
Money managers and analysts say the Democrats' takeover of the U.S. House of Representatives, and possibly the U.S. Senate, could auger higher taxes, a hike in the minimum wage and scrutiny of tax subsidies enjoyed by some sectors that benefited from Republican control of Congress.
"The Dems will be targeting energy, insurance, pharmaceutical and defense, and they're going to have a lot of power, especially if they've got their friends over in the Senate with a majority," said George Schwartz, president of Schwartz Investment Counsel, manager of the Ave Maria Funds.
ALTERNATIVE ENERGY:
Environmental groups welcomed the election results. "The American people's vision of an energy future that is very different from current policies is the winner, and Big Oil is the big loser," said Gene Karpinski, president of the League of Conservation Voters.
Voter concern over the environment suggests there might be a push in Congress to find funding or tax incentives for alternative energy sources.
There also might be another attempt to tighten emission controls on coal and other sources of greenhouse gases. To date, seven different bills have been proposed by Democrats, Republicans and independents in the Senate to address greenhouse gas emissions, but none has advanced.
"You've seen the price of oil take a tremendous increase in the last year, so anything that could help offset that or be an alternative to oil, could get a boost," said Bob O'Brien, head equity trader at Evergreen Investments in Boston.
Ethanol producers, such as Archer Daniels Midland Co.
Big OIL:
Democrats want to end tax subsidies directed to big oil companies and enact punitive laws to prevent what politicians say is price gouging, Merrill Lynch said in a note to investors.
The huge increase in profits at many energy companies, a Democrat target over the past year, and the traditional heavy backing by Republicans of oil and gas companies suggests that sector will be under pressure, analysts said.
"Every oil and gas company in the S&P 500 and every one in the Russell 2000 has been a net contributor to the Republican party over the last 10 years. That's the only industry for which that's true," said Daniel Adamson, chief executive of Blue Investment Management.
"If one had to predict a sector that would fare the worst, given new leadership in the House, it would be that one," said Adamson.
DEFENSE:
Investors had sold defense stocks thinking that a victory by the Democrats could mean cuts in military spending. But experts say Pentagon outlays will keep up their spectacular growth for at least two years, regardless of Tuesday's outcome.
In the run-up to the elections, Pentagon suppliers' shares took a small beating.
In the past two weeks, the Standard & Poor's Aerospace and Defense index <.GSPAERO> had dipped nearly 4 percent from a record high on Oct. 16, while the S&P 500 moved higher.
"If you look at what they're (the Democrats) saying, and if they can get these things to pass, I would imagine you're going to see the defense sector weaken. They're talking about how they can exit Iraq sooner," said Jim Huguet, president and co-chief executive of Great Companies Inc., which oversees about $400 million, primarily in equities.
Arabs relished on Wednesday the beating the U.S. Republican party took in mid-term elections, saying President George W. Bush had been given a well-deserved slap for heavy handed Middle East tactics.
But few believed the elections that handed Democrats at least partial control of Congress would exact any real policy shift on the issues they care about most -- from the U.S. role in Iraq to the Iranian nuclear row, Israel and Sudan.
"There will be a feeling that justice has been done partly, although not completely," said Mustafa al-Sayyid, a political scientist at Cairo University.
"People are realistic. A victory in Congress doesn't mean the administration will be forced to change its foreign policy. Moreover President Bush is known to be quite rigid. His approach is ideological and it is difficult to expect he will change."
Iraqi leaders predicted no change in U.S. Iraq policy and ordinary citizens doubted any U.S. party could restore their wrecked country after Democrats swept mid-term elections and Defense Secretary Donald Rumsfeld quit.
President Bush said Rumsfeld, one of the main architects of the war in Iraq, had resigned because there was a need for a "fresh perspective" on Iraq. He also conceded his Iraq policy was "not working well enough, fast enough".
Nadim al-Jabiri, an academic and prominent member of the dominant Shi'ite Islamic bloc the United Iraqi Alliance, said Rumsfeld's resignation was no surprise.
"The military strategy they have used won the war but failed to bring stability. I don't think his resignation will have an effect on the ground as our problems are too great," he said.
Some ordinary Iraqis took a similar view.
"Iraq is long ruined and American policy is fixed, whichever party takes control of Congress. If the Democrats can finally bring us some security they are welcome, but I believe no one can succeed," said Abdullah, a 28-year-old computing student.
Mohamed Husni, a 24-year-old taxi driver, said he hoped the shift in Congress, where the Democrats took control of the House from Bush's Republicans and moved close to victory in the Senate, would bring an immediate withdrawal.
"The Americans have ruined everything and the only solution is to let Iraqis deal with this mess," he said
Prime Minister Nuri al-Maliki, whose testy relations with Washington have often spilled into public clashes, told the BBC in an interview that he did not think a shift in Congress would bring any noticeable change in U.S. policy on Iraq.
"I understand that America will always work for America's interest in its foreign policy. The relationship will not experience any major or dramatic change if new opinions surface after the elections," he said in the interview filmed on Tuesday.
Europeans welcomed President George W. Bush's resounding defeat in mid-term U.S. elections, hoping the resurgent Democrats would help end ugly rifts that have soured trans-Atlantic relations in recent years.
However, analysts said U.S. foreign policy was unlikely to change overnight, especially in Iraq, and warned that the Democrats might prove more awkward to deal with than the beaten Republicans in areas such as international trade.
European sympathy toward the United States has largely evaporated since an initial burst of solidarity following the September 11, 2001 attacks, and Bush's administration is viewed with suspicion, if not downright hostility, in many countries.
"There is less White House in America now and a little less America in the world," said Dominique Moisi, special councilor at the French Institute of International Relations.
The Bush administration has progressively alienated Europe over an array of issues, notably Iraq, Guantanamo Bay and its refusal to sign the Kyoto Protocol on global warming.
"These years have been marked by the failure of Bush's unilateral policy," said Piero Fassino, head of Italy's largest ruling party, the Democrats of the Left.
"We now need to think that world problems cannot be resolved by only one country, even if it is the most powerful one."
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