On the morning of Wednesday, Nov. 3, literally tens of thousands of political writers, economists, lobbyists, soothsayers and bloggers will be providing their own "instant analysis" of what transpired politically the prior day. Some are likely to suffer major disappointments, while others will possibly see the benefits of a new beginning in Washington, D.C., and in statehouses across the nation.
On that Wednesday, I will likely be running through various airports (in order to then stand in line or sit and wait) to arrive in a timely fashion for a speaking presentation on Thursday morning on Amelia Island, Fla. We will have a non-political issue of the Tea Leaf released as usual on Nov. 2, meeting our commitment to nearly always release a new issue on Tuesdays.
As a result, I would like to give my two cents worth today.
We know that the political party outside of congressional control almost always picks up seats in the House of Representatives and the Senate in the mid-term (non-presidential) elections. The same is widely expected this year.
What is likely to be different this time around is, first, the large number of seats to be gained by the Republican Party, and second, the significant number of long-term incumbents of both major parties who may be sent home by frustrated voters, similar to what has already occurred in earlier 2010 elections.
Until the past few years, a longtime Democrat or Republican seat holder in the House or the Senate could boast of their membership on key political panels and their enhanced ability to send "pork" home by the truckload, aka earmarks. Such long-time incumbency is not what it used to be.
Voters across the nation — whether liberal or conservative, whether Democrat or Republican, whether independent or a tea party supporter, whether Libertarian or known by any other descriptor — have tired of the games, the childish behavior, the excessive spending, the name-calling, the distortion of facts, the paralysis that exists inside the Beltway.
We have had enough.
The ratings of our president are weak after roughly two years in office, although slightly higher than for presidents Reagan and Clinton after two years in office. More importantly, the ratings of the Congress — and especially of the congressional leadership — are at or near all-time lows.
Many pollsters expect the Republican Party to regain control of the House of Representatives, with a wide disparity as to how many seats could be returning to the party of Lincoln. The surprise would be if the House remained under Democrat control.
Change in Senate control is dicier, although the Republicans are highly likely to gain numerous seats. It is also likely that a greater-than-expected surge in Republican gains in the House would be followed by a similar surge to control of the Senate.
If so … then what?
This is where it gets more interesting.
Would the president and the current Democratic leadership use the "lame duck" period in December to attempt to squeeze through liberal legislation, possibly supported by a significant number of congressional members who would no longer be in office in January? This seems increasingly unlikely, as the Democrats would not likely have the votes in the Senate to get such legislation passed.
Would the president impose new environmental or other directives through his power to issue executive orders?
Would new Republican congressional leadership get serious about reducing the growth rate of government spending … or soon get seduced by the privileges of leadership that arguably cost them congressional control four years ago?
Would both sides be willing to work together to extend the Bush tax cuts for all taxpayers for a minimum of two to four years … and provide greater financial certainty for tens of millions of Americans?
The American people are very concerned about the future of this country. The majority see the nation off course. They fear the longer-term implication of massive and ongoing $1 trillion budget deficits for as far as the eye can see. They want the nation's fiscal house in order. The people fear that their children and grandchildren could be the first generations to not enjoy a higher standard of living than did prior generations.
Paralysis — good or bad?
What is likely is that the level of government inaction will rise. Political stalemate will be the order of the day. Neither party will have the votes to pass its own desired legislation.
Such paralysis can be viewed both positively and negatively. I argued in my latest book, econAmerica (2007, Wiley & Sons), that much of America's powerful economic performance during the second half of the 1990s was tied to Republicans taking control of the Congress in late 1994. The next six years featured a Democratic President Clinton and a Republican-led Congress.
As a result, government stalemate was paramount. The American economy was allowed to work its own magic, without enormous political interference or a major expansion in the role of government.
Government paralysis can also be a negative. This is especially true when critical bipartisan decisions must be made and implemented to move toward greater fiscal sanity and smaller future budget deficits. Trillion-dollar or greater annual budget deficits are a long-term road to financial disaster for this country.
We must work together to slow the growth rate of entitlement programs, principally Social Security, Medicare and Medicaid. Despite the emotion and mistruths that characterize political battles today, spending cuts in the entitlement area are not required. Nobody needs to have a check cut. No one is denied a cost of living increase. All new eligible entrants to programs can be allowed in.
What we need to do is slow the growth rate of future entitlement spending. Keep in mind that any reference to spending cuts is when compared to long-term baseline projections of spending.
In my view, the American people would be willing to slightly trim future spending increases on entitlement programs in order to ensure these programs survive … to ensure that funding would be there in the future, for them and for their children and grandchildren.
Simple straight talk from major political parties working together would go a long way in addressing this nation's financial challenges. Americans would relish it. We could put this nation on a more solid financial road.
Jeff Thredgold is chief economist for Zions Bank and founder of Thredgold Economic Associates. He is a certified speaking professional and author.