Post-election jubilation among Democrats last fall as they achieved huge House and Senate majorities is melting into the reality of governing during the dog days of summer.

The House has already departed Washington to begin its summer recess. The Senate’s break is set to begin on Friday, August 7.

Each chamber has missed the deadline set by President Barack Obama to pass health care reform bills before leaving town for their summer getaways. The delay can be attributed in part to Republican resistance and to fissures within the Democratic Party.

In order to achieve their majorities, Democrats wisely extended their tent. The head of their House campaign arm in 2006—Rahm Emanuel, who is now White House chief of staff—recruited moderates who could win conservative-leaning districts. Many of those victors became members of the Blue Dog Coalition.

Now the Blue Dogs are barking on health care legislation. Several of them who sit on the House Energy and Commerce Committee were successful in getting the panel to include amendments that would lower the cost of the measure and allow negotiated reimbursement rates in a government-run insurance option, rather than setting them based on Medicare rates.

Their intervention inflamed House progressives—formerly known as liberals. Just before the House broke for recess, 57 members of the Congressional Progressive Caucus sent a letter to House Speaker Nancy Pelosi, D-California, asserting that the Energy and Commerce agreement would reduce subsidies for the poor and middle class.

“In short, this agreement will result in the public, both as insurance purchasers and as taxpayers, paying ever higher rates to insurance companies,” the letter states.

Moderate and liberal Democrats will now have to wrestle a final House bill to the ground. The commerce, labor and tax committees have approved measures with varying kinds of employer mandates and public options.

In a July 30 press conference, which was held outdoors despite 90-degree temperatures and high humidity, leaders of the progressive Democrats warned that they would oppose what they called a watered-down bill.

“We want a plan with a meaningful public option,” said Rep. Lynn Woolsey, D-California and a former HR professional. “We can compromise no more.”

She and her colleagues were occasionally drowned out by protestors chanting for a single-payer government health care system. Some progressives support such a plan, but congressional leadership has ruled it out. Nonetheless, opponents of the public option call it the first step on a slippery slope to government-run health care.

Over in the Senate, health care reform also is in flux. The health committee has approved a bill with an employer mandate and a public option, while the Finance Committee is trying to cobble together a bill with bipartisan support that would jettison each idea.

Reconciling those two bills—once Finance has introduced and approved its version—is going to be a big challenge, if Democrats want to attract more than token GOP support and ensure that their own moderates stay on board.

The rising tension was illustrated in a July 30 Senate press conference. Majority Leader Harry Reid, D-Nevada, dropped all senatorial courtesy in answering a question posed by my Crain Communications colleague Matthew DoBias of Modern Healthcare.

DoBias asked a legitimate question: How will the two Senate committees be able to bridge the differences between divergent bills? The answer, which will unfold over the fall, may determine the outcome of health care reform.

Reid took umbrage. “With all due respect,” Reid said, pausing and casting an icy stare at DoBias, “you don’t know what you’re talking about. These are not two separate products.”

But then Reid seemed to endorse the premise of DoBias’ query with the rest of his answer about how he is going to merge the bills.

“I’m going to do it very carefully, recognizing we have to have 60 votes,” Reid said. “I’d like to have a few more than that.”

There are a total of 60 Democrats in the Senate, just enough to overcome a filibuster. Getting that number of votes—and 218 in the House—will be as much a test of Democrats’ ability to line up their colleagues as it is to attract Republicans.

The first week has become the worst part of each month. That’s when bad economic news gets worse—or at least when the bad news is first announced. On Friday, February 6, the Bureau of Labor Statistics reported a loss of 598,000 jobs in January, bringing the total to 3.6 million since December 2007.

The collapsing economy is creating more and more “have nots,” as in those who don’t have a job. If you’re not a “have not,” you’re probably worried about becoming one.

In this atmosphere, it’s no surprise that the biggest “haves”—Wall Street CEOs—are coming under heavy fire for their exorbitant pay packages. They raked in enormous bonuses while their companies lined up like individual Oliver Twists asking for hundreds of millions of federal bailout dollars.

