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With only 24 hours left before the formal Nov. 2 Mid-Term elections begin, Wall Street and Madison Avenue pollsters argue the Republican Party will best help the U.S. housing industry recovery in 2011 and 2012.Wall Street and others have switched direction, reduced contributions to Democrats, Independents and Tea Partyists and, instead, have been pouring billions (that's B with a capital B) into GOP-backed election race coffers, according to the latest buzz from various official and unofficial online and print publications.
The Weekly Standard reports that if the pollsters are right, or even close to right, the Republicans will take control of the House of Representatives after all the votes are counted.
"They might even take over the Senate, but that seems less likely," The Standard reports.
More important for its implication for the 2012 presidential race, the Republicans are slated to make big gains in state-wide races, winning several governorships and statehouses, giving them control of the process of re-drawing congressional districts to reflect new Census data, according to The Weekly Standard.
If all of this comes to pass, the implications for the economy are significant. Republicans will be in control of the key committee chairmanships, many that could expedite the housing recovery, according to various pollsters.
Wall Street money is smack dab on the Republicans in tomorrow's Congressional elections, echoes The Hill, an online Washington, DC-based publication.
Wall Street and financial interests are putting their money behind a handful of top-tier Senate Republican candidates as the GOP looks to win back power in the midterm elections.
The industry's contributions, which favored Democrats in recent election cycles, are now helping Republicans vie for control of the Senate. They are betting the GOP will best help the housing industry recover over the next two years.
Between February and June, financial, insurance and real estate interests contributed heavily to five Senate Republican candidates.
They are Ohio's Rob Portman ($820,000), Pennsylvania's Pat Toomey ($728,000), California's Carly Fiorina ($650,000), Illinois' Mark Kirk ($618,000) and Florida's Marco Rubio ($613,000), according to data compiled by the Center for Responsive Politics.
Republicans say the shift in donations is another sign of growing concern about the Democrats' agenda, which has included broad new financial regulations.
"We're seeing a shift in support towards Republicans because the message of restoring accountability in Washington and serving as a check on the Democrats' agenda of more spending and higher taxes is clearly resonating," said Brian Walsh, a spokesman for the National Republican Senatorial Committee.
Seven of the top 10 recipients of financial industry contributions from February to June were Republicans, the data shows. New York Democratic Sens. Charles Schumer ($1.52 million) and Kirsten Gillibrand ($788,000), and Connecticut Democratic Senate candidate Richard Blumenthal ($707,000) were also among the top 10 recipients.
Rounding out the top 10 were House Minority Whip Eric Cantor (Va., $818,000) and House Minority Leader John Boehner (Ohio, $589,000).
The Center for Responsive Politics first noticed a change in the financial industry's pattern of giving in February, when 17 of the top 25 recipients of contributions were Republicans.
"This was not a blip. There was a dramatic change and it has persisted," said Dave Levinthal, communications director at the center. "We see no indication of it stopping."
The five GOP candidates represent some of the party's best opportunities to pick up seats in the Senate. Democrats have tried to use the candidates' Wall Street connections against them.
The Democratic Senatorial Campaign Committee has labeled Portman a "Wall Street cheerleader" and Toomey a "Wall Street wheeler-dealer." Both men opposed the financial reform bill.
Portman's campaign declined to address the money he's receiving from the financial industry, instead noting his grassroots support.
"Rob Portman has received overwhelming support from more than 18,000 individuals with 80 percent of our contributions coming from Ohioans," Jessica Towhey, a spokeswoman for Portman, said in a statement.
Kirk spokeswoman Kirsten Kukowski said the congressman is "humbled by the outpouring of support he's received and will continue talking about the issues that matter most in this election -- creating jobs and turning our economy around."
Fiorina has also been criticized by Democrats for being tied to Wall Street. During a recent debate, Sen. Barbara Boxer (D-Calif.) repeatedly accused Fiorina of behaving like a "Wall Street CEO" during her time at the helm of Hewlett-Packard.
Fiorina's campaign said her donors come from "all walks of life."
Barbara Boxer
"Carly Fiorina, on the other hand, does not owe anything to anyone," Saul's statement said.
Rubio's spokesman said he's getting support from the financial industry because he "opposed taxes and regulatory policies that undermine the free enterprise system."
"We welcome the support of people who buy into this agenda," Rubio spokesman Alex Burgos said in a statement.
Even so, there is a growing group in the real estate industry itself that now suggests the industry should acknowledge certain cutbacks have to be made in the country's budget before the housing industry can return to normal.
Writing in The Miami Herald, Kenneth Harney, executive director, National Real Estate Development Center, Washington, DC, is among the forefront of that group. He writes:
"Could the forthcoming report of a bipartisan presidential deficit-reduction commission -- due Dec. 1 -- lead to fundamental changes in the way home ownership is treated by the federal tax system?
"Are you kidding?
"For decades the political rule on Capitol Hill has been that nobody messes with homeowners' tax benefits -- mortgage interest deductions, capital gains exclusions, property tax write-offs -- even if they cost the government hundreds of billions of dollars in tax revenues a year and increase the federal deficit.
"But now the sheer size of the country's fiscal problems -- a $1.3 trillion deficit for 2010 and a fast-mounting $13.6 trillion debt overall -- could be slowly altering the equation.
