Economic Outlook: A toast to gridlock

By ANTHONY HALL, United Press International  |  Nov. 7, 2012 at 9:40 AM
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Two comments resonated through all the Election Day pontificating. The first comment was that gridlock is not always such a bad thing.

That better be true, because it seems unlikely that President Barack Obama was handed any new Election Day clout, which takes a strong victory to produce.

Instead, Obama ended up with a split Congress and defiance -- some say obstructionism -- has been the order of the day in the House of Representatives for several years now and with growing fervor.

Like any good, old-fashioned shoving match, the national election represents a chance for both parties to dig in their heels. Obama's campaign, it cannot be denied, was crystal clear on his tax plan, which calls for dropping the Bush era tax cuts for individuals making more than $200,000 per year of taxable income and couples making over $250,000 in taxable income.

At the last glance, Republicans in the House were willing to go to any lengths it takes to say no to that concept. They have become the party of the rich and the right wing and to give that up appears impossible even on Nov. 7.

That means a fiscal cliff is not only around the corner, but inevitable. If Republicans want a chance to sink the ship in the name of patriotism, here's their chance. And, like the summer of 2011, when the devil's bargain known as the fiscal cliff was conceived, they appear perfectly willing to do so again.

The second statement that resonated on Election Day was a point about Obama's relationship with the business community. It is currently frightful.

A presidential advisory committee made up of business leaders and an occasional, token phone call to the Chamber of Commerce or an all day business forum hosted by the White House, complete with crust cut off the sandwiches, is not repairing the relationship that would seem critical during an economic recovery.

Business owners are waking up Wednesday unsure of what new environmental regulation or healthcare mandate might come their way, and while that may be true, it is also fair to say that these headaches are not why businesses choose not to hire new workers.

What businesses need to hire is demand for their goods. There will always be regulations. There will always be inspectors in restaurant kitchens and federal agents with clipboards sniffing around energy plants. More fuel efficient factories and cars (both are on order) are not business killers.

What businesses need, however, is customers lined up at the door. They need a backlog of orders. That's when they will start hiring again.

And, frankly, two critical customers, Europe and China are going through their own downturns at the moment. Europe is all but officially in a recession. Growth in China has slowed considerably.

The idea that the economy won or lost everything in the national election is likely a bit of a stretch. Obama can slow or speed up the recovery, but it is unlikely he will derail it completely. To a point, we have gridlock to thank for that.

In international markets Wednesday, the Nikkei 225 index in Japan was flat, falling 0.03 percent, while the Shanghai composite index in China dropped 0.01 percent. The Hang Seng index in Hong Kong rose 0.71 percent, while the Sensex in India added 0.45 percent.

The S&P/ASX 200 in Australia gained 0.71 percent.

In midday trading in Europe, the FTSE 100 index in Britain fell 0.25 percent, while the DAX 30 in Germany lost 0.7 percent. The CAC 40 in France shed 0.65 percent, while the Stoxx Europe 600 gave up 0.24 percent.

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