They’ve made themselves inviting political targets. On February 4, President Barack Obama took aim by issuing an executive order that would limit executive pay to $500,000 annually at financial institutions that seek “exceptional assistance,” as opposed to TARP (Troubled Assets Relief Program) capital injections, from the government in the future. 

The only addition to that base pay would be restricted stock options that only vest when the government is paid back. In addition, golden parachutes would be limited for the top 25 executives.

As he has done frequently in his short time in office, Obama used the bully pulpit to make his point. He excoriated the Wall Street crowd, calling the disbursement of “customary lavish bonuses … the height of irresponsibility.” He was just warming up. “That’s shameful,” Obama said. “And that’s exactly the kind of disregard for the costs and consequences of their actions that brought about this crisis: a culture of narrow self-interest and short-term gain at the expense of everything else.”

Wall Street executives have become fodder for many Democratic causes. Rep. George Miller, D-California and chairman of the House Education and Labor Committee, used CEO pay as a rhetorical device in promoting his favorite legislation, a measure that would make it easier for employees to form unions.

In a Capitol Hill rally on February 4, Miller said the bill would give workers leverage to raise their wages and increase their benefits, making it possible for them to gain their fair portion of gains from their productivity that are now going to “corporate elites” like CEOs and shareholders.

But there is hope yet for the embattled Wall Street CEOs. Just as the executive pay rules included in TARP last fall did not put a crimp in the compensation spigot, the new ones may not shut off the cash flow either.

For one thing, the executive order only applies to companies that ask for “exceptional assistance” in the future. Those that sought it last fall—including American International Group, Bank of America and Citigroup—are not affected.

In addition, the rules apply only to people at the top of the financial firms, leaving the door open for many other multimillion-dollar bonuses farther down the corporate ladder. Critics quickly pointed out the shortcomings of the plan.

Some assert that Wall Street leaders have the insight, financial acumen and leadership ability to deserve every penny of the tens of millions—or even hundreds of millions—of dollars they receive. Of course, the disastrous shape most of their companies are in creates at least an embarrassing if not devastating counterpoint to this argument.

Quite apart from their talent, though, the executives have something else just as important going for them—their collective political war chest. The pilgrimage to Wall Street for political donations each election cycle is a bipartisan phenomenon.

Obama did quite well trolling the Street. He raised $14 million of his $750 million from the “securities and investment” industry, according to the Center for Responsive Politics. Companies that received federal bailout money last fall made $37 million in federal campaign donations.

Contributing money to a candidate is not inherently corrupt. In fact, it’s a form of free speech that should be defended—as long as the sources of campaign cash are transparent.

But it does pay to follow the money in politics. Politicians might nip at the hand that feeds them. But they probably won’t chomp down with executive pay laws that have real teeth.

One of my regrets from my undergraduate days was that I didn’t major in economics. I was in the School of Management at Purdue University when a professor encouraged me to change my degree track.

I turned him down. Years later, I wish I hadn’t ignored Professor Hueckel’s advice. An economics education provides a compelling framework for discerning how the world works. But I did take a couple econ courses.

One of the terms I still remember is “stickiness of wages.” This is the concept that once someone has been given a raise, it’s difficult, if not impossible, to get him or her to give it up.

During the congressional debate over the auto bailout last week, Senate Republicans essentially asked autoworkers to immediately cut their wages. Part of the deal proposed by Sen. Robert Corker, R-Tennessee, would have required the United Auto Workers to lower its members’ pay by a certain date to achieve parity with the compensation offered by U.S. operations of Toyota, Honda and Nissan.

Senate Republicans claimed that car companies spend $71 per hour on labor versus the $49 per hour that foreign manufacturers pay. They demanded union concessions as one of the prices for their support of an auto industry bailout.

“We simply cannot ask the American taxpayer to subsidize failure,” said Senate Minority Leader Mitch McConnell, R-Kentucky, in floor speech during the debate.

