Few in Washington DC or at the desks of news outlets want to admit what Wall Street knows with a certainty: our economic prosperity as a nation is directly influenced by whether or not there’s gridlock. When government comes to a screeching halt because both parties share power, the economy suffers.
It doesn’t make much of a difference whether it’s Republicans or Democrats who control the House, Senate, and White House, as long as it’s one or the other. When Democrats control it, the business world moves in one direction. When Republicans control it, the business world moves in a different direction. Both represent different variations of economic progress.
Problems arise when we have shared powers. In the extremely partisan environment in which we’re in now, that’s the reality of America’s fiscal condition. It wasn’t always like this. As recently as the Clinton era with a Republican Senate and House for the second half of it, bipartisanship could still accomplish things on the economic front. That’s no longer the case.
Extreme partisanship started during George W. Bush’s second term when the bipartisan buzz of post-9/11 America wore off and both sides started playing dirtier. It’s not that they played dirty with each other; that’s nothing new. They started playing dirtier within their own caucuses. That’s a much longer story that I’ll cover here, but suffice to say we’re now in a political world where any betrayal against President Trump is met with dashed hopes of reelection for Republicans (ask Jeff Flake or Bob Corker) while breaking from Chuck Schumer or Nancy Pelosi is tantamount to party treason for Democrats.
If the Republicans cannot hold control of the House, the economy will be hit by instant tremors. They may not be big enough to crash the economy as a whole, but they’ll be felt in Wall Street, the jobs markets, and economic growth. Even if it won’t be catastrophic, it certainly will be devastating.
Unfortunately, we’re getting a flurry of stories like this one to try to convince people otherwise:
If Democrats win control of the House in next week’s congressional elections, their legislative priorities wouldn’t likely much alter a $20 trillion economy. For one thing, Trump would remain able to block Democratic initiatives — just as they could stop his plans for more tax cuts and a 5 percent cut to Cabinet department budgets.
What instead would likely result is continued gridlock — perhaps even more entrenched than what exists now in Washington. Arrayed against a stout Republican majority in the Senate, a Democratic House majority couldn’t do much to reorder the economy, which typically hinges more on the willingness of consumers and businesses to spend and on the state of the global economy than on government policy priorities.
Let’s break down that last sentence from the AP story. The “willingness of consumers and businesses to spend” has been clearly demonstrated to be directly affected by elections. Spending jumped within days of the 2016 election and hasn’t dipped since. That wasn’t because of sudden legislation. At that point, the President was still waiting to get inaugurated.
The second part of the sentence, attributing the order of our economy to the global economy, is completely backwards. The global economy has been on a steady rise because of the United States’ economic success, not the other way around. If the Democrats win the House and economic growth slows dramatically, the world economy will slow as well. If the Democrats win and Wall Street responds with a major selloff, the global markets will follow suit. Companies will put freezes on hiring until they know how the new dynamic will play out. Once they see that it’s not playing out well for them, they will go into saving mode as they did during the Obama-era, which means slowing job growth.
Mainstream media and Democrats want you to think it won’t be so bad if we give them control of the House. They’re probably already preparing stories to blame President Trump when their predictions of no-big-deal-gridlock prove to be false.