Here's What The Ultimate Washington Insiders Say Is Going To Happen Now That Obama's Been Reelected

Reid, McConnell, Boehner

Photo: AP

Patton Boggs, one of the top lobbying firms in D.C., has released its forecast for what it expects will happen in the nation’s Capitol this year now that President Barack Obama has been re-elected.The forecast tackles the big questions, including who gets the jobs opening up in Obama’s Cabinet and what will happen with the fiscal cliff, for instance.

Here’s what they predict will happen as Obama enters his second term. 

Don't expect a fiscal cliff resolution until after Christmas

The firm says that nothing is probably going to happen on the fiscal cliff until November 26.

Until then, expect posturing and public interactions so the parties can determine the lay of the land.

The firm writes:

Attention now will turn to the lame duck session that will formally get underway the week of November 12 but won't likely get down to business until the week of November 26.

The firm also expects that a solution -- which could either be a plan to buy time, or some sort of fiscal deal up front -- probably won't happen until after Christmas, cutting this very close to the wire.

Source: Patton Boggs 2012 Post-Election Analysis

Patton Boggs points out that the Senate's bipartisan 'Gang of Eight' has been furiously planning for the fiscal cliff, and has even convened with former deficit commission heads Alan Simpson and Erskine Bowles to talk about a deal based off their recommendations.

According to Patton Boggs, the group of four Republican and four Democratic Senators is working on 'a framework for a deficit reduction plan comprised of spending cuts, tax reform, and changes to entitlement programs that is reportedly modelled after the $4 trillion proposal the National Commission on Fiscal Responsibility and Reform.'

Source: Patton Boggs 2012 Post-Election Analysis

... but don't expect it to succeed

The firm predicts:

For the Administration, an opening bid might include a commitment to reform the tax code while reducing entitlement spending in 2013, tied to an insistence that all the Bush cuts are eliminated, now and forever, for income above $200,000/$250,000.

For Congressional Republicans, an opening bid might include a willingness to discuss raising revenue as part of tax and entitlement reform next year, predicated on a straight one-year extension of the Bush tax cuts in the interim.

Source: Patton Boggs 2012 Post-Election Analysis

In the end, the ideal solution is a Grand Bargain

The ideal situation for both the administration and Congress is something similar to the 'Grand Bargain' idea that the parties floated last year.

Serious negotiations will likely occur, and here's what Patton Boggs expects the result to look like:

A first step could be a willingness to extend the Bush cuts for one year, either income limited or not (at, for example, $500,000-$1,000,000), while including a process with agreed-upon numbers for revenue raising tax reform and entitlement spending reform in 2013.

In this sort of deal, Democrats get raised revenue and Republicans get lower marginal rates and a broadened tax base.

Entitlement reform would allow Congress to tackle the most significant drivers of the long term debt, consistently championed as necessary by most Congressional Republicans, and increasingly acknowledged as necessary by the Administration and some Congressional Democrats

Source: Patton Boggs 2012 Post-Election Analysis

Paul Ryan might lose his job as the House Budget Chairman

Republicans have a rule designed to limit the concentration of power in the hands of committee leaders. This time, it could affect the man their party nominated to be vice president.

There are six-year congressional 'term limits' for chair people and ranking members of major committees, and Ryan's term as House Budget Chair is up this year. Unless he can get a waiver from party leadership, he'll have to step down from the position that made him famous.

If he doesn't score that extension, Patton Boggs predicts that the job will go to Republican Congressman Scott Garrett from New Jersey.

Source: Patton Boggs 2012 Post-Election Analysis

Dodd-Frank isn't going anywhere

New energy legislation is coming, but Obama will leave the fracking issue to the states

There's a bunch of possible replacements for Secretary of State Hillary Clinton

Patton Boggs considers Sen. John Kerry to be the frontrunner for Secretary of State, but warns that Democrats might want to keep him where he is 'given the odds that Senator Scott Brown, having just lost his seat to Senator-elect Elizabeth Warren (D-MA), would likely be favoured to win the special election to fill his seat.'

Other candidates to replace Clinton include:

  • U.S. Ambassador to the United Nations Susan Rice, 'as befitting her rapid rise through the Democratic foreign policy establishment.'
  • Departing Senator Richard Lugar (R-Ind.)
  • Congressman Howard Berman (D-Calif.), who just lost his seat to fellow Democratic Congressman Brad Sherman as a result of redistricting.

Source: Patton Boggs 2012 Post-Election Analysis

There are four men on the shortlist to replace Tim Geithner at the Treasury

As Treasury Secretary Tim Geithner prepares to exit the Obama cabinet, the president will need a new financial consigliere.

Here's the shortlist, according to Patton Boggs:

  • Former Clinton White House Chief of Staff Erskine Bowles
  • White House Chief of Staff Jacob Lew
  • Evercore CEO and former Deputy Treasury Secretary Roger Altman
  • BlackRock CEO Larry Fink

Source: Patton Boggs 2012 Post-Election Analysis

With Leon Panetta stepping down as Secretary of defence, Michelle Flournoy is the likeliest candidate for the job

Janet Napolitano will stick around for Obama's second term

The report predicts that Homeland Security Secretary Janet Napolitano will likely remain in Obama's Cabinet for a second term and notes that the former Arizona Governor and the president get along very well.

But the report also states that Napolitano could transition to a new role in the administration, noting that she is rumoured to want the Attorney General job if Eric Holder departs.

Here's who Patton Boggs thinks might replace her if that happens:

  • Retiring Senator Joe Lieberman (I-CT)
  • New York City Police Chief Ray Kelly
  • Former Los Angeles Police Chief and former New York City Police Commissioner Bill Bratton
  • Former Congresswoman Jane Harman (D-CA)
  • Former Coast Guard Commandant Thad Allen

Source: Patton Boggs 2012 Post-Election Analysis

Now see what's next for Obama...

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