Republicans take US House of Reps as voters deliver Obama a message on struggling economy

The Republicans took control of the US House of Representatives overnight, with the country’s mid-term elections delivering a severe blow to president Barack Obama and the Democrats as voters remain discontented with the country’s failing economy.

But while the GOP may have picked up over 60 seats, with potentially more to come, the Democrats still control the Senate, ensuring a gridlock that will make it difficult for Obama or the Republicans to pass any meaningful legislation over the next two years.

In response, Obama said the result was humbling and that the massive body blow was clearly a message from the electorate regarding the country’s economic instability.

“I think that there is no doubt that people’s number one concern is the economy,” Obama said. “And what they were expressing great frustration about is the fact that we haven’t made enough progress on the economy.”

In the past two years, Obama has passed multi-billion dollar stimulus packages and a significant health care reform package in an attempt to kick-start GDP growth. But unemployment remains at 9.6%, and key industries including the manufacturing and services sectors are suffering badly.

New figures from Dun & Bradstreet also suggest US businesses may be suffering more than expected. The US Government reported 59,000 companies folded in the 12 months to 30 June, but the company says that the real number could be as high as 80,000.

D&B says this is because there are “hidden” failures not captured by bankruptcy statistics. And the outlook isn’t great either, D&B says, with stimulus beginning to taper off, and the percentage of delinquent debts still remaining above pre-recession levels.

“The tapering off of government stimulus spending combined with high levels of unemployment, slow job growth and the ongoing slump in the housing market remain core stumbling blocks to the recovery gathering pace,” D&B says.

“These factors will continue to undermine consumer spending – the key driver of the US economy – and consequently businesses will continue to face high levels of uncertainty and risk. Overall economic activity will remain well below pre-crisis levels for much of 2011.”

Obama said he has to take “direct responsibility” for the fact progress has been slow. “I have got to do a better job – just like everybody else in Washington does.”

The Democrats lost 60 seats overnight, while 13 still remain in play. The GOP now has a majority of 239 seats in the 435-seat house.

In the Senate, the Democrats hold a majority of 51 seats, but still managed to lose six seats to the Republicans, who now hold 46. Three remain in play.

And while voters were spiteful about the Democrats’ perceived inability to deliver any significant economic reform, that discontent has intensified as Obama passed a trillion-dollar health care package that has pushed the country’s deficit and debt even higher.

This has allowed Republican deficit-hawks to sweep into power, promising to cut spending, slash the deficit and help the private sector increase jobs growth, with the aim of bringing the economy out of its rut.
GOP House leader John Boehner noted yesterday the victory means Republicans will have to “roll up our sleeves”.

“The American people are concerned about the government takeover of health care,” Boehner said. “I think it’s important for us to lay the groundwork before we begin to repeal this monstrosity and replace it with commonsense reforms that will bring down the cost of health insurance in America.”

“It’s clear the American people want us to do something about cutting spending here in Washington and helping to create an environment where we’ll get jobs back.”

Republican National Committee Chairman Michael Steele said on CNN’s State of the Union that while the Republicans welcome Obama’s pledge to negotiate and compromise, he says the GOP will not back down on slashing debt and the deficit.

“To be very clear here, when we talk about not compromising, not compromising away on the principles that our party have run on and have stood for, for a long time.”

“For example, we’re not going to compromise on creating more debt. We’re not going to compromise on raising the debt ceiling. We’re not going to compromise on increasing the burdens on the backs of small-business owners and families.”

However, the Republicans will face difficulties. Firstly, the party is pushing for an extension of the tax cuts introduced during George W Bush’s term, which will put pressure on the deficit, which currently stands at over $US1.2 trillion.

One of the most significant results of the night was the success of several Tea Party candidates. While the wins were not enough to deliver the Republicans both the Senate and the House, several senators and even gubernatorial candidates endorsed by the radical splinter-group of the Republican party have taken office.

“I don’t think there’s any question that if it were not for the Tea Party, the Republican margin in the House of Representatives would not be as high as it’s going to be,” CNN senior political analyst David Gergen said yesterday. “They gave a lot of enthusiasm and fuel to the Republican Party.”

Tea Party-endorsed candidates including Rand Paul, Marco Rubio and Ron Johnson, who replaced long-term Democratic senator Russ Feingold in Wisconsin, will now all take office.

The Republicans are keen to act on their agenda, which includes repealing health care reform, blocking restrictions on carbon emissions, stopping any new taxes and spending more on defence.

Analysts suggest Obama now faces an extremely tough two years. With a gridlocked Congress, and an electorate still eager to see the economy improve, the President faces another backlash in 2012 if no improvements are made.

“Nine-point-six percent unemployment is the worst in a midterm since 1982,” University of California political scientists Gary Jacobson told Reuters. “The most important single factor shaping electoral politics in this cycle is the economy, but the unemployment rate is the most obvious emblematic feature of that.”