Political Gridlock Economists Ponder Whether Bush Can Influence Business
Mawhorr, S. A., Daily Herald (Arlington Heights, IL)
Byline: S.A. Mawhorr Daily Herald Business Writer
It's tough to say how business will change under the conservative Republican leadership of George W. Bush after eight years of unprecedented economic expansion with a Democrat in that charge.
The first question on the minds of many observers is if George W. Bush will be able to wield any influence at all.
"We know who will be president but we don't know if he'll be able to work with the new Congress or if the new will be able to work at all," said Jay Mueller, an economist at Milwaukee-based Strong Investments.
Bush takes over the White House after losing the popular vote and winning a contentious court battle over a recount in Florida. The Senate will be equally divided between Democrats and Republicans and the Republicans hold just five seats more than the Democrats in the 435-member House of Representatives.
"It could be gridlock," Mueller said.
But gridlock might not be a bad thing, said Bank One Chief Economist Diane Swonk.
Swonk is worried Bush will be too eager to push the $1.3 trillion in tax cuts over 10 years that he outlined during his campaign. Bush was reacting to a growing surplus, which the Congressional Budget Office has projected will reach $4.6 trillion over the next ten years.
A more prudent policy would be to pay down the national debt, Swonk said.
Tax cuts will stimulate spending right now, Swonk said. But reducing the debt will free up money that businesses are more likely to invest. And those investments will bolster the economy in the long term, she said.
Tax cuts are exactly what Dennis Whetstone, president of the Illinois Chamber of Commerce, is hoping for.
"It will provide an early shot in the arm to help bolster a slowing economy," Whetstone said.
But Swonk maintains that the economy doesn't need a shot in the arm yet and added that she resents Vice President-elect Dick Cheney's warnings of a recession on the horizon. …