7/11/2023 0 Comments Gridlock in congress![]() Without 10 Republicans joining a unified Democratic front, a single lawmaker can shelve the final vote. Part of the limit on Democrats’ success is the filibuster, a Senate tradition that requires 60 Senators to say they’ve heard enough debate and are ready to vote. Several of Biden’s nominees have been spiked, including his pick for the Federal Reserve just this week because of Manchin’s worry she sees the economy and climate crisis as interconnected. His infrastructure and social-safety ‘Build Back Better’ agenda is pretty much dead at the hands of aggressively centrist Sen. Longtime pals in the other are intractable. Even nominal allies inside his party are unreliable. I think it just shifts it around when all is said and done.That isn’t to say that Biden’s getting everything on his wishlist through a Congress that gives his fellow Democrats the thinnest of majorities. "So I don't know if gridlock gets rid of the uncertainty. "There will be a tremendous amount of uncertainty if we don't have policy action," Twibell says. So whether gridlock will be good likely will depend on whether those pockets are feeling any fuller after the new regime takes hold. "It doesn't make any difference whether Washington raises our income tax by five bucks or if the City Hall raises the dog licenses by five bucks. "Essentially consumers are saying we don't care what the egghead economists are saying, this still feels like a recession," Goldstein says. A survey from the Conference Board this weekon consumer confidence showed a slight increase over the previous month but continuing pessimism about the economy. It would be better for the intermediate and long-term health of the economy and markets if we could deal with it before it becomes an outright crisis."įor consumers, things still feel like they're in a crisis mode, so they're unlikely to be patient with Wall Street inaction as well. "To take a longer-term view, gridlock is not good. "The good thing with perceived gridlock is at least bad things for business won't be coming out of Washington anymore," says Steve East, chief economist and market strategist at Height Analytics in Washington, D.C. "Should a split Congress be the result of the November 2 elections, the resulting uncertainty may just end up adding one more stone to this already high wall of worry."Īt the onset, at least, leaders from both parties are likely at least to talk up unity, even if any honeymoon is short lived.īut both investors and voters may grow impatient with Congress if it doesn't make quick decisions on whether to continue the Bush tax cuts that expire at the end of the year, as well as whether the ObamaCare health reform plan stays intact. "I believe investors look to Washington for leadership, not obstacles," Sam Stovall, S&P's chief equity strategist, wrote in a note accompanying the data. But Republicans took over after the 1994 elections, and while the two sides bickered for the next six years the dot-com bubble hit and stocks ultimately exploded 208 percent during the Clinton years. The latter scenario was best seen under the Clinton administration and often serves as the template for the "gridlock-is-good" crowd.Īfter pursuing a leftist agenda for his first two years in office, during which Democrats controlled both chambers, Clinton saw the economy languish while the stock market did little. Both complete Republican control, and a Democratic president and Republican Congress have had returns of 15.1 percent. Looking at the numbers more internally, there is a tie for best performance when looking at party control. The worst? When there is total gridlock, when the benchmark has gained just 3.5 percent. Of the three scenarios, the best comes not when government is divided but actually during total unity, under which the S&P 500 has seen a 10.7 percent post-World War II return. The study examined three conditions: Total unity, when one party controls the White House, Senate and House of Representatives partial gridlock, where one party controls both houses of Congress and another the White House and total gridlock, when Congress is split. Standard & Poor's has evaluated the data of what actually does happen to stocks during a divided government, and the answers might be surprising. If what we get is just a lot of arguments I question whether that's really a good thing." ![]() "Looking a little bit longer term, we need to have the government playing a positive role in some of these issues. It will be less likely that we see sweeping legislation coming through Congress," says David Twibell, president of wealth management at Colorado Capital Bank in Denver. "The perception initially will be that gridlock is going to be good because it will take some uncertainty off the table. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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