The UAW disputes that the wage disparity is that great. The union also maintains it already made sacrifices to pave the way for a bailout. It agreed to let the car companies delay billions of dollars of payments into the fund that would cover retiree health benefits. It also shut down the “jobs bank” that allowed workers to continue collecting their pay even when they were laid off.

The unions say they went the extra mile by negotiating with Corker. But they refused to agree to the arbitrary deadline for wage parity. The union said in a statement that it “recognized that this would take time to work out and implement, using attrition programs to allow the companies to hire new workers at the lower wage and benefit rates.”

Reasonable people can disagree about whether generous union contracts have led to the near downfall of U.S. carmakers. But the wages earned by auto workers are a fact of life.

What American worker, in any industry, would have the wherewithal to immediately give up a big chunk of his or her pay? Could you do that? I couldn’t.

In the days since the demise of the bailout bill, the UAW has made its displeasure with Corker known. The only thing keeping a lid on the passion is that the Bush administration is going to use some of the previously approved federal rescue money to help the car companies.

But the bad blood between the GOP and unions will continue to boil. Leo Gerard, president of the United Steelworkers, expressed his frustration even before Senate Republicans filibustered the bill.

In a conference call last week on an economic stimulus bill sponsored by the Campaign for America’s Future, Gerard said that the recession is gutting America’s industrial base.

“There’s a whole bunch of angry and anxious [union] members out there,” Gerard said.

He warned the GOP not to scuttle the auto bailout.

“If we have Republicans that try to hold this up, we’re going to take to the streets,” Gerard said.

Republicans make some cogent and persuasive arguments that unionization raises costs for employers. But you have to wonder whether the party chose the right fight by going after organized labor on the auto bailout.

The unions may have earned sympathy during the tussle. And now they will be even more fired up to push through Congress the Employee Free Choice Act. The so-called card-check bill would make it easier for workers to organize.

Republicans and business groups have vowed to kill the bill. Their assertion that it undermines the secret ballot in the workplace might gain traction. But the GOP may find that poking labor in the eye over the auto bailout enraged its competitor—making a win on card-check a sticky proposition.
 

As someone who has worked in Washington for 16 years, it’s hard for me to imagine this place in the way that the presidential candidates envision it.

Both Sens. John McCain and Barack Obama talk about a bipartisan or even “post-partisan” atmosphere if they win the White House.

We’ll see. I arrived in Washington just as the “permanent campaign” became a staple of capital culture. President Clinton’s “War Room” wasn’t disbanded after he won the 1992 election. It swung into action whenever he tussled with Congress.

President Bush and his top political aide, Karl Rove, brought their “us against them” attitude from the campaign trail to the White House, making many interactions with Capitol Hill a showdown rather than a negotiation.

But this kind of fighting is turning off voters, according to Greg Casey, president and CEO of the Business Industry Political Action Committee. His organization helps companies become more involved in politics—and policy—by communicating with their workers.

Voter disgust with partisan gridlock has created an opening for businesses, according to Casey. In the cover package of Workforce Management’s September 8 edition, he explains that people have lost faith in political parties and are turning to their employers for guidance when it comes to issues and elections.

Voters themselves are moving to the middle of the political spectrum, Casey says. In that post-partisan geography, business involvement can make a difference.

One way to avoid alienating employees is to not overtly take sides in campaigns. Yes, business interests have typically supported Republicans. But that’s not necessarily going to be the case in an evolving political climate where the middle holds sway.

For instance, Democrats took over the House and Senate in 2006 thanks to the success of candidates who ran to the right of the party’s Capitol Hill leadership. Many of those folks won corporate backing.

For Casey, the important thing is to elect members of Congress who will keep taxes low on profit and capital gains, push for health care and energy reform and advocate trade liberalization. As long as they back policies supporting “capital formation,” party labels don’t matter.

“The key is to refocus government affairs on policy outcomes and not just access to policymakers,” Casey says. “An election happens every two years. Policy is an ongoing operation.”

Both elections and policymaking will occur in the middle, according to Casey.

