BUSINESSWEEK ONLINE : NOVEMBER 20, 2000 ISSUE
COVER STORY

When the Center Is a Moving Target
The President will rely on Congress' centrists. But they won't be the same for every issue

As the Florida recount put the outcome of the Presidential race on ice, cliffhanger elections in the House and Senate also had Capitol Hill Republicans postponing their revelry. The GOP, at least on paper, maintains its control in Congress. But even if George W. Bush wins the White House, the party's hold on Washington has been seriously weakened. Once the votes are all in, Senate Democrats and Republicans may now hold an equal fifty seats. That would be the first time such a situation has existed in over 100 years. And in the House, where Republicans lost seats for the third election in a row, Democrats may be just five votes from a majority. ''Senate Democrats had a huge night'' on Nov. 7, says Daniel P. Meyer, a former top aide to ex-House Speaker Newt Gingrich.

A big crop of new Democratic senators will be arriving in town come January. Yet some of these faces hardly seem fresh at all. In addition to First Lady Hillary Rodham Clinton, who beat Rick A. Lazio for a Senate seat in New York, there's the liberal Jon S. Corzine, who won a seat in New Jersey. The former CEO of Goldman Sachs broke the record in Senate campaign spending with his $60 million run. Others with less star power include Delaware Governor Tom Carper, Mark B. Dayton from Minnesota, heir to the Dayton-Hudson department store fortune, and Representative Debbie Stabenow. When the ballots are counted in Washington State, RealNetworks Inc. executive Maria Cantwell may join the strengthened Democratic lineup in January. But the GOP had winners as well. Such conservatives as Nevada veterinarian John Ensign and former Virginia Governor George Allen helped the Republican Party maintain its majority.

POWER SHARING? Should the Senate wind up in a tie and Al Gore in the White House, running mate Joseph I. Lieberman must resign his Senate seat. That would leave the balance of power in the GOP's favor, 51 to 49. If George W. Bush wins, Vice President-Elect Richard B. Cheney becomes the tie-breaker in the Senate. That would assure the GOP committee chairmanships and the legislative agenda. Even so, Democrats already are conspiring to muscle in on Republican turf. Senate Minority Leader Thomas A. Daschle on Nov. 8 called on Majority Leader Trent Lott (R-Miss.) to share power, giving each party equal billing on committees and would join equally in setting the agenda.

The wafer-thin majorities on both sides of the Capitol already have fomented countless intrigues. ''For the Democrats, every decision will be framed in terms of 'How does this help us get control?' For the Republicans, it will be 'How does this help us keep control?''' says Meyer. Adds Trinity College political scientist Diana Evans: Congress is likely to be ''a snake pit--worse than ever.''

All that's got the business community feeling plenty nervous. Having a divided Congress ''puts a premium on the President's ability to be bipartisan,'' says Robert N. Burt, chairman and CEO of Chicago-based FMC Corp. and chairman of the Business Roundtable. ''All these things need to be addressed,'' he adds, ticking off a prescription drug benefit for seniors, a patients' bill of rights, and greater authority for the President to negotiate trade treaties.

Some business lobbyists, however, see an opportunity to form business-friendly coalitions of centrist Republicans and New Democrats. They welcome such pro-business Democrats as Nebraska's Ben Nelson, ex-Florida Insurance Commissioner Bill Nelson, and Carper. Already, National Association of Manufacturers President Jerry J. Jasinowski has met with all three. ''We are cautiously optimistic that the tenor of the next Congress will be conducive to developing pro-business solutions with bipartisan coalitions,'' says Gregory S. Casey, president of the Business-Industry Political Action Committee, a pro-business fundraiser.

To pass entitlement reforms, middle-class tax cuts, or boost spending on child health care, the President will need to work closely with a socially moderate, fiscally conservative, floating middle of both parties. ''In the next two years, every deal done in this town is going to be done from the center out,'' says business lobbyist Joseph P. O'Neill, president of Public Strategies Washington Inc. Admits Daschle: ''They don't have the votes, we don't have the votes.''

A unified business community could have enormous influence on Congress because of its longstanding ties to moderates in both parties. Their problem will be figuring out who the centrists are on any given issue. ''It's a floating coalition. On trade it's one set of people. On environment it's another. On taxes it's another,'' says Bernadette A. Budde, senior vice-president of the Business-Industry Political Action Committee.

The biggest opportunity for improved cooperation may lie in the House. True, a shrinking majority will make life tough for House Speaker J. Dennis Hastert (R-Ill.). He will need to work with moderate Democrats to find compromises on a range of issues from health care to education and taxes. But with the Democratic caucus moving more to the middle with every election, House Minority Leader Richard A. Gephardt (D-Mo.) may also find it in his self-interest to cooperate with the GOP--particularly if Bush wins the White House. If Gephardt decides to make another run for the White House in 2004, he will want to appear bipartisan.

Gephardt already has signaled he's willing to make concessions, especially on issues of importance to the high-tech sector. Other Democrats see the thin margin as an opportunity to put their stamp on legislation. But they warn Bush not to take them for granted. ''If the Bush Administration thinks it can reach out and pick off a few of our members and use them to have credibility, that's not going to happen,'' says Representative Calvin M. Dooley (D-Calif.).

Even absent a clear mandate, a consensus-minded Congress and pragmatic White House should be able to chalk up some early wins, especially on a Medicare prescription drug benefit, an issue that put many candidates in the winner's circle. Some Democrats say they can back a Medicare reform plan based on vouchers as long as the GOP agrees to a longer phase-in period. Legislation drafted earlier this year by centrist Senators John Breaux (D-La.) and Bill Frist (R-Tenn.) provides a strong starting point. ''A lot of the pieces are in place,'' says Senator Judd Gregg (R-N.H.).

The makings of a compromise are in place, too, for education reform. Democrats flatly reject GOP proposals that would allow education tax dollars to be spent on private schools. But they might accept a pilot voucher program and proposals that call for teacher accountability, such as national testing standards, if the President throws more money into school construction. Teacher testing ''may be the only thing Gore and Bush agree on,'' says John Kernan, CEO of San Diego-based software company, Lightspan.

Clearly the two candidates have more in common than that. And no matter which one wins in the end, he may have to adopt many of his opponent's ideas to work with a sharply divided Congress. For an anxious business community, that may prove a recipe for success.

By Lorraine Woellert and Howard Gleckman in Washington with bureau reports

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