Financial Markets Watch Election Results with Interest
STEVE INSKEEP, host:
This next story is a political story, but also an economic one. Democrats have captured the House for the first time since 1994. To find out what that victory means for the economy, the markets and for legislation, we turn to David Wessel. He's deputy Washington bureau chief of the Wall Street Journal and a regular guest here. David, thanks for coming in.
Mr. DAVID WESSEL (Deputy Washington Bureau Chief, Wall Street Journal): Good morning.
INSKEEP: How much really changes now?
Mr. WESSEL: Well, quite a bit changes inside the Beltway. The thing about having a majority of the House is that you control the agenda - you get to decide what bills come up and what don't. Although Republicans still have at least 40 votes in the Senate to block everything, they still have the White House - they definitely have a lot more leverage today than they had yesterday.
INSKEEP: Well, what do Democrats want to do, now that they control that agenda - in one house anyway?
Mr. WESSEL: Well, that's a great question. You know, it's very easy to talk during a campaign, it's a lot harder once you win the election. One thing I think is very clear, the minimum wage is going up. It was interesting yesterday, that in the six states where voters had a chance to raise the minimum wage and link it to inflation so it'll rise automatically every year, they overwhelmingly approved it. Democrats have wanted to raise the minimum wage - stuck at 5.15 since 1997 - and they're almost sure to do that early in their tenure.
INSKEEP: And if the Democrats in the House get that on the agenda and pass it in the first 100 hours, which is something they've promised to do, is this something that the Senate and the president really can't say no to?
Mr. WESSEL: In this case, they can't say no to it. Even some Republicans have been eager to raise the minimum wage. You know, 22 states already have a higher minimum wage than the federal government. There'll be objections to it, but it would surprise me greatly if this is one in which the Republicans chose to draw the line.
INSKEEP: Anything else on the Democratic agenda that seems likely to become law?
Mr. WESSEL: Well, I don't think there's much that's likely to become law immediately, but there are a number of things on the horizon. They're very strong about changing the Medicare prescription drug benefit, giving people more benefits, and they want to do it by squeezing the prices that the drug companies can charge Medicare.
And I think it'll be very interesting to see how they play the free trade issue. There's a lot of skepticism about free trade pacts among the Democrats. There are a number of Democrats who think globalization and free trade are inevitable and good. What price will trade skeptics demand, to get free trade pacts through Congress if they are to get through?
INSKEEP: David, as we know, Democrats and Republicans alike can pass measures that affect the macro economy - the larger world in which we live - but I want to ask about the micro economy. When you have a change in the House like this, can that affect individual companies or even individuals: the tax breaks they get, the subsidies they get or that they lose?
Mr. WESSEL: It certainly can affect individual industries and companies quite typically - differently. Here's one example: Fannie Mae and Freddie Mac, the mortgage giants, believe the Democrats are much more friendly to them than Republicans are. They've been on the defensive, they have been dragging their feet on new legislation to change the regulation of Fannie Mae and Freddie Mac, hoping for a better deal for Republicans.
As I mentioned, the drug companies are squarely in the sights of Democrats and they'll be hit hard. Individual tax breaks? Yes, something will change. I just don't know what it is yet.
INSKEEP: David, thanks very much.
Mr. WESSEL: A pleasure.
INSKEEP: That's David Wessel, he's deputy Washington bureau chief of the Wall Street Journal.
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