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How the 2010 Midterm Elections Did and Did Not Change the Advertising Agenda

Background

Last Tuesday, the Democratic Party was dealt a significant blow in the midterm elections.  The Republicans earned a net gain of 61 seats in the House of Representatives and 6 seats in the Senate. Six House races have not yet been firmly decided.  This will give the Republicans a majority in the House for the 112th Congress, while the Democrats will retain a majority in the Senate.  Republicans have made a net gain of six governorships, while the governor’s mansion of Rhode Island was won by an independent, former Senator Lincoln Chafee. 

Many long-serving, powerful members of the House were defeated in their bids for re-election, including several with whom the advertising community has had long relationships.  Among those defeated were three House committee chairmen, thirteen House subcommittee chairmen, more than 20 members of the conservative Blue Dog Coalition, and at least 18 members of the moderate New Democrat Coalition. With the results of six races still to be determined, the new House is expected to be made up of 240-245 Republicans and 190-195 Democrats.

Some of the most notable House members defeated were:

In the Senate, the Republicans made a net gain of six Senate seats.  This will give the Senate 53 Democrats (including two independent Senators who caucus with the Democrats) and 47 Republicans.  

Republican pickups in the Senate were as follows:

Democrats held on to five closely contested seats:

Therefore, much of the political agenda of the Democratic Party will be initiated and championed in the Senate, where key Chairmen with major advertising concerns, such as Jay Rockefeller (D-WV), Tom Harkin (D-IA), and Max Baucus (D-MT), will retain their gavels.  Members of the Republican leadership, on the other hand, have stated publicly that they would like to substantially roll back or modify much of the legislation passed under the 111th Congress, including the Health Care and Financial Reform bills.  In addition, the Republican leadership has pledged to stop the progress of Cap and Trade Environmental Proposals.  These issues are likely to be key issues of debate in the 112th Congress.  

The Lame Duck Session of Congress


A lame duck session of Congress is set to convene on November 15, 2010.  A number of issues are expected to be debated during the four to six weeks that Congress will be in session before Christmas.  These include:  a defense spending authorization bill, an extension of long term unemployment benefits, preventing cuts to doctors’ Medicare reimbursements, child nutrition, several treaties and trade agreements, an extension of the so-called “Bush Era Tax Cuts,” and a stopgap spending bill to finance the federal government through early 2011.  The most controversial of these issues will likely be the spending bill and the tax cut extension.  The tax cut extension bill, if fully reauthorized, has been estimated to increase the deficit by at least four trillion dollars over the next 10 years, and the debate on this issue may signal how tax policy will be handled in the next Congress.

Advertising Impacts


Numerous issues affecting the advertising industry will continue to be active, regardless of the changes in party control.  Online privacy and behavioral advertising will still be hot-button issues in the coming year.  Although the author of major draft privacy legislation in 2010, Congressman Rick Boucher (D-VA) was defeated, the Republican co-author of that legislation, Congressman Cliff Stearns (R-FL), remains in Congress and will continue to serve in a senior position on the House Energy and Commerce Committee.  Congressman Joe Barton (R-TX), the current ranking member of the House Energy and Commerce Committee, was quoted last week in the press as stating that online privacy issues would remain a focus of the next Congress.  The identity of the new chairman of the Energy and Commerce Committee has not yet been determined, though those publicly considering campaigns for the job are the current ranking member and former chairman, Joe Barton, Representative Fred Upton (R-MI), Representative Cliff Stearns (R-FL), and Representative John Shimkus (R-IL).  In addition, Tuesday saw the election of Connecticut’s Democratic Attorney General Richard Blumenthal to the seat held by retiring Senator Chris Dodd of Connecticut.  Blumenthal, in recent months, has actively pursued investigations of data collection by Google and has stated an abiding interest in privacy issues.  Senator Jay Rockefeller (D-WV), the Chairman of the Senate Commerce Committee, has held hearings actively focused on behavioral advertising questions in the last year.  Given the Democratic hold of the majority in the Senate, these privacy issues will likely remain active in the 112th Congress.

Also, a large number of the the newly elected members of Congress and governors ran on themes of fiscal responsibility and deficit reduction.  In a time of trillion dollar deficits and multi-trillion dollar national debt, ad tax deduction elimination proposals in controversial sectors may be looked to as a means to help close the gap.  These issues will also surface in the states which, in aggregate, are facing a 260 billion dollar deficit in the next two years and have state constitutional mandates to balance their budgets.

Rulemakings


In addition to issues in the Congress, there are an unusually large number of rulemakings impacting advertising, which are continuing to be considered by federal regulatory agencies.  The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in July of 2010, requires 243 rulemakings and 67 studies, under the jurisdiction of 11 different federal agencies.  The Interagency Working Group (IWG), composed of the Food and Drug Administration, the Federal Trade Commission, the Centers for Disease Control, and the US Department of Agriculture, is expected to release final guidelines on the marketing of foods and beverages to children 17 and under before the end of the year.  These new guidelines may lead to new rulemakings at the federal agency level.  The FTC is also awaiting comments on its proposed major revisions of its Green Marketing Guides, which are due by December 10, 2010.  The FDA is currently pursuing at least seven studies on direct-to-consumer prescription drug advertising.  Chairman Jon Leibowitz of the Federal Trade Commission has publicly expressed support for a Do-Not-Track List for behavioral advertising, and the FTC and the Department of Commerce are expected to release separate detailed reports on privacy in the near future.  This unprecedented amount of regulatory activity at the agency level is likely to pose significant threats to advertising interests in the coming year.

The Courts


There also is an unusually large amount of activity in the courts that could create major precedents affecting the advertising community.  Oral arguments in the Schwarzenegger v. Entertainment Merchants Association case were recently heard in the U.S. Supreme Court, and the eventual ruling could have significant results on the future of violent video game advertising. The Educational Media v. Swecker case, which has implications for the constitutionality of limits on alcoholic beverage advertising in university publications, may advance from the U.S. Court of Appeals for the Fourth Circuit to the Supreme Court.  The FCC v. Fox Television Stations, et.al. case, also known as the “fleeting expletive” case, has been remanded to the U.S. Court of Appeals for the Second Circuit, and the final outcome may have indirect impacts on the commercial speech rights of advertisers. The Commonwealth Brands, et.al. v. USA case, which has major implications for tobacco advertising, remains active in the U.S. Court of Appeals for the Sixth Circuit and may go all the way to the Supreme Court.  These cases will significantly affect the rights and interests of advertisers, regardless of the political situations in the Congress or the Executive Branch.

ANA will continue to monitor legislation, rulemakings, and court cases over the next year, and we will alert our members to important developments.  We track these issues consistently, and our tracking system can be accessed here. We will remain vigilant to any threats to advertising interests that may emerge. 

If you have questions about any of these matters, please contact Dan Jaffe in our Washington office at (202) 296-2359 or by email at djaffe@ana.net. 

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