What the Election Means for Marketers

November 7, 2018

The midterm Congressional elections generated enough political heat and hot air to threaten to accelerate global warming. This was the most expensive non-presidential election cycle in history. More than $5 billion, much of it for political advertising, was spent collectively across the country. Over 113 Million people voted, a record midterm turnout.

We congratulate all of the winners on Tuesday and look forward to working with them to protect the critical role that advertising plays in our economy and society.

The party in the White House normally loses seats in their first mid-term election, but Tuesday’s elections were far from normal. Since World War II, only three times before have the Senate and House gone in different directions in a midterm. Democrats have seized control of the House, ending eight years of GOP rule. Republicans increased control of the Senate. Several races have not been called so the final margins are not certain.

With Speaker Paul Ryan’s retirement, there is likely to be a leadership fight on the Republican side. There may be a similar contest among the new Democrat majority as several Democratic House members have pledged to oppose the re-election of Nancy Pelosi as Speaker. Finally, it has been widely predicted that there will be substantial changes at the cabinet level and the White House.

In my view, the party split in control of the Congress is only going to further heat up an already overheated partisan environment. I expect the House to carry out a whole series of detailed oversight hearings on the White House and the executive branch. I believe the Senate will continue to push forward on immigration issues and judicial appointments. The question remains whether this will just lead to constant gridlock or whether there will be sufficient consensus to push through bipartisan legislation in certain areas, such as infrastructure programs and drug pricing.

So what does all this political turmoil mean for the marketing community? It is likely that, generated from the House, there will be a far greater focus on many of our key issues, including privacy and data security as well as on controversial product categories, including food marketing, pharmaceutical marketing and marketing to children.

Democratic control of the House means there will be a large team of new committee and subcommittee chairs, who generally will be far more regulatory-oriented than their Republican predecessors. For example, the new chair of the Energy & Commerce Committee will likely be Congressman Frank Pallone from New Jersey, who has been critical of pharmaceutical advertising even though several major prescription drug companies are headquartered in the Garden State.

The chair of the Judiciary Committee most likely will be Congressman Jerry Nadler from New York, who has consistently put forward legislation to remove the tax deductibility of prescription drug advertising. DTC advertising certainly will be high on the legislative agenda as President Trump and HHS Secretary Azar are pushing a rulemaking proposal to require price disclosures in many prescription drug advertisements. Two prominent subcommittee chairs will be Congresswoman Jan Schakowsky, a strong consumer rights activist from Illinois, and Congresswoman Anna Eshoo from California, who has been active on technology and privacy issues. Connecticut Representative Rosa DeLauro, who has been an industry critic on several issues and introduced bills to restrict the tax deductibility of foods of “low nutritional value,” will be a senior member of the Appropriations Committee. California Congresswoman Maxine Waters, a frequent target of the president, will most likely be the Chair of the Financial Services Committee. An unprecedented number of women ran and won elections in the House and this may affect some of the issue focus in 2019.

One piece of very good news – Massachusetts Representative Richard Neal will likely be the new Chairman of the Ways and Means Committee which writes tax legislation. Congressman Neal has been a longtime industry friend who has helped us preserve the full tax deductibility of ad costs as an ordinary and necessary business expense.

While there will be less turnover in the Senate, Senators Chuck Grassley (R-IA) and Richard Durbin (D-IL), who have been severe critics of DTC advertising, will be in key positions within their parties and able to push these issues forward, particularly if Senator Grassley takes over as chair of the Senate Finance Committee, which has health jurisdiction.

Senator John Thune (R-SD), the Chairman of the Senate Commerce Committee, who has taken the lead in pushing privacy legislation hearings forward, will also continue in a leadership position. Tennessee Congresswoman Marsha Blackburn, chair of the Communications and Technology Subcommittee of the House Energy & Commerce Committee and the author of a very broad online privacy bill, was elected to the Senate. She also took a leading role in pushing a major data security bill in the House. We expect her to continue to push for privacy legislation in the “upper house.” Just last week, Senator Ron Wyden (D-OR), the ranking member of the Senate Finance Committee, released an extremely detailed draft privacy bill that would give the FTC substantially enhanced enforcement powers and the ability to impose immediate major fines both for economic and non-economic injuries. This just further demonstrates the growing focus on privacy issues on both sides of the aisle. We expect privacy and data security issues, which presently are ANA’s number one legislative priority, to be an area that gets extensive focus in both houses of the new Congress.

There was substantial turnover in the House and Senate tax committees due to the elections. With the President calling for a new middle class tax cut and the Democrats arguing that the recently passed major tax law needs to be focused on lower and middle class tax payers, we may see action in the tax area, again.

Amazingly, the 2020 elections already have launched: the President has amassed the largest early political war chest in history with over $100 million in the bank. The Democrats have an unusually broad array of candidates, more than 20, scrambling for the Presidential nomination primacy. Senate Republicans will face the exact opposite situation in 2020 from this year where far more Democratic Senators were up for election than Republicans. In 2020, 21 Republicans and only 12 Democrats will face reelection.

There will be only a limited window for any meaningful legislative action through the rest of this year and into 2019 before the presidential and congressional campaigns overtake the full attention of the Congress. Things, inevitably, are only going to get even more contentious and interesting!

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