Washington may finally help the economy

Business leaders have had an uncommon challenge to contend with during the last few years: Man-made political chaos. Legislative stunts such as shutting down the government and threatening to default on U.S. debt may have served as dramatic theater inside the Beltway, but such political shenanigans made employers reluctant to hire and commit to future spending. Instead of helping build confidence, Congressional politicians undermined it.

That may be changing. So far this year, Congress has avoided prolonged smackdowns such as last year’s 16-day government shutdown or the “fiscal cliff” battle of 2012. In the video above, Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank in Washington, tells me Congress may finally do the economy a favor. “Up until now, Washington has been a problem,” he says. “It’s now out of the way. And that will be good for the business community.”

The biggest change is a strategic shift among Republican leaders in Congress who are now eager to shun the party’s image as a disruptive force able to gum up the works but not get anything done. This comes as Congress’s approval rating, at 16%, has hit a new low for a midterm election year, according to Gallup. In theory, that’s bad news for incumbents of both parties, although voters don’t necessarily punish candidates at the voting booth for being unpopular.

To some analysts, the recent, startling defeat of Republican House Majority Leader Eric Cantor represents a resurgence of the Tea Party, which campaigns against big government, including legislative favors and other handouts for business. Holtz-Eakin, a former director of the Congressional Budget Office who was also John McCain’s chief economic advisor during the 2008 presidential campaign, doesn’t buy that. Cantor’s defeat, he says, “doesn’t change the basic tenor of, ‘let’s elect people who will be able to govern effectively.’”

With Republicans facing a fair chance of taking the Senate in the November elections, and thus controlling both houses of Congress, some analysts predict the added leverage would lead to even worse partisan gridlock than during the last five years. Holtz-Eakin dismisses that prospect.

“You could imagine [Republican] leader Mitch McConnell exacting retribution for the reign of [Democratic majority leader] Harry Reid,” he says. “But I don’t think that will happen.” Instead, Holtz-Eakin predicts that Republicans, if they control both houses, will abandon gridlock as a political strategy and focus on passing small pieces of legislation Democrats will support. They want to “go into 2016 elections as the party that finally made Washington work,” he says. We’ll believe it when we see it.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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