"Not only are some Republicans and Democrats joining in support of plans to lower the deficit through across-the-board cuts in defense spending, social programs and tax subsidies, but even leaders in the real estate industry are speaking up.
"At an opening session Oct. 14 of the annual fall meeting of the Urban Land Institute here, all five of the panelists -- Democrats and Republicans -- agreed that while continuing tax system support for housing is important, the current mix of tax incentives is costly and imbalanced -- favoring home ownership disproportionately over rental housing alternatives.
"At a private meeting following that session, one of the panelists, Henry G. Cisneros, secretary of housing and urban development during President Bill Clinton's first term, said serious leaders on both sides of the political aisle increasingly believe that the weight of public debt -- plus the hundreds of billions of dollars per year required to make interest payments to creditors -- could wreck the economy within the decade.
``This is a catastrophe looming,'' said Cisneros, citing a Congressional Budget Office estimate that the public debt will amount to 69 percent of the national gross domestic product (GDP) by 2020 -- hobbling the country with $778 billion in annual interest payments simply to service that debt.
"Since leaving public office, Cisneros has been in the housing development industry and is currently executive chairman of realty investment company CityView.
"Though Cisneros has long been an ardent proponent of homeownership, he now believes that the real estate and housing industries must be willing to contribute their fair share to any ``comprehensive long-term plan'' to balance the budget.
J. Ronald Terwilliger
"Steve Preston, the last secretary of HUD under George W. Bush, suggested that a ``comprehensive policy'' covering all key sectors of the economy stands the best chance of gaining the broad political support needed to push a deficit-reduction and balanced budget program through a fractious Congress.
"In theory at least, that is what the National Commission on Fiscal Responsibility and Reform is supposed to deliver to President Barack Obama six weeks from now.
"The 18-member commission is co-chaired by former Republican Sen. Alan Simpson of Wyoming and former Clinton White House Chief of Staff Erskine Bowles, and has been holding hearings and gathering deficit-reduction ideas since February.
Erskine Bowles
"Though the commission has provided no public hints of where it is headed, housing analysts say it's inevitable that it will propose cutbacks to tax subsidies for real estate.
"Likely targets: The mortgage interest deduction, which added about $100 billion to the deficit in fiscal 2010 and more than $400 billion during the last five years, according to congressional estimates; capital gains exclusions for home sale profits, which cost more than $128 billion between 2006-10; and property tax write-offs, which cost $70 billion-plus during the same period.
"Though virtually no one in the real estate industry supports elimination of tax benefits for homeownership, many economists and deficit-reduction experts say some form of cutbacks will be essential to help balance the budget.
"Robert L. Bixby, executive director of the nonpartisan Concord Coalition, which advocates for deficit reduction, says write-offs such as the mortgage interest deduction could be reduced significantly below the current $1.1 million loan amount maximum without diminishing the financial attractiveness of homeownership for the majority of consumers.
"But is any of this politically doable?
"Tough question, but the answer is: not unless the deficit-reduction commission comes to Congress with a powerful and skillfully balanced set of recommendations that require concessions from every interest -- real estate included -- in order to meet the larger goal of rescuing the economy from debilitating debt."
Meanwhile, The Capitol, an online New York City-based magazine, reports the real estate industry in New York has warmed up to the Democratic leadership, despite years of supporting the Republican conference.
The Real Estate Board of New York (REBNY) even held a fundraiser at its headquarters in early July for the Democratic Senate Campaign Committee that brought in $126,000.
Steve Spinola, president of REBNY, acknowledged that Espada had been a friend to the real estate industry as housing chair, but said the group's main focus was on general election races, not primaries.
As their relationship with Democrats strengthens, REBNY's ties with the Independence Party appear to be straining.
In 2009, REBNY began pouring money into the Independence Party, which went toward supporting a number of moderate Democratic candidates for New York City Council, in an effort to blunt the impact of the Working Families Party.
But Spinola said that the Independence Party and REBNY split on several endorsement decisions this year, though Spinola declined to name them.
"The answer is that we were not that happy with some of the decisions made by the Independence Party," Spinola said.
The Rent Stabilization Association, a REBNY ally, has so far taken a different tack, primarily supporting the campaigns of Senate Republicans.
They have donated to 19 different Senate Republican candidates, and gave $25,000 to the Senate Republican Campaign Committee housekeeping account, although the group also hedged its bets by giving $10,000 to the Senate Democrats.
One interest group up for grabs appears to be the state's building trades unions. Senate Deputy Minority Leader Tom Libous, the executive director of the Senate Republican Campaign Committee, told The Capitol in June that he believes a number of Senate Republican candidates will get the backing of building trades unions this year.
But in two of the most critical races--that for Brian Foley's seat on Long Island and Bill Stachowski's seat in Buffalo--the building trades are leaning towards endorsing the Democratic incumbents, according to Ed Malloy, president of the New York State Building and Construction Trades Council.
Malloy said the push for the SUNY empowerment plan, which would allow schools more control over capital projects, would ultimately create new construction jobs for his members in areas of the state where unemployment in the construction industry is running high.
Still, unlike some of their more pro-Democratic private-sector union brethren, the building trades have typically split their endorsements between Democrats and Republicans in an effort not to be taken for granted by either side.
"We're open to both," said Jack Kittle, political director for the International Union of Painters and Allied Trades DC 9. "We don't have a religion when it comes to picking candidates."
