What the Midterm Results Mean for Advertisers

November 6, 2014

The 2014 midterm elections have been surprising and record-setting in more ways than one – most notably in the billions of dollars spent on the 1.5 million political ads that just ran in this midterm election and the high number of Democratic incumbents unseated.  There are also a few races that still cannot be decided and are dragging the elections on even longer.  

However, even before these elections, we knew a major shakeup in the Congress was inevitable due to the retirements of key Senate Chairs – including Sen. Jay Rockefeller (D-WV) of the Commerce Committee and Sen. Tom Harkin (D-IA) of the Health, Education, Labor, and Pensions (HELP) Committee – and a self-imposed extensive mandated reshuffling of House Committees.  In particular, the House Ways and Means Committee is losing Chairman Dave Camp (R-MI) to retirement.  This has resulted in a race for the open Chair spot between Rep. Paul Ryan (R-WI) and Rep. Kevin Brady (R-TX).  A number of political pundits have predicted that Rep. Ryan will get the Chairmanship, although Rep. Brady is well-liked and outranks Ryan in seniority on the Committee.  If Ryan wins the Chairmanship, he will work with the new Republican Senate majority to move to a dynamic scoring approach, as opposed to the current method of static scoring, to forecast tax impacts.  

In meetings with Congressman Ryan, he said that because there had been years of work put into developing the Camp tax reform proposal, he would start with that as the baseline moving forward.  The Camp tax plan includes a proposal to amortize advertising costs, which we have been very vocal against as it has the potential to cost advertisers $169 billion according to IHS Global Insight, a noted economic think tank.  

Tax reform is slated to be an important issue in the near future, as Speaker of the House John Boehner has listed tax reform as his number one legislative priority for the next Congress and soon to be Senate Majority Leader Mitch McConnell is also open to working on this issue.  Furthermore, President Obama highlighted tax reform in his post-election speech, stating that tax reform that closes loopholes is the top area where Democrats and Republicans could work together to create more jobs and strengthen the economy.

Now that we know the Republican Party has taken control of the Senate, it is predicted that the following Senators will lead committees of importance to the advertising community.  For the Senate Commerce Committee, Sen. John Thune (R-SD) is expected to be the Chair.  Thune usually advocates for limited regulation.  In the Senate Finance Committee, Sen. Orrin Hatch (R-UT), who is known to be receptive to business interests but has also worked with Democrats on initiatives over the years, will become the Chair.  Finally, in the Senate Judiciary Committee, the new Chair will be Sen. Chuck Grassley (R-IA).

Another surprising development in these elections is that Rep. Lee Terry (R-Neb.), an incumbent who is the current Chairman of the House Commerce Trade Subcommittee, has lost his seat to his Democratic opponent, state Sen. Brad Ashford.  Terry has been a stalwart supporter of passing legislation to limit the threats of patent lawsuits and he has also supported our industry in the online privacy and data security areas.  

The overarching question is whether the elections are going to change a Congress that has been described as gridlocked, dysfunctional, catatonic, and paralyzed.  If both sides of the aisle take these elections as a sign that they must do more, we could see serious legislation being passed, particularly in top level issue areas for the advertising community.  One of the most important ways advertisers can impact members of Congress is through grassroots contacts with people who live, work and vote in their states and districts.  ANA will continue to enlist the help of our members to reach out to members of Congress on these important issues.

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