Tuesday's midterm elections proved to be even more devastating for the Democrats than the polls had been predicting, at least in the House, but the initial response of the stock markets to the new divided government was positive and it certainly portends a much different Congressional outlook moving ahead. In a reversal from the emissions based focus of the 111th Congress, the GOP’s energy game plan for the 112th includes EPA oversight, support for domestic energy sources and nuclear promotion. Today’s GR Insight assesses the potential for compromise in the divided legislature - highlighting issues where the two parties may find common ground as long as relations do not come off the rails during the upcoming tax cut debates.

Tuesday's midterm elections proved to be even more devastating for the Democrats (at least in the House) than the polls had been predicting, but the initial response of the stock markets to the new divided government was positive and it certainly portends a much different Congressional outlook moving ahead.  The forthcoming debate over tax cut extensions will be a preview of whether or not the two sides will be able to constructively work together, but expect the coming period to be messy and slow.   There are significant policy implications of the results across the board - notably for infrastructure and transportation - but particularly for energy.   Though a few House races have yet to be decided, the Republican Party has gained at least 61 seats, the biggest swing in favor of the GOP since the 1930s.  The worst losses by far for the Democrats were concentrated in the industrial Midwest, indicating the overriding importance of job and economic concerns in that part of the country.  More significant over the long term will be all of the Governors’ races where the Republicans did well, which will give them political power in key electoral states like Ohio, Michigan, Pennsylvania and Florida in advance of the 2012 elections, but also redistricting power to draw the “new” map of Congressional seats.  Though the Republicans failed to pick up the ten seats necessary to win a majority in the Senate, the closely divided chamber means that bi-partisan cooperation will be absolutely necessary to pass any major legislation.  Today’s GR Energy and Climate Brief evaluates the outcome of the Congressional Midterm Elections and the implications the results have for Climate and Energy.

The Swing of the House and the Fall of the Old Bulls

A notable aspect of the Democrats' losses was how many senior members, including three long-time committee chairs, lost their seats.  The 36-year veteran James Oberstar (MN), chair of the Transportation and Infrastructure Committee, lost to Republican Chip Cravaack, while the 28-year Budget committee chair John Spratt (D-SC) lost to Republican Mick Mulvaney.

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