“Neither political party is currently positioned to be the majority party given the nature of their caucuses right now,” he says. “We in the business community have an opportunity to shape the public discourse on the No. 1 issue of the day, which is prosperity,” and formulate an agenda that appeals to the “new emerging middle.”

The election will be decided by independents who disdain partisanship and want politicians to get things done in Washington. Perhaps corporate interests will influence that important voting bloc.

Even in an exciting and unpredictable election year, Sen. John McCain’s choice for running mate was a stunning pivot in his campaign—one that could make HR issues more prominent in the race.

McCain, who will formally become the GOP presidential nominee later this week, had been gaining ground on Democratic nominee Sen. Barack Obama by emphasizing what he called his superior experience and readiness for office.

Although they are assumed to be drawbacks, McCain’s age, 72, and more than 20 years in the Senate are a potential comfort to people uneasy with the young Obama, 47, who remains largely undefined after nearly four years in the Senate and several in the Illinois state Legislature.

But McCain must have decided that the experience tack would provide ephemeral benefits. Instead, he concluded that the election will be decided on “change.”

So, he plucked Alaska Gov. Sarah Palin out of relative obscurity and thrust her into the national spotlight. McCain says that Palin’s record of reforming the Alaskan government and the state’s GOP would give him an ideal vice president and partner to shake up Washington.

McCain hopes Palin energizes his “change” brand and makes it harder for Obama to cast McCain as a continuation of the Bush administration. Palin, 44, is now the fresh face and untested wild card in the race, not Obama.

One way she could change the campaign for Workforce Management readers is being a touchstone for HR topics. First, there is the issue of readiness to be president.

Just as corporate boards parse the background of potential CEOs, voters will have to decide whether Palin is prepared to be a heartbeat away from the Oval Office.

Republicans argue that Palin’s 20 months as Alaska governor give her more executive seasoning than Obama. In addition, she has hands-on experience dealing with energy policy—one of the top campaign issues—thanks to her service on the Alaska Oil and Gas Conservation Commission.

Democrats decry her lack of foreign policy background, even though Obama’s introduction to the subject has consisted of his brief Senate career—about half of which he has spent running for president.

But in fairness to Obama and Palin, a thin résumé in world affairs is a canard. Washington has a deep bench of foreign policy experts. Neither will be on their own trying to figure out policy toward Russia.

Plenty of brilliant minds currently working at Washington think tanks or in the State Department would jump at the chance to join Palin’s VP staff or Obama’s national security team. Palin and Obama won’t lack for foreign policy tutors, especially if you count all the members of Congress who will weigh in. It will be up to them to use their best judgment on the advice they get.

Foreign policy was not on McCain’s mind when he selected Palin. In part, he was making a pitch for disaffected supporters of Sen. Hillary Rodham Clinton and for unaligned suburban women.

It’s unclear whether Palin will inspire those women to vote for McCain. But she almost certainly will cause Obama to focus even more on women’s issues than he was going to anyway.

In an effort to strengthen his ties to the Clinton Nation, look for Obama to emphasize legislation providing for equal pay, paid sick days and paid time off. He will assert that McCain and Palin are detrimental to working women.

Although Palin is even more conservative than McCain, her biography throws a curve into the HR debate. She will probably oppose legislation that Obama touts. But she also brings a perspective that Obama and his running mate, Sen. Joe Biden, lack.

Palin is a walking women’s focus group to whom almost any HR professional can relate. She is a working mother who not only returned to the office shortly after giving birth, but she will be doing her job remotely much of the time—running Alaska via BlackBerry and cell phone while she campaigns in the lower 48.

Palin’s is a two-income family dealing with a health care challenge (her infant son has Down syndrome) and a wayward teen (her 17-year-old daughter is pregnant). She had to break several glass ceilings in her rapid climb to the top of Alaskan politics. But she also is defined by a traditional workplace affiliation—her husband is in a union and she once belonged to one.

Obama calls himself a Rorschach test. Everyone sees in him what they want to see. Palin is more a reflection of everyday working women. They can see in her some part of themselves.

It’s likely that HR issues will be refracted through the Palin prism this fall.