Democrats go on the defensive as midterm elections approach.

• Author: Miller, Matt M.
• Position: Washington insights

Ben Franklin long ago remarked, "[I]n the world, nothing can be said to be certain except death and taxes." More than 200 years later, a lot of knowledgeable people have opinions and forecasts about the upcoming midterm elections, but it's impossible to know for certain how things will turn out.

For sure, it's a volatile campaign season, sparked by the arrival of the Tea Party on the national scene, the targeting of "establishment" candidates, dire state budgets and intensifying anger over the sputtering economy, as well as President Barack Obama's most recent economic recovery proposals added to the mix.

Republicans appeared to be gaining momentum in House, Senate and gubernatorial races in early September, based on leading national indicators. Every House member is in the midst of a reelection campaign and 37 Senate seats and 37 governors' mansions are up for grabs on Nov. 2.

Democrats in campaign mode can't help but be concerned as a number of polls, including the Gallup Poll, are consistently finding Republicans with a 10-point lead in the generic congressional ballot. Moreover, University of Virginia Professor Larry Sabato and political columnist Charlie Cook's post-Labor Day political forecasts predict that Republicans will likely reclaim the House and that even the Senate is now in play.

Sabato said the GOP could pick up as many as 47 House seats and that state-houses could provide the third strut of the Republicans' 2010 victory (with eight governorships possible).

Obama's Economic Counterpunch

Across the board, political momentum often sparks a significant counterpunch from the floundering opposition party. With the midterm elections just around the corner, President Obama on Sept. 8 introduced a targeted set of "economic recovery proposals."

Specifically, the president proposed $50 billion for investment in infrastructure to rebuild roads, railways and runways, and a 100-percent bonus depreciation plan that would allow companies to fully deduct qualified capital investments through the end of 2011.

Moreover, Obama proposed a permanent extension and expansion of the research tax credit that would be offset by a combination of international tax increases and oil and gas tax increases contained in the administration's FY 2011 budget.

While FEI and many other business organizations have consistently advocated for a permanent extension of a strengthened R&D credit, the potential tax offsets of $150 billion or more to "pay" for such...