The votes have been counted, the speeches and celebrations have wrapped up and the dramatic election night coverage has come to a close. So what happens next for the U.S. economy?
The two houses of Congress, the House of Representatives and the Senate, have been controlled by the Democratic Party for the past two years. Tuesday’s mid-term elections put an end to that as Republicans gained enough seats to take control of the House. This gives the Republicans more power over the decisions made and laws passed — or not passed — on Capitol Hill.
The general tone of the triumphant Republicans, who gained 60 seats in the House and six seats in the Senate, was positivity and hope for change to the economic policies put in place by Democratic President Barack Obama and a Democratic Congress.
“(Wednesday) we’ll wake up and we’ll have the possibility of a real change in our nation,” Mike Pompeo, a Republican Representative elect from Kansas’ 4th District, said in a speech.
Newly elected Speaker of the House John Boehner has said in recent speeches that having a more balanced Congress would ensure both sides of an issue are heard before legislation is passed.
Possibility of ‘Legislative Gridlock’
In addition to allowing the conservative side of issues to be heard, the split Congress could lead to so-called “legislative gridlock.” Gridlock occurs when neither party has enough support to advance its position on an issue. With one side of the legislature leaning Democratic and one side trending Republican, we could see proposed bills stall before they are sent to the President’s desk for approval.
How you feel about the potential for less new legislation probably depends on your political beliefs. If you think a more proactive approach would help pull the economic recession out of the doldrums, the prospect of a split legislature might not be a good thing. If you think the President’s spend-first approach to stimulating the economy is the wrong path, Tuesday’s election probably provided some good news.
What About the Recovery?
Both major political parties have certain ideas about how to recover from the economic crisis. The gulf between Democrats and Republicans on economic issues has widened over the past two years as the Obama administration and Democrat-led Congress pushed new stimulus and regulatory measures through Washington.
The President’s Recovery Act devoted nearly $800 billion to reviving the economy through government programs and drew the ire of budget-conscious conservative politicians and citizens. The Dodd-Frank Wall Street Reform and Consumer Protection Act also raised the hackles of Republicans because it levied new rules and regulations on large financial companies, potentially restricting the firms’ revenue streams. September’s Small Business Jobs Act barely made it through Congress and didn’t please many conservatives, as it laid out $42 billion of spending to try to stimulate small business lending and in turn, generate hiring.
Whether the Democrats’ economic plans or some overarching factor is to blame, the economic recovery has stagnated. Nearly 10% of Americans remain unemployed, the dollar is nearing the threshold of deflation, and the stock market has just recently shown signs of life.
The results of the midterm elections certainly had a lot to do with the economy. But will the results have an effect on the economy moving forward?